Pharma anti-graft sweep in China's 'problem province'
Monday, February 4, 2013 at 6:02AM
Benjamin Kessler in Baxter, Bristol Myers Squibb, China, China Compliance Digest, Eli Lilly, Jiang Hanping, Merck, Pfizer, Zhu Xiaodan

Authorities in Guangdong Province are responding with special seriousness to industry-wide anti-corruption regulations issued by the Ministry of Health (MOH) in July 2012.

ethiXbase members can download the regulations in their entirety, in both English and Chinese.

Last year, a sweeping probe in Shenzhen snared dozens of high-level medical staffers, leading to the December downfall of one of the city’s top healthcare officials, Shenzhen Municipal Health Committee chief Jiang Hanping.

Provincial authorities bared their teeth again earlier this month by ordering the formation of a special task force to investigate a Gaozhou hospital where state-run TV caught a doctor taking bribes.

About Guangdong

Guangdong Province has long been at the leading edge of China’s economic reforms. Its reputation for pushing social and political change stretches back at least a century. Guangdong is known as the cradle of the republican-minded revolution that led to the overthrow of the Qing dynasty in 1912.

Something like this authority-bucking spirit survives today in Guangdong-based media outlets such as Southern Metropolis Daily and Southern Weekend, newspapers famous for their forays into what, in the Chinese context, could be considered oppositional journalism.

In dealing with the Guangdong media, the Party has been forced to moderate its accustomed iron-fisted approach.

Guangdong’s recently appointed governor Zhu Xiaodan has announced he intends to build a government that would allow “close media scrutiny.”

An Industry at Risk

The director of a major hospital in Guangzhou recently begged a reporter not to portray his institution as corruption-free. He was quoted as saying, “We can only say that we handle these cases seriously and promptly, but there is no absolute in such things! This is an industry-wide problem, and who dares to say they are totally clean?”

Several well-known multinationals have been active in Guangdong’s thriving pharmaceutical industry. In 2012, UK-based biopharmaceutical firm AstraZeneca acquired Guangdong BeiKang Pharmaceutical Company Ltd., a maker of generic injectable antibiotics.

In its annual report for 2010, AstraZeneca disclosed that as part of an ongoing FCPA investigation, it had received inquiries from the DOJ and SEC regarding business transactions in several countries, including China.

Pfizer, GlaxoSmithKline PLC, Baxter International Inc., Eli Lilly & Co., Bristol-Myers Squibb Co., and Merck & Co. are among the multinational pharmaceutical companies that have reportedly been linked to bribery and kickback schemes involving China.


This post is part of an ongoing China Compliance Digest investigation into current anti-corruption compliance risk factors.

For a limited time, subscribers to China Compliance Digest will receive the China Anti-Corruption Handbook (normally $750) and FCPA Blog membership (normally $495) at no extra charge.

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