Glaxo in China bribery case

As part of an investigation launched last July, police accused Mark Reilly of operating "a massive bribery network." It is the first time a foreign GSK employee in China has been accused.

In 2009, Reilly allegedly started to order his sales team to pay doctors, hospital officials and health institutions to use GSK's products, according to Gao Feng, deputy director of the Ministry of Public Security's economic crimes unit. He said that resulted in "illegal revenues" of billions of yuan (hundreds of millions of dollars).

"GSK's bribery activities ran through its entire operations in China," Gao said. He added that Reilly, who was the British drug company's vice president of pharmaceuticals for China and Hong Kong as well as its former general manager for China, was in China, but gave no further details of his status.

Reilly apparently used bribery to meet sales targets set by the head office. The company charged prices up to seven times the level charged in other countries, Gao said.

Before a patent on one of its drugs was due to expire in 2012, GSK paid bribes to discourage hospitals from switching to cheaper generic versions. "The more it bribed, the more drugs it could sell," he said.

Police have already identified four Chinese GSK employees who they say had confessed to bribery.

GSK said in a statement that "we take the allegations that have been raised very seriously," and that "we want to reach a resolution that will enable the company to continue to make an important contribution to the health and welfare of China and its citizens."

A second UK drugmaker, AstraZeneca, has also seen one of its sales people being investigated for bribery.

Bribery not uncommon

China is shaping up to be the second-biggest pharmaceuticals market behind the United States within three years, according to consultants IMS Health.

Bribery between sales staff and doctors is a "widespread practice" among local and foreign pharmaceutical companies operating in China, Zhang Lufa, an expert on health care reform at Shanghai's Jiaotong University, told the DPA news agency.

The case is one of the biggest corruption scandals to hit a foreign company in China. In 2009, four executives of mining giant Rio Tinto were jailed on similar charges.

ng/hg (AP, Reuters, dpa)