Foreign companies are paying close attention to the GlaxoSmithKline bribery investigation, largely to see if its outcome will it prompt multinational pharmaceutical firms in China to review how they do business in the country.
Chinese police accused GlaxoSmithKline of bribing officials and doctors to boost sales and raise the price of its medicines. They said GSK transferred up to $489 million to 700 travel agencies and consultancies over six years to facilitate the bribes.
When announcing the accusations against GSK, Chinese police said they had uncovered information that pointed to similar violations made by other multinational pharmaceutical firms, although they have not named any companies.
Pharmaceutical companies are at the mercy of Chinese regulators to get products licensed for import or manufacture in China, or to get them listed on the national drug registry. Bribes to government officials, underfunded hospitals and poorly paid doctors have long facilitated the regulatory approval, distribution and the pricing of medicines in China.
China is increasingly important for big drug makers, which rely on growth in emerging markets to offset slower sales in Western markets. IMS Health, which tracks pharmaceutical industry trends, expects China to overtake Japan as the world's second-biggest drugs market behind the United States by 2016. Read more