China widens drug industry probe, visits Belgium's UCB


Belgian drugmaker UCB has been visited by Chinese authorities as the country widens investigations into bribery by drugmakers, following allegations against Britain's GlaxoSmithKline.

A spokesman for UCB said on Thursday that officials were also investigating a number of other drug companies with operations in the country, although he did not identify them.

Chinese police have accused GSK of bribing officials and doctors to boost sales and raise the price of its medicines, marking a hardening stance against malpractice by multinationals operating in the country.

"They've been launching inspections with several pharma companies active in the country, both Chinese and foreign companies such as ours, and as part of the process our Shanghai office was visited by the agency in the last 48 hours," the UCB spokesman said.

(Read More: China block Glaxo executive from leaving the country)

The officials visiting the group's office were from the State Administration for Industry and Commerce (SAIC) and were seeking information on compliance, he said.

The SAIC is one of China's main three anti-trust regulators in charge of market supervision.

Its investigations often overlap with the country's top watchdog, the National Development and Reform Commission, which has recently launched a pricing investigation into local and international drugmakers, including GSK, Merck and Estella's Pharma.

China on Monday accused GSK of transferring up to 3 billion yuan ($489 million) to 700 travel agencies and consultancies to facilitate bribes - an allegation Britain's top drugmaker said it was deeply concerned about and which it called "shameful".

The tough Chinese action against GSK, including the detention of four senior Chinese executives and a ban on a top British executive leaving the country, has sent a chill through the wider pharmaceutical sector.

(Read More: China says Glaxo executives confess to bribing doctors)

There has been widespread speculation that other multinational companies would be drawn into the corruption investigations.

"This is bigger. This is not just GSK. The entire industry is on a journey here," one European drug industry executive said on Thursday.

The GSK investigation is the highest profile corporate probe in China since four executives from mining giant Rio Tinto were jailed in March 2010 for taking bribes and stealing commercial secrets. Three of those executives were Chinese while the fourth was a Chinese-born Australian.

(Read More: China police say Glaxo broke law, execs detained)

Past improper payouts in China have also landed other Western drugmakers in trouble - although with U.S. rather than Chinese authorities.

In the last year Pfizer and Eli Lilly have both settled with Washington, without admitting wrongdoing, over alleged corrupt payments in foreign markets, including China. More cases under the U.S. Foreign Corrupt Practices Act are pending.

China is increasingly important for big drugmakers, which rely on growth in emerging markets to offset slower sales in Western markets. IMPS 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.