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May 22, 2014

Roche Confirms Chinese Authorities' "Visit" to Sales Office

  • Roche confirmed today that a sales office in Hangzhou, China, was “visited” by local authorities, drawing the Swiss pharma giant into the tangle of drug developers that have drawn government scrutiny over their marketing and other practices. 

    “We are aware that local government authorities visited Roche’s office in Hangzhou on May 21,” Roche said in a statement emailed to GEN, adding: “The details of the visit are not clear. We will collaborate fully with authorities for any inquiries.”

    The authorities were from China’s State Administration for Industry and Commerce (SAIC), the agency charged with investigating corruption in the pharma industry. A SAIC spokeswoman would not disclose to Reuters the issues that led to the visit, but did tell the news wire that her agency had yet to reach any conclusion.

    Since last year, Chinese officials have cracked down on several biopharmas, visiting the offices of AstraZeneca, Bayer, Eli Lilly, Novartis, Sanofi—and most notably GlaxoSmithKline (GSK). The Chinese government has publicly accused GSK of bribing physicians, hospitals, and government officials in return for their prescribing its drugs.

    Last week, authorities formally charged the former head of GSK’s business in China, Mark Reilly, and several other officials with bribery. Reilly was charged following a 10-month investigation that is alleged to have found that GSK bribed doctors and hospitals in order to win approvals for the use of its drugs by Chinese healthcare providers. GSK has also been accused of evading Chinese taxes, holding onto billions of yuan as a result.

    Roche disclosed last year that it stopped being a client of Shanghai Linjiang Travel Agency, which was also scrutinized by authorities investigating GSK.

    Separately, on Sunday, Liu Zhanbin, the president of generic drug developer Sanjing Pharmaceutical leaped to his death from a hospital window, while under investigation for corruption.

    According to state-owned China Daily, Liu was placed under investigation by the procurator of Heihe City on May 16, on suspicion of corruption. The day of his death, China Daily reported, Liu claimed to be sick and was taken to a hospital in Xunke County. During the medical examination, he got away from his guards, jumped from a third floor restroom window, and died.

    Sanjing’s parent company, Harbin Pharmaceutical Group, is China's second-biggest drug maker by market value, according to China Daily.

    Over the past five years, China has spent about $180 billion toward fulfilling the government’s goal of providing basic medical care to at least 90% of its population. Global pharma giants have been eager to help, given the lucrative potential of expansion into the growing market of the world’s most populous nation.

    Headquartered in Basel, Switzerland, Roche’s Chinese operations are based in Shanghai, more than 100 miles from the Hangzhou sales office. 

    “President Xi Jinping has indicated one of his policy goals is cracking down on corruption, so there’ll likely be more cases going forward,” Kevin Jones, a Shanghai-based lawyer heading Faegre Baker Daniels’ labor and employment practice in China, told Bloomberg. “Foreign companies are an easy target because they’re generally held to a higher standard.”

    [This report has been updated to include a Roche statement emailed to GEN.]


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