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By Adam Jourdan
SHANGHAI, May 27 (Reuters) - China's eastern city ofHangzhou is cracking down on graft in the healthcare sector,according to an internal memo from the local government, puttingmore pressure on global drugmakers operating in the country.
Earlier this month, China charged executives at Britishdrugmaker GlaxoSmithKline Plc with corruption. GSK saidit was cooperating with the authorities.
Swiss drugmaker Roche Holding AG last week said itwas cooperating with authorities after China's anti-graftwatchdog visited its Hangzhou offices.
The Hangzhou crackdown is another sign that Chineseauthorities are getting increasingly active in the fight against graft in the country's healthcare sector, a concern fordrugmakers and medical device firms looking to target thecountry's near 1.4 billion population.
Industry and legal sources told Reuters that probes into thesector were likely to rise in the wake of the investigationagainst GSK, putting increasing downward pressure on profits andsales.
The city's health bureau has ordered healthcare departmentsto carry out internal compliance probes before the end of Juneand to report any kickbacks they had received, the 21st CenturyBusiness Herald newspaper reported on Tuesday, citing theinternal document from the ministry.
An official at the Hangzhou Health Bureau told Reuters thatthe document existed, but declined to elaborate further sayingit was meant to be an internal notification.
COMPANIES NAMED
The health bureau memo named Britain's AstraZeneca Plc, U.S.-based Eli Lilly and Co and Denmark's NovoNordisk A/S as examples of drugmakers suspected ofmaking kickbacks, the 21st Century Business Herald reported. Thehealth bureau official declined to comment.
A Denmark-based spokesman for Novo Nordisk said that hecouldn't comment directly on internal documents, but that thefirm fully supported the Chinese government's work.
"Investigations by various authorities are not uncommon inChina, nor are they a new phenomenon, and like many othercompanies Novo Nordisk receives inspections from time to time,"the spokesman said.
An AstraZeneca spokeswoman said the firm was aware of themedia reports but had not received any "official communication"on the matter from Chinese authorities.
"AZ China cooperates with various Chinese authorities on aregular basis across a wide range of interactions," she said.
Eli Lilly said it had not been contacted by the authoritiesin China over the matter.
"Lilly has not been contacted by Hangzhou Health Bureau. Wefully cooperate with any inquiries we receive from governmentand its agencies in China," a China-based spokeswoman said.
Last year Chinese authorities visited global drugmakersincluding Novo Nordisk, Novartis AG, AstraZeneca,Sanofi SA, Eli Lilly and Bayer AG as partof a broad investigation into the sector. (Additional reporting by SHANGHAI newsroom; Editing by EricaBillingham)
