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Pin to quick picksGlaxosmithkline Share News (GSK)

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Share Price: 1,608.50
Bid: 1,608.00
Ask: 1,609.50
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UPDATE 3-U.S. citizen detained as China pharma probe spreads

Tue, 23rd Jul 2013 22:39

* U.S. citizen held amid widening China pharma probe

* Two more Chinese staff at AstraZeneca questioned

* 39 hospital staff to be punished for taking bribes-Xinhua

* Industry under scrutiny after bribery charges against GSK

* GSK reports second-quarter results at 1100 GMT

By Michael Martina

BEIJING, July 23 (Reuters) - A U.S. citizen has beendetained in China in connection with probes sparked by anunfolding corruption scandal in the drugs industry, as Chinawidens the range of international firms and staff under thespotlight.

Police have also questioned two more Chinese employees fromBritish drugmaker AstraZeneca in Shanghai, after a localsales representative was taken away for questioning earlier.

And China's Health Ministry said 39 hospital staff would bepunished for taking bribes from two drug companies. The firmsinvolved were not identified.

The unnamed American is the first U.S. citizen to bedetained in connection with the investigations, and the secondforeign national, after a British risk consultant linked withGlaxoSmithKline was held last week.

GSK, Britain's biggest drugmaker, has been accused by Chinaof funnelling up to 3 billion yuan ($489 million) to travelagencies to facilitate bribes to doctors and officials.

"We are aware that a U.S. citizen has been detained inShanghai. We are in contact with the individual and areproviding all appropriate consular assistance," U.S. embassyspokesman Nolan Barkhouse said on Tuesday, when asked about theinvolvement of U.S. citizens in the widening probe.

He declined to say which company the individual wasassociated with.

The latest moves by Chinese officials underline thecountry's tough stance on corruption and high prices in thepharmaceutical industry, as it unrolls wider healthcare accessand faces an estimated $1 trillion healthcare bill by 2020.

"Momentum is gathering and if you are a big internationalfirm, then you're a good example to be held up. This is awake-up call for the rest of the industry," said Jeremy Gordon,director of China Business Services, a risk management companyfocusing on China.

GSK Chief Executive Andrew Witty will detail what action thedrugmaker is taking in response to the bribery allegations whenhe presents quarterly results on Wednesday, sources familiarwith the matter have said. The results are due at 1100 GMT.

The company has called the bribery accusations "shameful"and on Monday said some of its Chinese executives appeared tohave broken the law.

AstraZeneca said the Shanghai Public Security Bureau hadasked on Tuesday to speak with two line managers linked to thesales representative questioned earlier.

"The Public Security Bureau is describing this as anindividual case. We have no reason to believe it is related toother investigations," the company said in a statement.

DOCTORS DISMISSED

Meanwhile, Chinese doctors and officials who are takingbribes are feeling the wrath of the authorities.

The official Xinhua news agency, citing a statement from theHealth Ministry on Tuesday, said 39 employees at a hospital insouthern Guangdong Province would be punished for taking illegalkickbacks, totalling 2.82 million yuan ($460,367), from twodrugmakers between January 2010 and December 2012.

"The vice chairman of the hospital's trade union and twopeople in charge of the two pharmaceutical companies involvedhave had their cases transferred to judicial organs, while ninedoctors who directly received kickbacks were dismissed,suspended or had their licences revoked," the report said.

Shanghai police detained British man Peter Humphrey earlierthis month. Humphrey runs an international business riskadvisory firm, ChinaWhys, that has worked with drug companies,including GSK, two people familiar with the situation said atthe weekend.

Chinese police have detained four Chinese executives fromGSK and the company's head of finance for China has also beenprevented from leaving China since the end of June.

Authorities have also visited the offices of Belgiandrugmaker UCB.

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