Police in China said the former China head of GlaxoSmithKline, the British drugmaker, ordered staff to bribe doctors and government officials, deriving "illegal revenue worth billions" and transferring some of it overseas, write Jamil Anderlini in Beijing and Patti Waldmeir in Shanghai.
Police said they have found evidence GSK as a company engaged in bribery on a "huge scale".
The results of the police investigation, started last July, will now be turned over to Chinese prosecutors who are almost certain to follow police recommendations .
The company and individuals Mark Reilly, former head of GSK's China operations, will now go on trial in the coming months.
Two weeks ago, GSK earnings revealed that the ongoing probe had hurt sales in emerging markets. Sales (including established products) in China fell a fifth to ￡137m in the first quarter.
Police in China said the former country head of GlaxoSmithKline, the UK-based drugs group, ordered staff to bribe doctors and government officials, deriving “illegal revenue worth billions of renminbi” and transferring some of it overseas.
In a briefing in Beijing on Wednesday, police said they had found evidence GSK as a company engaged in bribery on a “huge scale”.
GSK could not immediately be reached for comment. It has previously denied any systemic corruption. Last summer, it admitted that some of its employees in China appeared to have broken laws and described the allegations as “shameful”.
It has since scrapped individual sales targets for sales staff in China as part of an overhaul of its marketing operation.
According to the police, the drugmaker funded the bribes by inflating the price of medicines in China, some of which were seven times more expensive than in other markets.
After a 10-month long investigation, Chinese police have passed the case to prosecutors and recommended the company and executives including Mark Reilly, former head of GSK’s China operations, be charged with bribing non-government entities, government officials and corporate bribery.
GSK also inflated import costs by making false declarations to Chinese customs to transfer profits abroad illegally, police said.
“The more drugs the company sold, the more they bribed, and the more they bribed, the more drugs they sold,” said a spokesman for the economic crime investigation department of the Public Security
The company encouraged sales representatives to bribe doctors and officials on a huge scale and set up a “complete bribery network”, police investigators said.
GSK also bribed officials to try to exclude competitors from the market and tried to block the Chinese government from investigating the company’s actions, according to police.
The company’s Chinese subsidiary was also said to have set up an “emergency response unit to bribe officials from executive administration departments” to ensure they did not launch investigations into GSK’s operations, a police spokesman said.
He added that since the investigation began GSK had shown a “responsible attitude” and had co-operated with the police investigation.
Mr Reilly remains in China.