Doing business in China became that bit more unpredictable when a court hit UK pharmaceutical company GlaxoSmithKline with the largest bribery fine ever imposed on a foreign company in China, while GSK’s British head in China, Mark Reilly, received a suspended three-year prison sentence.
Four Chinese managers got sentences of two to three years in a verdict handed down in September. Their sentences were also suspended, but the message was clear, drug industry analysts and insiders say. Foreign drug companies in China can no longer turn a blind eye (or worse) to sales staff who offer bribes to doctors and hospitals that buy their products.
Soon after Chinese police began investigating GSK in 2013, the company stopped using individual sales targets as a basis for calculating staff bonuses, globally as well as in China. Other multinational pharmaceutical companies in China have not been so categorical, but industry and legal sources say they have all re-examined their compliance procedures to make sure they are not setting unrealistic sales targets that can only be achieved through what are euphemistically known locally as “commissions”.