Sinopharm Pharmaceutical Executives Face Investigation

China has been monitoring the actions of pharmaceutical companies, both foreign and domestic, in an attempt to curb rising prices and stop acts of bribery. For example, the state claimed that international pharmaceutical giant GlaxoSmithKline (GSK) was bribing doctors into prescribing and promoting their product by providing high paying speaking engagements. GSK was forced to stop the practice.

But now China may have found more. Sinopharm, currently the largest drug distributor in the country, has said that two former high level executives from the company are under state investigation for corruption. The information caused Sinopharm’s stock price to fall by 2% in Hong Kong. One of the former executives, Shi Jinming, resigned last month for “personal reasons.” Because Sinopharm is owned by the national government, top executives are privy to information and have access to public funds. Both Sinopharm former executives are accused of transferring public money into personal, private accounts.

China plans to increase the regulation of the pharmaceutical industry, but the continued public demand for high quality drugs from western producers makes that difficult. Frank Guo of Ipso has described the situation, “So far, China's pharmaceutical distribution network has been dominated by a group of domestic large companies, such as Shanghai Pharmaceuticals and China National Pharmaceutical Group, whose profit margins exceed 10%, while in developed markets, such as the United States and Europe, it's usually no more than 1%.”

Source:

http://www.bbc.co.uk/news/business-25708349

http://usa.chinadaily.com.cn/business/2012-03/21/content_14877837.htm