Pharma’s China-Gate: So Much For Easy Growth

A knock on the door should not be interpreted as a sign of wrongdoing, of course, but the bribery scandal in China that began with GlaxoSmithKline (GSK) has now predictably begun to focus an uncomfortable spotlight on its many rivals. Recently, you may recall, Chinese authorities questioned AstraZeneca (AZN) employees in Shanghai, Eli Lilly (LLY) and UCB were contacted. Now, Novo Nordisk (NVO) and Lundbeck have acknowledged that authorities have visited their facilties as well.

Separately, a whistleblower alleges that Sanofi paid about $276,000 in bribes to more than 500 doctors in China, according to The 21st Century Business Herald, which reported receiving documentation. The whistleblower, who used the pseudonym of bacon, described the payments as 'research spending' that was funneled to physicians in Beijing, Shanghi, Hangzhou and Guangzhou in 2007 (read a translation).

As patent expirations have cut into sales in the U.S. and other developed countries, Pharma companies have looked to developing economies – notably China and India – for sales growth.

GSK Revenue TTM Chart

GSK Revenue TTM data by YCharts

The developments are, not surprisingly, being interpreted in different ways. The Chinese government, for instance, is believed by some to use the probes as an opportunity to bolster its own domestic pharmaceutical industry or simply use this as leverage to extract lower prices from global drugmakers. The National Development and Reform Commission, you may recall, is examining pricing by 60 drugmakers, including both local and multi-national companies.

To read the remainder of this article, go to Pharmalot.

Ed Silverman, a contributing editor of YCharts, is the founder and editor of Pharmalot. He previously reported on the pharmaceutical industry and other business topics for the Star-Ledger of New Jersey, New York Newsday and Investor’s Business Daily. He can be reached at editor@ycharts.com. You can also request a demonstration of YCharts Platinum.

Read more articles about: Company Analysis  pharma stocks   

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