Glaxo’s Reilly to Return to China to Assist in Bribery Probe

GlaxoSmithKline Plc (GSK) said former China head Mark Reilly will assist police in a bribery probe after returning to the country, where government radio reported authorities detained another 18 of the drugmaker’s employees.

Reilly, replaced as China head by Herve Gisserot, “will be returning to China shortly,” Glaxo’s Melbourne-based spokeswoman Lisa Maguire said in an e-mail today, without giving a more specific timeframe.

Glaxo’s former China chief left the country last month after four of his colleagues were detained as part of a government probe that has produced allegations of 3 billion yuan ($489 million) in spurious travel and meeting expenses as well as trade in sexual favors. Government scrutiny has extended to other foreign drugmakers and local hospitals since China’s Ministry of Public Security detailed the Glaxo allegations on July 15.

Police in the central city of Zhengzhou are holding 18 Glaxo employees and some medical personnel, China National Radio reported on July 26. The report didn’t give details about when or why the workers were detained.

“We are unable to comment on specific employees,” Garry Daniels, a Singapore-based spokesman for Glaxo, said in response to e-mails requesting comment on the Zhengzhou detainees. A staff member who answered the main line for Zhengzhou police headquarters, and who asked not to be named, said details of cases could not be provided over the phone.

Photographer: Simon Dawson/Bloomberg

A GlaxoSmithKline Plc logo sits near a sign outside the company's headquarters in London. Close

A GlaxoSmithKline Plc logo sits near a sign outside the company's headquarters in London.

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Photographer: Simon Dawson/Bloomberg

A GlaxoSmithKline Plc logo sits near a sign outside the company's headquarters in London.

Personal Relations

Some Glaxo salespeople in China had established “good personal relations with doctors by catering to their pleasures or offering them money, in order to make them prescribe more drugs,” the official Xinhua news agency said July 25, citing interviews with police handling the case.

Glaxo’s sales contribution from China, where revenue gained 20 percent last year, is “likely to be impacted by the current inquiries” in the second half of 2013, Chief Financial Officer Simon Dingemans said on a July 24 earnings call. “It’s too early to quantify this,” he said.

China accounted for about 1 billion pounds ($1.5 billion) in Glaxo sales last year, according to the company.

Glaxo has commissioned law firm Ropes & Gray to conduct an independent review on the China investigation, Glaxo Chief Executive Officer Andrew Witty said on the July 24 call.

“Mark Reilly remains an active member of our senior executive team that is managing this issue,” Daniels of Glaxo said in an e-mail today. “Mark will play a key role in the internal review and response to the ongoing investigation.”

To contact Bloomberg News staff for this story: Jason Gale in Melbourne at j.gale@bloomberg.net; Daryl Loo in Beijing at dloo7@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net

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