Lilly Cites Deep Concerns Over China Kickback Allegations

Eli Lilly & Co. (LLY), the Indianapolis-based drugmaker, said it is investigating allegations its employees paid Chinese doctors at least 30 million yuan ($4.9 million) in bribes and kickbacks.

Lilly allegedly gave bribes to Chinese doctors to promote the sales of two diabetes drugs in Shanghai and the eastern Chinese province of Anhui, the 21st Century Business Herald reported today, citing a former senior manager of the company identified by the pseudonym Wang Wei. Bribes and special payments are common practice for selling products, the person was cited as saying.

The allegations make Lilly, which has about 3,800 workers in China, the third major global drugmaker accused of bribing doctors in return for prescriptions. GlaxoSmithKline Plc (GSK), based in London, and Paris-based Sanofi face investigations over similar allegations, with four Glaxo employees having been detained over allegations the company paid 3 billion yuan ($490 million) in spurious travel and meeting expenses as well as trade in sexual favors.

“We are deeply concerned about the allegations made against Lilly China,” Yan Connie Li, a Lilly spokeswoman, said today in an e-mail. “Although we have not been able to verify these allegations, we take them seriously, and we are continuing our investigation.”

The 21st Century Business Herald is a newspaper based in the southern Chinese city of Guangzhou. Lilly shares rose less than 1 percent to $52.46 at the close in New York.

Sanofi Case

In Sanofi (SAN)’s case, a whistle-blower said the drugmaker paid about 1.69 million yuan ($280,000) in bribes to 503 doctors in the country, the 21st Century Business Herald reported on Aug. 8. 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.

Lilly said it was aware of similar allegations last year, and conducted an investigation that failed to verify them. It isn’t aware of any employees in China having been questioned by authorities there in connection with the new allegations, and none of its workers has been detained, said Amy Sousa, a U.S.- based spokeswoman.

“We were made aware of very similar allegations in 2012 by a former sales manager from the region that was mentioned in the article,” Li said. “At the time of the allegations, we did an exhaustive investigation to search for any evidence of kickbacks. The investigation was very thorough and included employee interviews, e-mail monitoring, and expense report audits.”

To contact the reporter on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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