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J&J Fined in China as Eli Lilly, Sanofi Visited by Regulators

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Aug. 1 (Bloomberg) -- Johnson & Johnson, the world’s biggest maker of health-care products, was fined by Chinese authorities for monopolistic practices as the country continues its crackdown on malfeasance in the health-care industry.

Two of New Brunswick, New Jersey-based J&J’s units were ordered to compensate 530,000 yuan ($86,483) to a distributor after a court in Shanghai ruled today that their setting of minimum resale prices constituted monopolistic conduct, according to a report posted to chinacourt.org, a website controlled by the nation’s Supreme Court. The company did not immediately respond to requests for comment.

Separately, drugmakers Sanofi and Eli Lilly & Co. said today they had received visits from regulators, the latest in a series of steps Chinese authorities have taken to increase scrutiny of the health-care industry that have included a probe of GlaxoSmithKline Plc., the U.K.’s biggest drugmaker.

Chinese authorities have accused Glaxo of economic crimes amounting to 3 billion yuan in spurious travel and meeting expenses as well as trade in sexual favours undertaken to boost sales. Regulators will “severely crack down” on fake medications, forged documents and bribery, the China Food and Drug Administration said last month.

Glaxo’s head of emerging markets, Abbas Hussain, said last month after meeting with government officials in Beijing some employees may have broken China’s laws.

In China, every province and city have local agencies that regulate commercial activity. These units, formally known as the Administration for Industry and Commerce, hold broad powers to investigate possible malfeasance, seize evidence and impose financial penalties without a warrant, according to a note from consulting firm Control Risks.

Company Inspection

Paris-based Sanofi said today one of its regional offices was visited by authorities from the Shenyang Administration for Industry and Commerce. The company didn’t know the purpose of the inspection, Chief Executive Officer Chris Viehbacher said on a call with reporters today, and its China headquarters in Shanghai haven’t been checked.

Lilly was also visited by Shenyang authorities in a review “early this year,” the company said in an e-mailed response to questions, without elaborating on the date. The Indianapolis-based company said it hadn’t received any notice of the results of the investigation.

In China, Lilly is “one of the first companies in the industry to enforce compliance in a strict manner,” according to the company. “Lilly has not and is not being investigated by the Chinese Public Security Bureau,” its Beijing-based spokeswoman Connie Li said in the e-mailed statement.

Julien Dedman, a Beijing-based spokesman for J&J, said by e-mail when contacted today that he was seeking the appropriate person to respond to inquries about the Shanghai court ruling.

To contact Bloomberg News staff for this story: Natasha Khan in Hong Kong at nkhan51@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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