China Sentences GSK Executives

A court in Changsha, in central China, has imposed a fine of nearly $500 million on GlaxoSmithKline and sentenced several of the firm’s China subsidiary managers for paying bribes to boost sales in the country.

The five executives involved were sentenced to suspended jail sentences of between two and four years. One of the managers—the Briton Mark Reilly, who was the head of GSK China—will be expelled from the country, China’s state media reported. The other managers sentenced, all Chinese citizens, were the head of human resources, the head of operations, the director of legal affairs, and a manager of business development. The trial was held behind closed doors.

“Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK,” CEO Andrew Witty said in a statement.

The company issued an apology addressed to “Chinese patients, doctors, and hospitals, and to the Chinese Government and the Chinese people.” The company declared that it “fully accepts the facts and evidence of the investigation and the verdict of the Chinese judicial authorities.” The company added that it planned to continue investing in China, particularly in R&D. China is the world’s third-largest pharmaceutical market, according to IMS Health, a market survey firm.

Although GSK accepted blame, the case has raised speculation that because payments to doctors and hospitals are widespread in the country, China has singled out GSK for different treatment. In addition to fining the company and sentencing its executives, Chinese officials arrested the managers of a private investigation firm who were looking into a case of breach of privacy and security at the home of Reilly. A court in Shanghai sentenced the managers of the private investigation firm—the Briton Peter Humphrey and his wife, Yu Yingzeng—to jail in August.