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Corruption discovered in Chinese pharmaceutical industry

July 23, 2013

The pharmaceutical industry is among one of the world's largest and most lucrative sectors. It has also historically seen its fair share of scandals that have made headlines around the world. China is now at the center of one such instance of alleged corruption. GlaxoSmithKline (GSK), a drug maker based in the United Kingdom that outsources a fair amount of its research and development to a facility in Shanghai, China, was recently called out for purported bribery and other unscrupulous practices.

According to The New York Times, recently discovered documentation also points out that GSK executives received warnings of problematic issues with research procedures as early as 2011. This development may be a topic of discussion among international players in the pharmaceutical sector who can contact each other using international calling cards.

The news source reported that in the GSK audit documents, a drug called ozanezumab - intended to treat symptoms of Lou Gehrig's disease and multiple sclerosis - that had already gone through clinical trials with human subjects did not have the research properly reported from prior testing done on animals. This is viewed by some, including Arthur L. Caplan, head of New York University Langone Medical Center's division of medical ethics, as a major breach of ethical practice.

"If that's true, it's a mortal sin in research requirements," Caplan told the source. "No one could approve human trials without having that information available, scientifically or ethically. That's kind of a Rock-of-Gibraltar-sized ethics violation."

According to Reuters, two foreign nationals - one from the U.K., another from the United States - have been detained by Chinese police in connection with these alleged instances of bribery and corruption. Specifically, authorities accused these employees and the company of using as much as $489 billion, or 3 billion yuan, to offer bribes. Jeremy Gordon, director of risk management firm China Business Services, told the source that this should serve as "a wake-up call for the rest of the industry."

"Momentum is gathering and if you are a big international firm, then you're a good example to be held up," Gordon said. 

GSK is not the only company with a Chinese presence currently being accused of corruption. Reuters reported that three Chinese representatives of AstraZeneca, also based in Shanghai, have been questioned by Chinese police as of July 23. In a statement released to the public, AstraZeneca claimed that the Shanghai Public Security Bureau is viewing this particular incident as an individual case with no connection to other investigations.

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