September 11, 2013 / 10:18 AM / 4 years ago

China drugmaker Gan & Lee investigating allegations it paid $130 million in bribes

SHANGHAI (Reuters) - Chinese insulin maker Gan & Lee Pharmaceuticals said on Wednesday it was investigating allegations published in a newspaper that it spent around 800 million yuan (82.91 million pounds) to bribe doctors to promote the firm's drugs over five years.

A sales representative for the privately held company, identified by the pseudonym Wu Dejiang, told China's 21st Century Business Herald the bribes were aimed at raising sales ahead of a planned initial public offering in Shanghai.

"From 2008 until now the amount of bribery involved is probably around 800 million yuan, and close to 300 million yuan in 2012 alone ... Gan & Lee has been very skilful with their bribes," the whistleblower told the newspaper.

Gan & Lee is the latest drugmaker to face whistleblower accusations in the newspaper, although it is the first Chinese firm to be accused of wrongdoing.

The reports coincide with multiple Chinese investigations into the pharmaceutical sector, spanning alleged corruption to how drugs are priced.

An official at Beijing-based Gan & Lee told Reuters by telephone the company was looking into the allegations. She said the firm would then issue a statement. The official declined to comment further or give her name.

Gan & Lee is on a list of companies seeking IPO approval from the China Securities Regulatory Commission, according to the agency's website. The newspaper said Gan & Lee began the application process in June.

"Because Gan & Lee is striving to list, it took a ruthless approach to performance and didn't hesitate to offer business bribes in return for increased sales," the whistleblower said.

Gan & Lee's website said its sales have been climbing quickly, reaching 540 million yuan in 2012. It gave no figures for 2011. The website also said the firm employed 1,100 people.

The most high-profile investigation into corruption in the pharmaceutical sector in China involves British drugmaker GlaxoSmithKline (GSK.L).

Police have detained four Chinese executives from GSK over allegations it funnelled up to 3 billion yuan to travel agencies to facilitate bribes to doctors to boost the sale of its medicines. GSK has said some of its senior Chinese executives appear to have broken the law.

Corruption in China's pharmaceutical industry is widespread, fuelled in part by low base salaries for doctors at the country's 13,500 public hospitals.

Whistleblowers have made a beeline for the 21st Century Business Herald.

Last month U.S. drugmaker Eli Lilly and Co (LLY.N) said it was "deeply concerned" after the newspaper quoted an unnamed whistleblower saying it spent more than 30 million yuan to bribe doctors in China.

The paper also quoted a whistleblower in August as saying Swiss drugmaker Novartis AG NOVN.VX had paid bribes to doctors to boost drug sales, prompting the Swiss company to launch an internal investigation.

Health Ministry officials are also investigating Sanofi SA (SASY.PA) over bribery allegations after the same newspaper said staff paid bribes totalling about 1.7 million yuan to more than 500 doctors in late 2007 to boost sales. The French company has said it is taking the claims "very seriously".

The newspaper has declined a request from Reuters for an interview on why whistleblowers keep speaking to it. ($1 = 6.1200 Chinese yuan)

Editing by Dean Yates

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