As China becomes the focal point for more and more exporters, playing by China’s rules has never been more important. This summer has seen giants of the European pharmaceutical industry stand accused not only of non-compliance but of bribery and over-pricing.
This comes at a time when the Chinese pharmaceutical market is forecast to soar in value. A recent report from GlobalData indicated that prescription pharmaceuticals would reach an annual value of $315 billion within the next seven years. This represents a leap of 650 per cent from the 2012 level. How can European and American providers make their mark in this arena?
The allegations against Safina and GlaxoSmithKline have been damaging to these companies and instructional for the rest of the industry. When China’s government news agency Xinhua announced that Sanofi would be investigated for bribing over 500 Chinese doctors to use their products, dating back to 2007, the sums of money discussed raised eyebrows. It’s alleged that around E280,000 was paid to Chinese practitioners. This is said to have consisted of 90 yuan, or E13, being paid each time a patient purchased a Sanofi product.
At the same time GlaxoSmithKline is alleged to have undertaken a programme of payments so widespread that almost $500 million was paid to travel agencies who helped organise corporate inducements.
There has long been speculation about payments offered to government officials and other key decision makers, and not only in China, but speculation now concerns whether or not these practices are heading for a clampdown. This summer China’s leading economic planner has instigated a review of sixty pharmaceutical companies – both foreign and domestic – with the focus on pricing levels.
As much as transparency is to be admired, is there a political motive for this surge of investigative activity? It’s not only the value of the Chinese pharmaceutical market that is forecast to skyrocket by the end of this decade. By 2020 the Chinese government is expected to be burdened with healthcare costs of $1 trillion, and they face the tricky balancing act of promoting universal healthcare access while simultaneously reducing the cost of medicine. One obvious way to address this is to target “Big Pharma”, and calling to account the questionable practices of industry giants also reinforces the view of Beijing as a no-nonsense opponent of corruption.
As the likes of Novo Nordisk and AstraZeneca opened their doors to investigating authorities in China this summer, they will have realised that precision and transparency are the minimum requirement for continued success in this market.
EVS Translations is global partner to many of the most reputable names in the pharmaceutical industry. It’s our pleasure to work alongside professionals whose integrity and attention to detail are embedded in all that they do. As China makes it clear that corporate compliance is not an optional extra but a fundamental requirement, we look forward to supporting our partners in this market and many others. This has been a difficult summer for pharmaceutical companies in China, but the rewards and the potential remain. By 2020 $315 billion will be spent on pharmaceuticals in China each year. We can help you get your share.
