Sanofi fingered as China's drug bust continues

Sanofi is the latest foreign drug company to be busted by Chinese authorities.

China's drug bust continues.

Sanofi, France's largest drugmaker, is the latest foreign firm to be implicated in a corruption crackdown carried out by Chinese authorities. The Paris-based company has been accused of paying bribes, disguised as research grants, totaling 1.69 million yuan to 503 doctors at 79 hospitals in Beijing, Shanghai, Guangzhou and Hangzhou in 2007, state-owned news agency Xinhua reported.

The municipal health bureau in Beijing will coordinate the investigation into Sanofi's practices, a bureau official told Xinhua.

Sanofi said Monday that it would be "premature to comment on events that may or may not have occurred in 2007."

"Sanofi takes any allegation of this kind very seriously," the company said. "We also are committed to cooperating with the authorities in any review they undertake regarding these allegations."

The pharmaceutical industry has been under scrutiny in China since July, when Beijing accused British drug giant GlaxoSmithKline (GLAXF) of bribing doctors and hospital officials in efforts to sell their products at higher prices. The company is under investigation, and some executives have been detained.

Another UK-based drugmaker, AstraZeneca, has said that its employees were questioned and detained by Chinese regulators.

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Medical workers are thought to be particularly susceptible to bribery in China because their salaries often lag other fields, even though extensive education is required to enter the profession.

The corruption crackdown could be linked to a larger effort by Beijing to bring down the prices charged by foreign firms in the country.

Related story: China fines six companies for baby formula price fixing

Last month, the National Development and Reform Commission launched an investigation into production costs and price-setting practices at 60 pharmaceutical companies.

The NDRC is China's central economic planning agency. The group regularly reviews drug prices, and periodically implements price ceilings that apply to government reimbursement levels. The agency also directs bulk purchases of pharmaceuticals by local and provincial governments.

The regulator has been busy, and last week announced record fines against six dairy companies accused of price-fixing and anti-competitive activities.

The companies -- Biostime, Mead Johnson, Danone, Abbott Laboratories, Friesland and Fonterra -- are set to pay a record $108 million in penalties.

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