Roche Says Authorities Visited Office in China’s Hangzhou

May 22, 2014 5:40 am ET

(Updates with comment from lawyer in fourth paragraph.)

May 22 (Bloomberg) -- Roche Holding AG said local authorities called on its offices in eastern China’s Hangzhou city yesterday, making it the latest pharmaceutical company in the country to draw government scrutiny.

“We are aware that local government authorities visited Roche’s office in Hangzhou on May 21, and the details of the visit are not clear,” Lei Bao, Roche’s Shanghai-based director of communications, said in an e-mailed statement today. “We will collaborate fully with authorities for any inquiries.”

A far-reaching probe of sales practices in China that began last year has resulted in the arrests of doctors, hospital administrators and pharmaceutical executives across the health- care industry. Police this month handed a case to prosecutors alleging that the former head of GlaxoSmithKline Plc’s Chinese unit ordered sales teams to bribe hospitals and doctors.

“President Xi Jinping has indicated one of his policy goals is cracking down on corruption, so there’ll likely be more cases going forward,” Kevin Jones, a Shanghai-based lawyer heading Faegre Baker Daniels’ labor and employment practice in China, said in a telephone interview. “Foreign companies are an easy target because they’re generally held to a higher standard.” Jones said he isn’t representing Glaxo or Roche.

Smaller Office

The visit was to a smaller sales office, and government authorities haven’t contacted Roche since then with more information about what exactly they were looking for, Nicolas Dunant, a spokesman for the Basel, Switzerland-based company, said in a telephone interview. Roche’s headquarters in China are in Shanghai, more than 100 miles (160 kilometers) from the branch office visited yesterday.

“I don’t have a lot of details,” Dunant said. “They certainly investigated the office.”

Roche was among the clients of Shanghai Linjiang Travel Agency, also probed in the Glaxo case. Roche stopped working with the travel agency once allegations of illegal behavior were made public, the company said last July.

In a separate case on May 18, the chairman of Harbin Pharmaceutical Group Sanjing Pharmaceutical Co. jumped to his death while being investigated for corruption.

Drugmakers have poured resources into China over the past decade as rising incomes have made health care more affordable for many. At the same time, the government has spent $180 billion since 2009 to advance its goal of providing basic care for more than 90 percent of its citizens. President Xi has made affordable health care a key part of the Communist Party’s agenda.

Glaxo has said it’s cooperating with the authorities. Sanjing, a Chinese generic-drug maker, has said its former chairman’s death “would not have a major impact on the company’s operations.”