Roche's Unit Visited By Chinese Officials From SAIC, Which Conducts Corruption Probes In China

Roche Holding AG (OTCMKTS:RHHBY) said Thursday that a unit of China’s anti-trust regulator visited the company’s local office as the Chinese government steps up efforts to investigate potential violations in the local business practices of global pharmaceutical companies.

According to a Roche spokesperson, the Chinese officials were from China’s State Administration for Industry and Commerce, which usually leads corruption probes against companies. The visit to Roche's facilities follows last week’s decision to charge Mark Reilly, former head of UK-based GlaxoSmithKline Plc’s (NYSE:GSK) China unit, along with other company officials on bribery charges.

"We understand that a local government unit in Hangzhou visited Roche's offices on May 21, but the specific details are not yet clear. We will cooperate fully with the work of the relevant government department," Basel, Switzerland-based Roche said in a statement Thursday, according to Reuters.

Last year, Chinese administrators began an investigation into the sales practices of health care companies in the country, which led to the arrests of doctors, hospital administrators and company executives.

While the drug companies have entered the Chinese market to establish businesses that generate significant revenues at low costs, the Chinese government too has spent nearly $180 billion since 2009 to reach its goal of providing basic medical care for more than 90 percent of its citizens, Bloomberg reported, and President Xi Jinping has added affordable health care to the Communist Party’s agenda.

On May 18, the chairman of Harbin Pharmaceutical Group Sanjing Pharmaceutical Co jumped to his death while authorities were investigating him for bribery, but the company said that the death “would not have a major impact on the company’s operations,” Bloomberg reported.

GSK's Reilly was charged after a 10-month probe in which it was found that the firm made billions of yuan by evading taxes, Reuters reported. The probe has hurt the company's reputation and its operations in its second-largest market after the U.S., the report added, citing IMS Health, a consultancy.