COPENHAGEN/LONDON: Chinese authorities have visited a site operated by Danish drugmaker Novo Nordisk A/S, the world’s biggest maker of insulin, in the latest sign of a widening investigation into Western drugmakers.
H. Lundbeck A/S, a smaller Danish drugs firm, also said its unit in Beijing had been visited by the authorities, while a Chinese newspaper reported an allegation from an unnamed person that French firm Sanofi SA had paid around 1.7m yuan ($276,200) in bribes to hundreds of doctors in China in 2007. Paris-based Sanofi said it took the claim “very seriously”.
Chinese investigations into bribery and over-pricing have so far centred on Britain’s GlaxoSmithKline Plc but the latest developments suggest they could have a wider impact across the pharmaceuticals industry.
Novo said yesterday that local Administration for Industry and Commerce (AIC) officials visited a production facility in Tianjin on Aug. 1, adding there had been no visit at the company’s head office in the country. “We were asked to provide information regarding our operations in China,” Chief Financial Officer Jesper Brandgaard told reporters as he presented second-quarter results.
“Whether this was a routine check or triggered by the (GSK) case reported recently in the media is not completely clear to us. However, the local AIC hasn’t accused Novo Nordisk of any wrongdoing.”
Chinese police have detained four Chinese executives of GSK and questioned at least 18 other staff amid allegations that the drugmaker funnelled up to 3bn yuan ($489m) to travel agencies to facilitate bribes to doctors and officials.
At the same time, the powerful National Development and Reform Commission is examining pricing by 60 local and international pharmaceutical companies.
AstraZeneca Plc, meanwhile, has had a sales executive detained in Shanghai, while Eli Lilly & Co and Belgium’s UCB SA have also had visits to premises in China. Industry analysts at Wells Fargo Securities, citing the views of a China expert with law firm Ropes & Gray, said the knock-on effect would be to crimp growth for multinational pharma companies in China, where the authorities are expected to push for harsher price controls.
As a result, the rate of growth for drug sales in the country could fall to around 10 percent a year from an historical 20 percent, they wrote in a research note.
NOVO RAISES OUTLOOK
For Novo investors, the potential problems in China were offset by the company’s decision yesterday to raise its full-year results forecast for a third time in six months, after double-digit sales growth in diabetes drug Victoza and modern insulin helped lift second-quarter operating profit above forecasts.
It now expects 2013 sales growth in local currencies of between 11 and 13 percent, compared with 9 to 11 percent previously. Its forecast for operating profit growth was increased to between 12 and 15 percent from around 10 percent.
“Given the tendency of management to beat and raise throughout the year, we expect consensus to move 1 to 2 percent upwards to the higher end of the new guidance range,” said Deutsche Bank analyst Tim Race.
Profit growth was driven by a 12 percent increase in sales of modern insulins compared with the same quarter a year ago and a 25 percent rise in sales of diabetes drug Victoza. Group sales rose 10 percent to 21.38bn crowns, against an average market forecast of 21.26bn given in a Reuters poll of analysts.Reuters
