Exclusive: Siemens
healthcare unit probed by China regulator for bribery -
sources
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[May 04, 2015] By
Adam Jourdan and Engen Tham
SHANGHAI (Reuters) - A Chinese regulator
investigated Siemens AG last year over whether the German group's
healthcare unit and its dealers bribed hospitals to buy expensive
disposable products used in some of its medical devices, three people
with knowledge of the probe told Reuters.
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The investigation, which has not previously been reported, follows a
wide-reaching probe into the pharmaceutical industry in China that
last year saw GlaxoSmithKline Plc fined nearly $500 million for
bribing officials to push its medicine sales.
China's State Administration for Industry and Commerce (SAIC)
accused Siemens and its dealers of having violated competition law
by donating medical devices in return for agreements to exclusively
buy the chemical reagents needed to run the machines from Siemens,
the people said.
Reuters was unable to determine whether Siemens had denied the
accusations or if any action was taken against the company or the
dealers.
A senior spokesman for Siemens in Germany said he was "not aware" of
the investigation and declined to comment on specific questions
about the investigation.
"We are not aware of any situation that conforms to what you
describe," said Germany-based spokesman Matthias Kraemer in response
to questions emailed to Siemens in China and to the group's
headquarters. He declined to comment further.
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SAIC declined to comment.
China-based lawyers said it was not uncommon for regulators to
conduct investigations behind closed doors and for legal teams to
then negotiate settlements to keep probes under wraps.
The Siemens investigation, which involved as many as 1,000
hospitals, could signal further probes into other medical device
makers, one of the sources said. It comes as Beijing pushes
hospitals to use more locally-made medical devices and reduce a
reliance on imports that account for three-quarters of a Chinese
market worth around $34 billion.
Other foreign medical device firms operating in China include
General Electric, Koninklijke Philips, Medtronic and Johnson &
Johnson.
"COMMERCIAL BRIBERY"
SAIC accused Siemens and its dealers of having committed "commercial
bribery" under Article 8 of the Anti-Unfair Competition Law, the
sources said, and the regulator took a tough line on a practice
that, while technically illegal, is relatively common in China's
healthcare sector.
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Chinese medical institutions are prohibited from accepting donations
under conditions that impede fair competition or otherwise affect
procurement decisions, according to China's National Health and
Family Planning Commission.
The three people, two of whom have direct knowledge of the
investigation, asked not to be named. The third works closely with
Siemens' healthcare team in China and was briefed on the
investigation.
Medical device makers work closely with their dealers, and contracts
to sell equipment to hospitals are usually signed by both the
manufacturer and the distributor. The Siemens investigation involved
a range of medical devices, including those used to carry out blood
tests, the sources said.
Reuters was unable to ascertain which dealers were involved.
Siemens had China sales of 6.44 billion euros ($6.94 billion) in
2014, around 8 percent of its total. It employs 32,250 people in
China, where it also has units operating in sectors from railways to
energy.
(Additional reporting by SHANGHAI newsroom; Editing by Ian
Geoghegan)
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