9:47AM BST 22 Jul 2013
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While the move comes amid a criminal investigation into GlaxoSmithKline, AstraZeneca said it does not believe it has yet been caught up in the maelstrom surrounding its rival.
Officers from the Public Security Bureau arrived at Astrazeneca's sales office in Citic Square, Shanghai, on Friday afternoon and were said to have detained one employee.
"We believe that this investigation relates to an individual case and while we have not yet received an update from the Public Security Bureau, we have no reason to believe it is related to any other investigations," said a spokesman for the pharmaceutical company.
The company added that it "does not tolerate any illegal or unethical conduct in our business activities."
The move comes after Chinese authorities appear to be widening their probe into drug pricing beyond GlaxoSmithKline.
Two sources also said that Baxter International, a US pharmaceutical company, is also under investigation for possible malpractice at its joint venture in China: Baxter Qiaoguang Pharmaceutical.
One source said the investigation may relate to payments paid to secure the approval of Baxter's ClinOleic treatment on the list of products that can be claimed on national insurance. A spokesman for Baxter in China did not respond to requests for comment.
UCB, a medium-sized Belgian pharmaceutical company with a particular strength in epilepsy treatment, said last Thursday its office in Shanghai had been visited by officials from the State Administration for Industry and Commerce (SAIC) seeking information on compliance. At the time a number of other international firms, including AstraZeneca, denied any knowledge of being investigated.
The New York Times reported that it had seen documents showing that at least six other global pharmaceutical companies, including Merck, Novartis, Roche and Sanofi, had used the same travel agency as GSK to make bookings for events and conferences.
While the documents do not indicate wrongdoing, they suggest that the investigation into GSK may widen further.
Meanwhile GlaxoSmithKline, which has been ensnared in a criminal investigation in China for some weeks, has admitted that some of its executives appear to have broken Chinese law.
Abbas Hussein, GSK's head of emerging markets, conceded that a number of senior staff in China had circumvented the drug maker's compliance systems and were in breach of the country's bribery laws.
"Certain senior executives of GSK China, who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law," Mr Hussain said in a statement.
Mr Hussain, who was dispatched to China by GSK chief executive Sir Andrew Witty on Friday to lead negotiations with the country's powerful Ministry of Public Security, described the talks as "very constructive".
In an olive-branch offering, the pharmaceuticals group has pledged to lower its drug prices in China. Sources close to the investigations say Sir Andrew also has plans to visit China to support the government's efforts to root out corruption in business.
"Savings made as a result of proposed changes to our operational model will be passed on in the form of price reductions, ensuring our medicines are more affordable to Chinese patients," said Mr Hussain.
The Chinese Ministry of Public Security said Mr Hussain had apologised for the scandal. In a statement, it also urged GSK to take "responsibility" for the scandal, citing Mr Hussain's comment that the four detained Chinese executives from the drugmaker were able to break the law because they knew the company's internal systems so well.
Mr Hussain's statement comes as the company's internal probe uncovered evidence that appeared to support some of the allegations from Chinese police, as the Daily Telegraph reported on Saturday.
The drug maker is facing a mounting crisis in China after the country’s authorities revealed police were looking into deals worth 3bn renminbi (£320m), which could go back as far as 2007.
The allegations centre on GSK’s use of “travel agencies” in China which organise conferences for doctors and are a highly competitive business.
The Chinese authorities claim the company used some 700 agencies as middlemen to funnel money to health officials and doctors in order to win market share and clinch higher prices. GSK believes the figure is far lower and says it only has relationships with between 20 and 25 agencies.
Four senior staff, all Chinese nationals, are under arrest, and one appeared to make a public confession on state television last week. Chinese police claim the others have also confessed to the charges.
A British consultant who specialises in fraud investigations in China, and is believed to have advised GSK in the past, has also been detainedas part of the probe.
