Business Law and Regulatory Pressures: International Operations

Companies looking to gain space in markets oversees need to be aware of local laws and regulations that are applicable to their industry. Companies that operate in China are subject to local laws and need to pay close attention to anti-bribery laws. GlaxoSmithKline is a multinational drug company that employs 100,000 people around the world (7,000 of which are located in China) and has achieved global sales over $22 billion (Quelch & Rodriguez, 2013). A scandal that GSK was involved in resulted in a settlement of $3 billion; it was the largest fraud scandal in the healthcare industry in US history. Bribery and scandals of foreign companies operating in China is not a rarity (“China Focus”, 2012). GlaxoSmithKline’s ethics policy was good at providing a framework for the organization to abide by; however, there is much work that GSK can do in order to prevent the China bribery scandal from happening again.

GSK had a policy in place to prevent the China bribery scandal from occurring, but there is obviously room for improvement. GSK is not the only drug company to be involved in a scandal like this. AstraZeneca, UCB, Novo Nordisk, and Lundbeck have also been investigated by the Chinese government (Quelch & Rodriguez, 2013). Allegations of bribery and marketing unapproved drug indications have surfaced as a result of these investigations. Patterns of these investigations suggest that it is common for the drug company to just pay settlements rather than admit to wrongdoings. A shift in thinking is occurring in the Chinese government regarding bribery and who is responsible. They used to prosecute the person accepting the bribe, now they are looking more at the person offering the bribe. There is great improvement that is needed in order to prevent this type of corporate misconduct in the future.