Pharmaceutical procurement process moves ahead despite scandal

After a wave of criminal allegations swept through the Chinese pharmaceutical industry, drug companies across the globe were certain that one of the world's largest growing markets was sure to encounter a major setback. However, now that the bureaucratic storm has somewhat abated, medical companies are beginning to bring their strategic sourcing back to the southeast Asian nation. 

The scandal

According to The Wall Street Journal, the country's Ministry of Public Security's economic crime investigation unit detained four high-level Chinese executives working for United Kingdom-based GlaxoSmithKline last summer after authorities accused them of leveraging travel agencies to bribe government officials, hospitals and physicians in order to sell more drugs for higher prices. In addition to the detrimental financial effects such an operation would have on the global pharmaceutical procurement process, ministry official Gao Feng stated that the scandal encouraged a corrupt, economically unfair environment. 

Gao told the news source that the British-based company and the travel agencies exchanged nearly $489 million between them since 2007. GSK released a public statement apologizing for the actions of its members, claiming that the corporation has a zero tolerance policy for this particular kind of conduct. Pharmaceutical sales reached nearly $82 billion in 2012, and industry professionals have claimed that the market is embroiled in rampant corruption. 

Slowly gaining confidence 

The Wall Street Journal noted that China has exercised a number of anti-corruption laws, but that there have been too few crackdowns on the records management procedures of drug manufacturers and distributors within the region. Many experts have claimed that leveraging software to take a closer look at their books may be in the government's best interest, but the necessary funds haven't been allocated to support such an endeavor. 

However, after nearly eight months of a tempered market, the Chinese pharmaceutical industry seems to be regaining investment. According to the Financial Times, Bruno Gensburger, external affairs director for French drug company Sanofi, believes the market is returning to its formal stature

"It has never been normal, but it does seem to be more quiet now," said Gensburger regarding the Southeast Asian drug economy, as quoted by the news source. 

Despite all the trouble caused by GSK's scandal, many economists are viewing the ordeal as a minor setback. The Chinese drug market continues to grow at a profitable annual rate of 15 percent, showing that western distributors and medical companies are bringing operations back to the nation. In order to get a better overview of the products they're purchasing, some of these foreign organizations are using vendor resource management so executives can gain a broader perspective of materials acquisitions. 

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