SHANGHAI, April 25 (Reuters) - British drugmaker GlaxoSmithKline Plc has appointed two executives to new roles overseeing sales and marketing in China after authorities accused the firm of corruption last year, a person with direct knowledge of the decision told Reuters.
The move marks a significant change for GSK’s sales and marketing command chain in China, creating a wider gap between the two key functions, the person said, asking not to be named because of the sensitivity of the topic.
GSK’s front line sales and marketing staff were at the centre of a scandal last year when authorities accused the drugmaker of funnelling up to 3 billion yuan ($480.08 million) to doctors and officials to encourage them to use its products. GSK has described the behaviour as “shameful”.
Sales and marketing staff previously reported to a general manager for their particular therapeutic unit, meaning the two areas’ management more closely overlapped, the person said.
The new model would see a head of commercial and head of marketing separately oversee each function across the range of therapeutic units, the person added.
London-based GSK spokesman Simon Steel confirmed the new appointments, but declined to give further details.
“As we have made consistently clear we are committed to China and to serving the needs of patients ... The new management team in the country are shaping our business to best meet that purpose,” Steel told Reuters.
Pharmaceutical firms have been in the spotlight in China since the launch of the GSK probe last year, with lawyers saying that most global healthcare firms in the country were now reviewing their compliance process.
GSK is now also investigating claims that bribes were paid to doctors in Poland, Iraq, Jordan and Lebanon.
In addition to widening the gap between the two functions, the new appointments also suggest GSK is keen to have people with international experience overseeing China operations to ensure compliance with the firm’s global standards. Previously, most unit general managers had been appointed locally.
German-national Thomas Willemsen, who led the firm’s Taiwanese unit, will lead commercial operations including sales, the source said. Willemsen previously spent a decade with Merck Serono in Europe and Asia, according to his LinkedIn profile.
U.S.-educated Wang Yizhe will take charge of marketing. Wang was a senior director at GSK’s oncology marketing unit in the United States before moving to Britain to lead a team working with emerging markets, the source added.
GSK has said it will overhaul its global sales model and stop paying medical professionals to promote its products. The firm will also employ hundreds more doctors in-house in a drive to eliminate “sharp” marketing practices.
Bribery between sales staff and doctors is rife in China, with steep sales targets and low salaries for doctors creating fertile ground for backhanders. Local managers can create strong power bases, lawyers and industry insiders said.
“This is another challenge for MNCs (multi-national corporations) because for decades they have relied on these local teams. Suddenly these companies are having to examine how they have achieved their rapid growth,” said Leon Liu, partner at law firm MWE China.
The head of marketing will still report to the head of commercial operations, the source said, both of whom answer to China general manager Herve Gisserot, appointed in July last year in the wake of the corruption scandal.
$1 = 6.2489 Chinese Yuan Editing by Stephen Coates