Danone (BN) Medical Nutrition Unit Under Investigation For Alleged Bribery In China, Third Time For The Company In Two Weeks

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Chinese doctors performing an operation.

Need someone to clean your fishbowl, do your kids’ science projects or take you on an all-expense paid strawberry picking trip? Yet another division of Danone SA (EPA:BN), the French food company, is now responding to bribery accusations in China, and those are just some of the innovative methods it has been allegedly using to get on the good side of the doctors.

Exposure of illicit relationships between pharmaceutical giants and doctors in China shines a light on the country’s severely underfunded medical system, which makes bribery a commonplace practice. A new doctor makes about 2,000 to 3,000 yuan ($326.84 to $490.26) a month, a figure so low that doctors are now flocking to work for drug companies, Bloomberg reported. Sales representatives for pharmaceutical companies supplement that salary, and in exchange, doctors are more likely to prescribe the medications these companies offer.

Nutricia, Danone’s advanced medical nutrition unit, has allegedly bribed more than 100 doctors at 14 hospitals in Beijing with kickbacks, false receipts for reimbursement, gifts and funded travel between 2010 and 2013, the 21st Century Business Herald reported on Wednesday, citing an anonymous whistleblower who claimed to be an intern doctor.

The tipster provided 52 documents, detailing Danone’s alleged bribery and the amount of kickbacks doctors received from Danone. Multipying his meager salary, one doctor realized a 21,140 yuan payout from medication kickbacks over three months. Another doctor, a theater fan, received tickets to plays worth a few thousand yuan.

In exchange for these benefits, doctors allegedly would prescribe more medications from the company. For example, in April 2013, Danone allegedly took a doctor on a trip to Yunnan. Before the trip, said doctor prescribed 80 bottles of a certain Danone medication per month, but after the trip in June, the doctor prescribed 300 bottles, the 21st Century Business Herald reported.

“We only saw the report this morning, so we’ve only just started an internal investigation into the matter,” said Zhao Qinghua, a spokeswoman for Nutricia in China, according to the New York Times. “At the moment we still don’t know the details. We need to wait to see the outcome of the investigation before we can make our next plans.”

This is the third time in two weeks that a division of Danone has had to respond to bribery accusations in China. Its infant milk formula group, Dumex, was twice reported by China’s state television as the subject of bribery allegations. Other multinational pharmaceutical companies, like Baxter International Inc. (NYSE:BAX) and GlaxoSmithKline plc (NYSE:GSK), have similarly run into trouble lately for bribery. 

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