Trade Resources Industry Views China's Market Regulators Are Investigating Foreign Medical-Equipment Makers

China's Market Regulators Are Investigating Foreign Medical-Equipment Makers

China's market regulators are investigating foreign medical-equipment makers over suspicion that they may have paid bribes or used illegal strategies to achieve market dominance, according to some people familiar with the matter.

Regulators including the State Administration for Industry and Commerce opened the preliminary investigations last year into the Chinese healthcare units of General Electric Co, Royal Philips NV and Siemens AG, the people said. The probes do not necessarily mean the companies have done anything wrong, said the people, who asked not to be identified because they were not authorized to speak publicly on the matter.

The three companies command more than 80 percent of China's market for large medical equipment such as CT and MRI scanners.

The regulators are looking at whether they achieved such dominance by using illegal means and whether the companies bribed hospitals to use their products. It is yet to be decided if regulators will launch a formal investigation, according to the people.

The government has stepped up regulatory scrutiny of companies, particularly multinationals, including Microsoft Corp, Symantec Corp and Qualcomm Inc. That scrutiny has raised concern that China is using the probes to boost native enterprises.

The SAIC did not immediately respond to a faxed request for comment. Representatives for Siemens and GE could not immediately be reached via phone and e-mail. A spokeswoman for Philips did not immediately comment via phone.

A Reuters report said that a Chinese regulator investigated Siemens AG last year over whether the German group's healthcare unit and its dealers bribed hospitals to buy expensive disposable products used in some of its medical devices, three people with knowledge of the probe said.

The investigation, which has not previously been reported, follows a wide-reaching probe into the pharmaceutical industry in China that last year saw GlaxoSmithKline Plc fined $500 million for bribing officials to push its medicine sales.

It said that the SAIC accused Siemens and its dealers of having violated competition law by donating medical devices in return for agreements to exclusively buy the chemical reagents needed to run the machines from Siemens, the people said.

It is unknown whether Siemens had denied the accusations or if any action was taken against the company or the dealers.

A senior spokesman for Siemens in Germany said he was "not aware" of the investigation and declined to comment on specific questions about the investigation.

"We are not aware of any situation that conforms to what you describe," said Germany-based spokesman Matthias Kraemer in response to questions e-mailed to Siemens in China and to the group's headquarters. He declined to comment further.

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Foreign Medical Device Makers Under Scrutiny