China said to probe medical device firms on bribe suspicions

China is probing foreign medical-equipment makers over suspicion that they may have paid bribes or used illegal strategies to achieve market dominance, according to people familiar with the matter. 

PHOTO: REUTERS

5 May7:54 AM

[BEIJING] China is probing foreign medical-equipment makers over suspicion that they may have paid bribes or used illegal strategies to achieve market dominance, according to people familiar with the matter.

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

The three companies command over 80 per cent of China's market for large medical equipment such as CT and MRI scanners, according to the people. The regulators are looking at whether they achieved dominance via illegal means such as bribing hospitals to use their products. It's yet to be decided if regulators will start a formal investigation, the people say.

The government commerce regulator subsequently issued a statement denying that it has started investigating Siemens for commercial bribery. A Siemens spokesman referred Bloomberg News to the statement, which didn't mention Philips or GE.

Reuters earlier reported the investigation into Munich- based Siemens. The probes started last year after President Xi Jinping in May urged more domestic production of modern medical equipment.

A State Administration for Industry and Commerce branch in Shanghai is looking into Siemens Healthcare's Laboratory Diagnostics marketing and business model, which is common worldwide in the industry, Siemens said earlier via e-mail.

"Contrary to the recent media reports, the probe is neither corruption-related nor related to any personal benefits to individuals," the company said. "Siemens has been working closely and cooperatively with AIC to dispel its concerns and expects to resolve the matter in the near future." The government has stepped up regulatory scrutiny of non- Chinese companies, including Microsoft Corp, Symantec Corp and Qualcomm Inc. That scrutiny has raised concern that China is using the probes to boost native enterprises.

"Philips is not aware of an official investigation on this matter at this time," the Amsterdam-based company said via e- mail. "We are committed to complying with the laws and regulations of the countries in which we operate, and to ethical business practices." A representative for GE couldn't immediately be reached.

BLOOMBERG