Pharmaceuticals companies and corruption

What is it about?

Despite being a highly regulated sector, and in some ways ahead of the game in terms of compliance, pharmaceuticals companies regularly fall foul of anti-bribery laws. This paper argues that this reflects two tensions. First, local norms - particularly in emerging markets - often conflict with the requirements of anti-bribery laws, e.g., companies operating in Asia are expected to provide extensive gifts and hospitality, but this often makes it difficult to control local representatives. Second, business models often rely on sales teams that are deeply embedded in local cultures and motivated by commission payments, creating barriers to their compliance. Within organisations then, there is a need to make compliance teams more cognisant of the pressures on sales teams, so as to develop more workable rules and systems.

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Why is it important?

The enforcement of anti-bribery laws is getting tougher and spreading to more and more jurisdictions. While it is difficult to completely protect against bribery risk, companies that have thought through their risk profiles and changed their business models accordingly are likely to be treated more leniently by the authorities.

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