Whistleblower accuses Novartis of paying bribes in Turkey to push sales
An anonymous whistleblower has accused Swiss drugmaker Novartis (SIX: NOVN) of paying bribes in Turkey through a consulting firm to push drug sales, according to a Reuters report.
The company secured advantages worth an estimated $85 million (£59 million) and the bribes were paid through a consulting firm, the report said.
The company has said it is investigating the allegations for the alleged benefits including getting medicines added to lists, or formularies, of drugs approved for prescription in government-run hospitals, and avoiding price cuts in other countries by securing government approval to change the names of two drugs.
The anonymous whistleblower sent a 5,000-word email to Novartis Chief Executive Joe Jimenez and Srikant Datar, chairman of its audit and compliance committee, according to Reuters, saying the company paid Alp Aydin Consultancy the equivalent of $290,000 plus costs during 2013 and 2014, before the Turkish Social Security Institution (SSI) launched an investigation, leading the drugmaker to end the association.
“We take any allegation of inappropriate behaviour extremely seriously and investigate all allegations thoroughly. As a matter of policy we don’t comment on such investigations even if the complainant decides to make them public,” Novartis said in a statement.
Shares in the company were down nearly 2.7% to 67.85 Swiss Francs in morning trade on the SIX Swiss Exchange.
Read the Reuters report here.
Novartis reaffirms outlook for 2016
Separately, Novartis reaffirmed its financial outlook for 2016 as the company moves to a new division structure announced in January. The restructuring is targeted at generating over $1 billion in annual cost savings by 2020 and push growth for its Alcon unit.
The restructuring plans will see the ophthalmic pharmaceuticals franchise moved away from Alcon to pharmaceuticals unit. Further, the portfolio of 19 mature products will be transferred to the Sandoz unit from the pharmaceuticals business, the company said in a statement.
For 2016, Novartis expects sales and core operating income broadly in line with last year after absorbing the impact of generic competition, which the company said will impact revenue by as much as $3.2 billion, versus $2.2 billion in 2015.
Novartis said, excluding Gleevec generic impact, it sees net sales to grow mid-single digit and core operating income to grow in the mid-teens.
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