Everything in China is political, even when it might not be.
A series of seemingly unrelated corruption scandals in China all share a common thread that has got the political class in Beijing very excited and boosted speculation that an elite power struggle is under way within the ruling Communist party.
The connections seem tenuous at first but spend enough time in the Byzantine world of Chinese politics and the logic starts to appear compelling.
By Scott Lane of the Red Flag Group
Media coverage of the GSK bribery probe has many Western companies quaking in their boots about their operations in China.
However when it comes to corruption in China, perception isn’t necessarily reality. With the right procedures in place, overseas companies can succeed in the country without recourse to graft.
It’s no secret that GSK is bullish on Nigeria, Africa’s second biggest economy. Last November the company’s board agreed to raise its shareholding in local subsidiary GSK Nigeria to 80 per cent, up from 46 per cent, through a forced tender offer.
Eight months later, the Nigerian Securities and Exchange Commission has approved the move up to 75 per cent. But minority shareholders are unhappy at the price, and the process.
Last November, GlaxoSmithKline topped the Access to Medicine Index for the third year running, commended for its equitable pricing policy in emerging markets and a pro-access approach to licensing and patents.
You can be forgiven for feeling puzzled – the ranking marks a big turnaround for a company which little more than a decade ago was public enemy number one in Africa and elsewhere. How did that happen?
More signs that Big Pharma is determined to further expand its footprint in emerging markets, with GlaxoSmithKline on Monday inking two new deals worth more than £650m ($1bn) in India and Nigeria.
The transactions – which will see the UK-based pharmaceuticals group increase its stake over two of its leading subsidiaries – are noteworthy. Whereas most of the industry’s past M&A efforts in EMs have been focused on securing new drugs and generics, GSK’s latest move is aimed at strengthening its presence in the consumer healthcare product space.
Just a few months ago, the Indian government announced that it would, by the end of the year, start implementing a $5bn plan to provide more than half the country’s 1.2bn people with free access to a wide range of generic drugs.
Delhi this week announced that it plans to increase the number of drugs under price controls from 18 per cent to 30 per cent, meaning an additional 348 medicines will be made more affordable.
Think big business in South Africa and it’s likely that mining houses, banks or the brewer, SAB Miller, will be among the first to spring to mind.
Yet away from the more obvious groups, a South African pharmaceutical company, Aspen Pharmacare, has been cutting its own path in its domestic market and beyond, aggressively expanding its business from the Philippines to Brazil, largely through mergers and acquisitions.