A Siemens healthcare unit was investigated by the Chinese regulatory board last year because of a speculation that the head of Siemens AG bribed health care facilities in purchasing high priced disposable products for use in medical devices.

The investigation probes deeper into China's pharmaceutical industry following GlaxoSmith Kline's fine of approximately US$500 million for bribing officials in advertising its medical sales, according to an exclusive report by Reuters.

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China's State Administration For Industry And Commerce indicted Siemens on the case of violating competition by giving medical devices in exchange of an agreement to exclusively purchase the chemical reagents needed to run Siemens-made machines.

Matthias Kraemer, a senior official spokesman of the German company, was "not aware" of this current case and refused to disclose any further details about the issue.

"We are not aware of any situation that conforms to what you describe," said Kraemer via email, in response to queries received from the Siemens branch in China and the group headquarters.

China's State Administration For Industry And Commerce also declined to comment on the issue.

Legal representatives in China elucidated that it was not rare for the regulatory board to conduct investigations and settle within closed doors.

The investigation, which involves more than 1,000 hospitals, could instigate a further investigation on other device manufacturing companies.

As Beijing encourages more hospitals to purchase local made devices, this in return will reduce the number of imports that account for more than US$34 billion.

Chinese hospitals are prohibited to accept donations from the government, following conditions that these may impede fair competition and even affect decisions of procurement, according to China's National Health Care And Planning Commission.

Aside from the Siemens healthcare unit under investigation, other device manufacturing companies established in China are Johnson and Johnson, General Electric, Koninklijke, Phillips and Medtronic. These companies typically work hand in hand with dealers and when an agreement is made, a contract is then stipulated to sell equipment to hospitals that are approved by the manufacturer and distributor.

TagsSiemens healthcare, Chinese Regulatory Board, Bribery