Corruption results in a second fine for Novartis in US courts

After Covid-19 affected in the second quarter of the year the impressive first-quarter results achieved by the Swiss company Novartis for the pharmaceutical industries, the company paid a new fine to the American judiciary, the second in three months, as the two fines totaled $ 356.8 million.

The payment was made, after the company was able to reach an extra-judicial agreement with the California Department of Justice to close a lawsuit against it related to paying under the table money to medical practitioners, to encourage them to prescribe some of its treatments against high blood pressure. The financial settlement of the second fine amounted to $ 11.8 million, and among the drugs in question were Litter, Valturna, Starlix, Tekamlo, and Tekturna-HCT, as well as several types of Diovan and Exforge.

According to the merits of the lawsuit published by the California Department of Justice yesterday, the bribes consisted of cash or the cost of meals, travel, or grants and gifts. Attorney General Xavier Becerra says, "Novartis is the latest company we caught cheating." Judicial proceedings began following a report that a "corruption detector" submitted to a New York court.

A "corruption detector" or “illegal reporter” or "informer" is a person who discloses, out of conscience, misconduct, alleged fraud or illegal activity occurring in the organization, even if he does not touch him.

Misconduct can be classified in several ways, for example, violation of a law, rule, legislation, or the formation of a direct threat to the public interest, such as fraud, health and safety violations, and corruption. Corruption detectors may present their allegations internally. For example, "To other persons within the accused institution" or externally "to observers or Law enforcement agencies, the media, or groups involved in breaking laws. "

Regarding the first fine, in late June 2020, the US authorities imposed on Novartis and its former subsidiary Alcon penalties in the amount of a cumulative amount of $ 345 million. According to the indictment, Novartis provided illegal profits to some of its shareholders in exchange for using or writing prescriptions for its products or for its subsidiary "Alcon".

The US Securities and Exchange Commission notes that forged books of accounts and records have been kept in connection with these profits, which accuses Novartis of not establishing adequate internal controls regarding certain aspects of the dividend distributions, and the US regulatory body estimates that the giant company has improperly favored itself. At about $ 92.3 million.

Again, to avoid trial, Novartis agreed to pay a fine of approximately $ 234 million to the US Department of Justice and an additional $ 113 million to the US Treasury.

Regarding the financial results of "Novartis" this multinational company drank a glass once in the second quarter, after it managed in the first quarter to ride the wave of the epidemic by building a good stock in anticipation of the prolonged coronavirus, as the company's financial report issued yesterday reveals that the decline in sales It was widely expected, but its size is somewhat surprising, and the generous lower than expected operating profitability added to investor disappointment.

The Rhine Basin Company talks about the stability of its business during the first half of the year, and believes that this stability continues in the direction of normalization over the rest of the year, saying, "The administration is working to lighten its growth ambitions for 2020 slightly, while raising its goal of achieving operational profitability."

The roadmap for 2020 now includes growth of about 5 percent, compared to about 5 to 9 percent, previously. It expects core operating income to increase by just over 10%, compared to about 10%, at the latest result.

The group’s revenues eroded between April and the end of June by 4 per cent, compared to an annual rate of 10.66 billion francs ($ 11.35 billion), as a result of a decrease in the revenues of its biomedical production unit by 11 per cent, to 2.16 billion francs ($ 2.37 billion). ". The main division of innovative medicines lost 1 percent, only to 9.19 billion francs (10.09 billion dollars).

Novartis notes that its ophthalmology and dermatology activities, in particular, as well as the retail sales at its Sandoz branch, were curtailed in April and May due to its prioritization of treatment structures deemed necessary in the circumstances of Covid-19. However, a normalization process began in June, but the company said, "The normalization expected for the second half of the year on the pandemic front is not yet guaranteed, given the number of new cases diagnosed on the planet, especially in the United States."

Vasant Narasimhan, CEO of the company, promised, "We are not planning to reduce our workforce due to the coronavirus." Despite this, the owners of capital abandoned the share of "Novartis" on the Swiss stock market. Near the end of the session, the share price fell 1.9 percent to 81.12 francs ($ 89.14).