Anticorruption law changes drugmakers, salespersons

Lee Hye-seon  Published 2017.09.28  17:14  Updated 2017.09.28 17:14


The Act on Prohibiting Improper Solicitation and Graft has brought about enormous changes on the Korean society, restricting the treatment of meals to 30,000 won ($26), gifts to 50,000 won and cash donations to 100,000 won. How has the act, called the “Kim Young-ran law” after its drafter, changed the pharmaceutical industry in the past year, then?

“The marketing people have adopted faster than expected because of various existing regulations such as Monopoly Regulation and Fair Trade Act, CP, the dual punishment of kickback exchangers and the two strike-out of bribers,” said a PR manager at a large drugmaker. “However, the PR department has become more cautious to spend. Moreover, the relatively small budget made us feel burdensome to offer dinners.”

A PR official at a smaller pharmaceutical company also said the number of dinner meetings has indeed fallen.

“Previously, we had treated people to dinner at least two or three times a week, but now we have only one such a meeting a week. Instead, we have far more lunch meetings,” he said. “Journalists also don’t stay long in dinner meetings probably to meet deadlines or other reasons.”

People experiencing greatest difficulties are those responsible for dealing with government employees. These public officials don’t want them even to bring a cup of coffee and are reluctant to meet them.

“I sent holiday gifts that didn’t exceed the upper price limit, but all of them were turned back. These officials don’t want to be embroiled in controversy. Even before the act went into effect, public servants had received not a single cup of coffee. The environment to entertain government employees has turned unfavorable,” said a businessman at another large drugmaker.

Marketing environment for the pharmaceutical industry has also changed. As general hospitals have taught their staff members sufficiently, professors are strictly abiding by the law. Salespeople, well aware of such an atmosphere, tend to refrain from controversial marketing beyond official symposiums and product demonstrations.

Spending on holiday gifts on Korean Thanksgiving Day and other traditional festivities have also sharply declined. That forced businesspeople to use relatively cheaper gifts or narrow their targets to a small number of recipients. As a result, the marketing officials had to wage a war of nerves to know what gifts their competitors gave and to whom.

However, the law has put greater burdens on businesspeople because they have to meet sales targets with smaller resources. The budgets for the marketing division and promotions have dropped. Their support for academic conferences has their limits. They have to set up new marketing strategies,

Some say the law has taken its root now that one year has passed since its introduction. At first, related people tended to refrain from even activities not forbidden by the law. Now, however, such frigid atmosphere has eased somewhat.

“Because the act applies not only to pharmaceutical industry but most other areas, it has settled down well. Initially, doctors and druggists would not even meet with salespeople. But they appear to have become more comfortable meet marketers or making lectures. They are still careful but behave far more comfortably than before,” said an industry executive.

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