THE Shanghai Stock Exchange has urged bankers to pay close attention to the marketing practices of Chinese drug and medical equipment makers seeking initial public offerings (IPOs) amid an escalating anti-corruption drive in the sector, sources said.

The bourse asked investment bankers and lawyers to ensure drugmakers’ compliance and legitimacy in sales and marketing activities, according to an internal publication the exchange sent to bankers in late July that was reviewed by Reuters.

Two banking sources familiar with the issue confirmed the information. The Shanghai exchange declined to comment.

The guidance comes as China in late July launched an anti-graft campaign, targeting the practice of salespeople bribing doctors in drug and medical equipment sales.

Under the stepped-up crackdown, a growing number of healthcare companies are shelving their IPO plans and listed medical firms also saw their shares slump in the past two weeks.

Bankers should carefully examine if the company, controlling shareholders or actual controllers conduct bribery in marketing activities, the exchange said in the publication.

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“Sales and marketing fees are complicated and there could be hidden expenses,” the bourse said.

The bourse also asked bankers to check the authenticity of the marketing expenses and urged companies to fully disclose information in their prospectus. REUTERS