AstraZeneca shares fall on report of potential China probe fallout

AstraZeneca AZN-Q shares on Tuesday recorded their worst day since March 2020 after a report that dozens of the drugmaker’s senior executives in China could be implicated in the largest insurance fraud case in the country’s pharma sector in years.

The Anglo-Swedish company, which has invested heavily in the world’s No. 2 pharmaceuticals market, said last week that its China president, Leon Wang, was under investigation and that the drugmaker would cooperate with authorities.

AstraZeneca had not said what the investigation was about or whether Wang, who grew up in China and has been with the company for more than a decade, had been detained by authorities.

The investigation by Chinese authorities has now expanded to include the public security bureau, supervisory commission and other relevant bodies, financial media company Yicai reported on Tuesday, citing a person familiar with the matter.

The report added that medical representatives have been previously found to fake prescriptions for AstraZeneca’s lung cancer drug, Tagrisso, to allow patients to buy it through the state’s medical insurance program.

“As a matter of policy, we do not comment on speculative media reports including those related to ongoing investigations in China,” AstraZeneca said.

“If requested, we will fully cooperate with the Chinese authorities,” the company added and said that its operations and delivery of medicines were ongoing in China.

AstraZeneca is one of the biggest multinational drugmakers in China, which accounts for 13% of its overall revenue. It said last year it would build a $450 million factory in the country and has also signed several licensing deals with Chinese firms.

However, AstraZeneca’s more than 30-year presence in the country has not been without challenges over prescriptions and sales.

In 2022, Chinese authorities had summoned AstraZeneca officials over an investigation of suspected medical insurance fraud by its employees, and had ordered that the drugmaker tighten its marketing activities.

The FTSE 100 component fell as much as 8.4% on Tuesday to hit a seven-month low of 10,118 pence and was the second-biggest percentage loser on the blue-chip index.