AstraZeneca shares tumbled on Tuesday wiping £14bn off the value of Britain’s biggest drug maker, after a report that dozens of senior executives at its China unit could be implicated in an insurance fraud case in the country’s pharmaceutical sector.
Also putting pressure on the share price, early data on AstraZeneca’s experimental weight loss pill published on Monday was described as “somewhat underwhelming” by analysts at Deutsche Bank, who reiterated their “sell” rating on the stock.
Shares in the FTSE 100 company fell by more than 8%, taking the market value down to about £156bn.
Last Wednesday, AstraZeneca announced that its China president, Leon Wang, was standing back because he is under investigation by Chinese authorities. Wang, who was also the company’s executive vice-president for international markets, “is cooperating with an ongoing investigation by Chinese authorities”, the company said. Its China business is now being run by Michael Lai, the general manager.
The Chinese financial media firm Yicai reported on Tuesday that dozens of AstraZeneca executives in China were now being investigated by Chinese authorities, and that the inquiry had expanded to include the public security bureau, the supervisory commission, and other organisations.
An AstraZeneca spokesperson said: “As a matter of policy, we do not comment on speculative media reports including those related to ongoing investigations in China. If requested, we will fully cooperate with the Chinese authorities. We continue to deliver our life-changing medicines to patients in China and our operations are ongoing.”
It emerged in September that five current and former AstraZeneca employees had been detained by Chinese police as part of an investigation into possible breaches related to data privacy and importing unlicensed medications. It is now understood that eight to nine current or former staff were detained.
The detentions took place earlier this summer, and targeted Chinese citizens who marketed cancer drugs for the oncology division of the British drugmaker, Bloomberg first reported.
Police are investigating whether AstraZeneca employees were involved in importing a drug meant to treat liver cancer, but which had not been approved for distribution across mainland China.
The investigation, which is being led by police in the southern region of Shenzhen, is also examining the way the company collected patient data, and whether it may have broken China’s privacy laws.
China has become a big market for AstraZeneca, and it has invested heavily in the country, announcing plans last year to build a $450m (£350m) factory and signing licensing deals with Chinese firms. It acquired the Shanghai-based Gracell Biotechnologies, which develops cell therapies for cancer and autoimmune disease, for $1.2bn earlier this year.
A decade ago, AstraZeneca’s UK rival, GSK, had to pay a fine of 3bn yuan (£297m) to the government in Beijing, after being found guilty of bribery by a Chinese court.
