AstraZeneca beat third-quarter expectations and lifted its guidance Tuesday, and AstraZeneca stock reversed an earlier dip amid the ongoing criminal probe in China.
The company confirmed its China president, Leon Wang, has been arrested and "a number of individual investigations" are ongoing into current and former AstraZeneca employees. Allegations include medical insurance fraud, illegal drug importation and personal information breaches.
In the company's earnings release, Chief Executive Pascal Soriot said AstraZeneca is taking the allegations in China "very seriously" and will "fully cooperate with the authorities." He doesn't believe the company itself is under investigation.
"We remain committed to delivering innovative life-changing medicines to patients in China," he said in the written statement.
On today's stock market, AstraZeneca stock rose 0.6% to 65.19, reversing from an earlier dip.
AstraZeneca Faces China Allegations
AstraZeneca has worked hard to grow its business in China. The company noted it's seeing higher demand in China following the launch of Enhertu in breast cancer treatment earlier this year. Other cancer drugs, Zoladex and Orpathys are experiencing improving demand.
But the oncology segment is getting the most attention from authorities in China. According to the Telegraph, authorities claim the executives smuggled cancer drugs into the country and altered genetic tests so some patients could receive insurance coverage for Tagrisso, a lung cancer drug.
On Nov. 7, AstraZeneca stock crashed more than 7% after a report indicated dozens of employees could have been involved, Reuters reported.
"As a matter of policy, we do not comment on speculative media reports including those related to ongoing investigations in China," AstraZeneca said in a news release that day.
China accounted for more than 12% of AstraZeneca's sales in the third quarter. Sales in the country grew 15% to $1.67 billion, while sales in other emerging markets jumped 16% — or 31% in constant currency — to $1.75 billion.
AstraZeneca Sales And Earnings Beat Forecasts
Across all products and regions, AstraZeneca's sales popped 18% to $13.57 billion. That beat calls for $13.08 billion, according to FactSet. Excluding the impact of exchange rates, sales rose 21%.
The company also earned $2.08 per share, growing 20% to top AstraZeneca stock analysts' forecast for $2.04. In constant currency, AstraZeneca's earning advanced 27%.
On a strict, as-reported basis, sales from the company's big cancer treatment division surged 19% to $5.57 billion. Enhertu was a big part of that, generating $361 million in sales, growing 36%. AstraZeneca partners with Daiichi Sankyo on Enhertu.
Trailing that, the cardiovascular, renal and metabolism segment generated $3.16 billion, up 18%, and respiratory and immunology sales climbed 26% to $1.96 billion. Rare disease drugs brought in $2.15 billion, while vaccines and immune therapies accounted for $460 million in sales.
The company hiked its guidance for the year and now expects both revenue and core earnings per share to increase by high-teens percentages. That's up from AstraZeneca's previous call for a midteens percentage for both measures.
AstraZeneca also it will invest up $3.5 billion in the U.S. by the end of 2026 to expand the company's research and manufacturing footprint. That includes $2 billion of new investment, creating more than 1,000 new jobs.
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