AstraZeneca shares fall after fraud inquiry widens in China

More than £14 billion was wiped off the stock market value of AstraZeneca as investors were unnerved by reports in China of a widening investigation by the authorities.
Shares in Britain’s biggest pharmaceuticals group closed down by 928p, or 8.4 per cent, to £101.14 on the London Stock Exchange, their lowest since March, after a local media report that dozens of senior executives at AstraZeneca in China, its second-biggest market, have been implicated in an insurance fraud case.
The investigation by Chinese authorities has expanded to include the public security bureau, supervisory commission and other bodies, according to a report by Yicai Global, the Shanghai-based English language financial media outlet, citing an unnamed source.
A separate report by the media outlet Caixin this week reported that an official investigation, first made public in January 2022, targeted sales representatives for AstraZeneca’s blockbuster lung cancer ­medication Tagrisso in Shenzhen.
Responding to the share price fall in a statement after the stock market closed in London, AstraZeneca 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 co-operate with the Chinese authorities. We continue to deliver our life-changing medicines to patients in China and our operations are ongoing.”
The latest reports come after AstraZeneca revealed last Wednesday that Leon Wang, its executive vice-president for international and China president, was co-operating with a continuing investigation by Chinese authorities, in a significant escalation of the issue.
AstraZeneca has declined to comment on why Wang is under investigation or whether he has been detained.
Asked about Wang during a foreign ministry news conference last week, a spokesman said: “The Chinese government welcomes foreign companies to invest and do business in China and will protect their lawful rights and interests in accordance with the law.”
In a memo to employees last Wednesday, Michael Lai, general manager of AstraZeneca China, said the company had participated in and benefited from the development of the country and the Chinese pharmaceutical industry.
The investigations are potentially significant, as AstraZeneca has become one of the two biggest multinational pharmaceuticals companies in China, a key part of the Anglo-Swedish company’s growth over the past decade and its future growth targets.
Sir Pascal Soriot, the group chief executive who has overseen the transformation of AstraZeneca over the past 12 years, is likely to be quizzed on the situation when the FTSE 100 company posts its third-quarter trading update next week.
AstraZeneca employs about 16,000 of its 90,000 global workforce in China and this year designated Shanghai, where AstraZeneca’s China business is based, as one of its five global strategic hubs.
China generated almost $5.9 billion of sales last year, accounting for about 13 per cent of AstraZeneca’s group sales.