AstraZeneca’s shares took a significant hit on Tuesday, plummeting over 8% and erasing £14 billion from the market value of the UK’s largest pharmaceutical company. This decline follows alarming reports that numerous senior executives within its China unit may be implicated in a widespread insurance fraud investigation.
In the first nine months of 2024, AstraZeneca’s stock had already faced challenges, but this latest news has intensified pressure on the company. Analysts at Deutsche Bank described early data from AstraZeneca’s experimental weight loss drug as “somewhat underwhelming,” further contributing to the stock’s downturn.
The company’s market capitalization now stands at approximately £156 billion. The turmoil began last week when AstraZeneca announced that Leon Wang, its president in China and executive vice-president for international markets, was under investigation by Chinese authorities. Wang is reportedly cooperating with the inquiry, which has expanded to involve multiple agencies, including the public security bureau and supervisory commission.
According to financial media outlet Yicai, dozens of AstraZeneca executives in China are now under scrutiny. The investigation is part of a broader crackdown on alleged medical insurance fraud involving the company’s cancer drug, Tagrisso. Reports indicate that employees may have falsified genetic test results to enable ineligible patients to claim insurance for medications not approved for distribution in mainland China.
An AstraZeneca spokesperson stated, “As a matter of policy, we do not comment on speculative media reports related to ongoing investigations in China. If requested, we will fully cooperate with the Chinese authorities.” The company emphasized that it continues to deliver essential medicines to patients in China and that operations remain unaffected.
This is not AstraZeneca’s first encounter with legal troubles in China. In September, it was revealed that five current and former employees were detained as part of an investigation into data privacy violations and the importation of unlicensed drugs. These detentions have raised serious concerns about compliance within the company’s operations.
Despite these challenges, AstraZeneca has made substantial investments in China, including plans for a $450 million factory and recent acquisitions like Gracell Biotechnologies for $1.2 billion. The Chinese market is crucial for AstraZeneca, contributing significantly to its revenue.
As investigations continue and share prices remain volatile, stakeholders will be closely monitoring developments surrounding AstraZeneca’s operations in China and their potential implications for the company’s future.
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