AstraZeneca’s chief executive has said it is taking investigations by Chinese authorities into its business in the country “very seriously” and insisted it is committed to China in the long run.
Authorities are thought to be investigating the importation of two cancer treatments manufactured by Britain’s biggest pharmaceutical company into China.
Pascal Soriot, the AstraZeneca chief executive, said: “We take the matters in China very seriously. If requested, we will fully cooperate with the authorities.”
Soriot, Britain’s best-paid boss of a FTSE 100 company, who is in line for an £18.7m package this year, denied there had been a lack of oversight by headquarters, but conceded that in a large workforce of more than 16,000 in China “unfortunately some will be tempted” to maximise sales.
AstraZeneca has strengthened its 200-plus compliance team in the country, introducing field-based compliance officers, and uses artificial intelligence to scrutinise sales staff’s expense reports to identify any misbehaviour, he said.
“We are at a very early stage,” he said. “We have very little information because we haven’t been approached as a company so far. We remain very committed to China, we are in China for the long run, it’s a very important market for us” as it has “a lot of patients” and an “important part of innovation in the industry,” referring to research & development of new drugs. The company still plans to build a $450m factory in the country.
Batting off suggestions of a potential spin-off of the China division, Soriot said: “I don’t think we have anything to regret. We never said we wanted to spin off the business in China.”
The company’s share price has fallen over the past fortnight, since it announced that its China president, Leon Wang, who was executive vice-president for international, was stepping back because he is under investigation by Chinese authorities.
Alongside Wang, two former and two current executives have also been detained over allegations of illegally importing oncology medicines. AstraZeneca’s China business is now being run by Michael Lai, the general manager.
Chinese authorities are thought to be investigating the importation of AstraZeneca’s cancer drug Imjudo, which has not been approved for sale in China, as well as shipments of Enhertu between Hong Kong and the mainland.
Enhertu is another cancer treatment, which was first licensed in Hong Kong and then in mainland China. Sources said shipments may have been made from Hong Kong before it was approved on the mainland.
The investigations concern the five individuals, and not the company itself.
There has been a wider crackdown by Beijing on international drugmakers and hospitals in recent years as part of an anti-corruption campaign, aimed at bringing rising medical spending under control.
AstraZeneca’s market value fell by £14bn in a single day a week ago 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. This relates to a separate issue dating back to 2021.
AstraZeneca said that “to the best of the company’s knowledge, the investigations include allegations of medical insurance fraud, illegal drug importation and personal information breaches”.
Soriot’s remarks came as AstraZeneca lifted its 2024 revenue and profit forecasts, and announced it was spending $3.5bn (£2.7bn) on research and development and manufacturing of cancer and other drugs in the US, its biggest investment globally in at least a decade.
The company reported a 21% rise in revenues to $13.6bn between July and September, catapulting pre-tax profit 24% higher to $1.8bn, stripping out currency moves. In China, sales grew by 15% to $1.7bn in the third quarter.
The drugmaker now expects 2024 revenues and core earnings a share to increase by a high teens percentage.
Revenues in the US, its biggest market, climbed by 23% to $6bn – 44% of the company’s total sales.
The company is still in negotiations with the UK government over expanding its vaccine site in Speke, near Liverpool, with talks centring on the amount of Treasury funding. Soriot said another issue, also raised by other industry leaders, was access to new medicines on the NHS. “If you don’t think your products are going to be reimbursed and used by patients, of course it’s a less attractive environment.”
