AstraZeneca’s stock price decreased by as much as 8% on Tuesday following news that top executives in China are embroiled in an insurance fraud investigation, according to reporting from Chinese financial media Yicai.
In a statement on the share price movement, AstraZeneca said it does not comment on “speculative media reports” including those related to ongoing investigations in China.
“If requested, we will fully cooperate with the Chinese authorities,” AstraZeneca said. “We continue to deliver our life changing medicines to patients in China and our operations are ongoing.”
Tuesday’s news comes after AstraZeneca announced last week that its China President Leon Wang was under investigation by Chinese authorities—though the pharma at the time did not reveal the reason for the probe. The company’s operations in the country are continuing under General Manager Michael Lai.
AstraZeneca’s stock has taken an 11% price hit since the first announcement of Wang’s investigation last week, according to BMO Capital Markets analyst Etzer Darout.
Citing a source familiar with the matter, Yicai reported that “dozens” of senior executives have been implicated in an insurance fraud case, with the probe now involving China’s public security bureau and supervisory commission, among other government agencies. The alleged fraud appears to be linked to an AstraZeneca medical representative that faked prescriptions for cancer drug Tagrisso, allowing patients to purchase it through insurance.
The staff in question allegedly forged genetic test results and even colluded with testing firms to forge positive reports, according to Yicai.
China is a major market for AstraZeneca. In 2023, the company’s Chinese revenue increased 7% year-over-year to nearly $5.9 billion—still comfortably behind the U.S. and European markets, but far ahead of other countries. Tagrisso has experienced “continued demand growth” in China, as did the breast cancer drug Enhertu.
AstraZeneca has made heavy investments in China incuding a $450 million commitment in April 2023, earmarked for a factory to manufacture inhalers for chronic obstructive pulmonary disease.
The company has also entered into partnerships with several Chinese biotechs in recent months, including a licensing deal with CSPC Pharmaceutical Group for its preclinical lipid-lowering drug candidate for dyslipidemia. The contract has a potential maximum value of $2 billion, plus royalties on the commercial product.
In November 2023, AstraZeneca also entered into an exclusive licensing agreement with Shanghai-based Eccogene, giving the pharma access to an early-stage GLP-1 receptor agonist for type 2 diabetes and obesity, as well as other cardiometabolic indications. This partnership has started to provide a return on investment for AstraZeneca, which on Monday announced that the candidate resulted in a 5.8% weight reduction after four weeks of treatment, as well as a relatively clean safety profile.
AstraZeneca is scheduled to release its third-quarter 2024 financial results on Nov. 12.
