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AstraZeneca’s sales in China have been hit by the arrest of the country’s top official as hospitals there avoid buying drugs from the company, company officials said.
British pharmaceutical executives expect a “clear” hit to their profits in China following the arrest of President Leon Wang and several other senior executives, two people familiar with the matter said. It is said that there is Sales of oncology drugs, which are at the center of Chinese authorities’ investigation, have been particularly affected, people familiar with the matter said.
AstraZeneca declined to comment on the ongoing investigation or how much it would affect sales.
The detention of China’s most prominent pharmaceutical executive has shocked the industry. Wang’s arrest came after several hospital executives were detained as part of a broader anti-corruption campaign that the Chinese government says targets exorbitant medical costs.
Wang’s arrest marks a dramatic reversal of fortunes for AstraZeneca in China, the largest foreign drugmaker by revenue. Wang had been praised by state media for helping strengthen the country’s pharmaceutical and biotechnology sectors by investing in start-ups and building manufacturing capacity and research facilities.
It is unclear at this stage how much of a hit AstraZeneca’s sales will take, with the figure to be released in the company’s next financial report. But one executive told the Financial Times: “The impact on sales is already very clear.”
AstraZeneca generated sales of $5.9 billion in China in 2023, accounting for 13% of total sales. Last month, the company raised its full-year outlook for global sales and profit growth.
“Doctors are reluctant to interact with our salespeople or prescribe drugs. They think we have too many problems and choose other options, especially drugs made in China.” I would say yes,” the AstraZeneca executive added.
There are early signs that the cancer drugs Tagrisso and Imfinzi are particularly severely affected. One of the people familiar with the company’s position said the company hopes sales of Enherz will help it weather the crisis because it is considered the best drug on the market for certain types of breast cancer. It is said that there is
In its latest financial report, AstraZeneca cited “significant uptake in China” after Enherz’s commercial launch at the beginning of the year. Chinese authorities announced in late November after Wang’s arrest that the drug would be included in the national health insurance system.
Wang’s arrest caught AstraZeneca by surprise. British leaders initially blamed lower-level employees in China for the scandal, following reports that several salespeople had been arrested for illegally importing the cancer drug Imjud.
Chief Executive Officer Sir Pascal Soriot said in an interview with Bloomberg News in September that only a “small number of employees” were affected and that the company had a “strong compliance policy.” said.
But then Wang was arrested in late October as authorities launched an investigation into how much senior management knew about the company’s alleged wrongdoing in its sales practices.
“At first, Mr. Soriot believed that only a few of his thousands of salespeople had been affected by fraud. But when Mr. Leon was taken into custody, he realized that the situation was more complicated than that. “We realized that,” said a person close to the CEO.
AstraZeneca executives have not received an official briefing from Chinese authorities and have not been able to contact Mr. Wang, the people said. The company said the investigation was related to the sale of Imjud in China, where the drug has not been approved, as authorities also detained Ying Ming, the former head of AstraZeneca’s oncology department, for alleged violations. I concluded that there is.
“We have not received any explanation. We can only assume that this is related to Imjud as other people are also involved,” one source said.
Separately, AstraZeneca is also facing a public relations crisis after a number of its salespeople were convicted of health insurance fraud in the past two years. The court found that genetic test results had been falsified to ensure that lung cancer patients were eligible to receive Tagrisso under the National Insurance reimbursement scheme.
AstraZeneca’s stock price has fallen more than 8% since the company revealed Wang’s detention in late October.
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Barclays analyst Emily Field said investors were particularly upset because they knew Mr. Wang, who attended the earnings call. But now she believes the consensus is that there was an overreaction. “No one thinks AstraZeneca will be kicked out of China. They will probably be fined in the low to mid-billion range,” she said.
Rival FTSE 100 group GSK was fined £297m by Chinese authorities in 2014 following a bribery scandal.
AstraZeneca has appointed Iskra Reik to manage its China operations through the crisis, and Pascal sees him as a “troubleshooter”. During her time in charge of Europe for AstraZeneca, she had to deal with a disgruntled EU over problems with vaccine production during the coronavirus crisis. A person close to Soriot, the chief executive, said he sees her as someone he can trust and hopes to see her as a “newcomer” in China.
But Chinese company insiders have questioned the ability of foreign executives to navigate sensitive political issues at a time when the company is under such intense scrutiny from authorities.
Company officials are concerned about whether business will be able to return to normal. “It’s very difficult for AstraZeneca to find a way out of this situation,” one person said.
