LONDON – AstraZeneca’s (NASDAQ: AZN) China president Leon Wang, who was detained last month by Chinese authorities, is in touch with a lawyer but the company has very little information about the case, its CEO said on Tuesday.
Pascal Soriot spoke during a media briefing after the drugmaker released third-quarter results. Though the company lifted its 2024 outlook, its shares fell as much as 1.4% before ending the day flat, reflecting market unease with the company’s ongoing issues in China, analysts and two shareholders said.
Those issues dominated a call with analysts in the afternoon, reflecting worries that – two weeks after Wang’s arrest – the second biggest UK-listed company worth nearly $200 billion is still in the dark over the situation.
Soriot fielded about 10 questions on the Chinese authorities’ investigation but had little to share. “We are trying to be as transparent as we can but we have very limited information”, he said.
Last week, AstraZeneca said that although it did not know the reason for Wang’s detention, it did not believe it was linked to a large health insurance fraud case involving the company.
“We are in the early stage and we don’t have all the detailed information that will enable us to draw conclusions as it relates to what happened,” said Soriot. “In fact we have very little information” about Wang’s case and AstraZeneca has not been approached by the Chinese government about it, he added.
In the past three months, AstraZeneca’s shares have dropped about 23%, in part due to market concerns about multiple investigations in China.
The company has invested heavily in China, the world’s second-largest pharmaceuticals market after the United States, with its Chinese business contributing 13% of group revenue last year.
AstraZeneca (NASDAQ: AZN) said last week its chief financial officer had briefed analysts on November 6 to try to quell concerns about a fraud probe expanding in China following a report by financial media company Yicai a day earlier that led its shares to plunge more than 8%.
The ongoing Chinese probe into alleged insurance fraud began three years ago and initially involved a small number of employees. It later escalated and some 100 now former employees were sentenced to jail time, the company said.
Asked about oversight of its operations in China, Soriot said the Anglo-Swedish drugmaker had 18,000 employees there.
“You really cannot police 18,000 people from headquarters,” he said, describing “very strong compliance policies” in the country with the local head of compliance and legal counsel reporting to their respective global chiefs in the company.
He added the company was taking steps to strengthen compliance further and remained “very committed to China”.
Over the past several years, AstraZeneca (NASDAQ: AZN) has implemented systems to monitor the compliance of its sales representatives and hired “field-based compliance officers” who identify “early misbehaviors”, said Soriot. Regional sales directors are also now rotated on a regular basis, he added, “so people don’t have a chance to become too connected to their local environment”.
