(Oct 31): AstraZeneca plc’s China president Leon Wang is under investigation by the country’s authorities, as Beijing’s intensifying regulatory scrutiny on the British drug giant reaches its senior ranks.

Wang is cooperating and, if requested, Astra too will “fully cooperate with the investigation”, the British company said without revealing further details of the probe. 

Wang’s involvement is a significant escalation of China’s probe into the company, after police detained multiple current and former Astra employees for questioning earlier this year over potential illegal activities. It’s a sign that Beijing is widening its scrutiny of Astra’s operations in mainland China, a worrying development for the drugmaker which counts on the country for 13% of total revenue. 

Shares of Astra fell by as much as 5.5% on Wednesday in London following the announcement, the most in seven weeks.

The company said its Chinese arm will continue under the leadership of general manager Michael Lai.  The world’s second-biggest economy is an important market for AstraZeneca, generating revenue of US$5.9 billion (RM25.84 billion) in 2023, according to its annual report, more than the UK and Germany combined.

Wang has been credited for much of its success in China, where his tenure coincided with a period of double-digit growth. The company derived as much as one-fifth of its total revenue from China as recently as 2020 and it has been for years the biggest pharmaceutical firm by revenue there. 

Astra has ridden China’s sweeping healthcare regulatory reforms to speed up approvals for life-saving innovative drugs, and offered deep price cuts to make its treatments eligible for reimbursement through state medical insurance. This helped significantly expand volumes and sales of its cancer medicines. 

In early 2022, Chinese police and health regulators made arrests and summoned some executives over allegations that included tampering with patients’ gene testing results to fraudulently claim reimbursement from state medical insurance for its cancer drugs.  

The investigation has continued since then, with a focus on suspected insurance fraud surrounding cancer drug Tagrisso and more Astra employees being taken away for questioning, according to local media reports, including the former general manager for its China oncology business. 

Bloomberg earlier reported the probes that had led to multiple arrests were related to the company’s collection of patient data, and whether that potentially infringed China’s data-privacy laws. The authorities were also looking into the possible importation of drugs that hadn’t been approved for distribution in China.

Astra is now among a slew of international companies struggling with legal compliance issues in China as Beijing doubles down on enforcing laws governing everything from data collection to national security and the proper use of state funding. 

Last year, five local employees of US due diligence firm Mintz Group were detained and the company was later fined for what authorities said was illegal data collection. In a separate case, an executive and two former employees from advertising company WPP Plc were arrested in China in relation to a bribery investigation.

Wang’s investigation is a sharp turn for a star of the local pharmaceutical industry, who climbed into its top ranks from humble beginnings as a tour guide after college. He has previously worked at Roche Holding AG and joined Astra in 2013, according to local media outlet The Paper. 

After being promoted to run the firm’s China business, Wang also oversaw expansion of Astra’s partnership with local governments to advance Beijing’s Healthy China 2030 blueprint. These partnerships sought to improve access to healthcare through initiatives like early diagnostics, homegrown medical device innovation and building pediatric asthma nebulisation centres at public hospitals.

Uploaded by Tham Yek Lee