On November 12th local time, Pascal Soriot, the global CEO of AstraZeneca, publicly responded for the first time to the detention of Wang Lei, the company's China regional president. Suboko said, "Wang Lei is discussing with his lawyer, and the company does not have any new information about the case
Suboko made the above response after the release of AstraZeneca's third quarter financial report. He also said, "We attach great importance to the issues in the Chinese market and are taking measures to further strengthen compliance
However, he denied that AstraZeneca headquarters lacked supervision over compliance. He said that the company has over 16000 employees in China, unfortunately some people may be tempted to maximize sales.
He also stated that AstraZeneca has strengthened its compliance team of over 200 people in China and introduced resident compliance officers to use artificial intelligence to review sales personnel's expense reports and monitor any inappropriate behavior.
It is worth noting that on November 12th, the National Health Commission held a symposium for pharmaceutical companies, inviting Chinese and foreign-funded enterprises to participate together. The content emphasized at the meeting also included "compliant marketing" and other aspects.
According to industry insiders, on the second day after AstraZeneca announced that Wang Lei was under investigation, executives from the company's headquarters went to China to handle related issues, but the specific negotiation content is unknown.
Subobo emphasized that the company remains committed to the Chinese market for a long time, and its previous plan to build a $450 million factory in China has not changed yet. He also stated that AstraZeneca has never publicly discussed the option of splitting its Chinese business.
AstraZeneca released better than expected third quarter financial report on November 12th and raised its annual sales and profit expectations. According to the financial report, AstraZeneca's third quarter revenue reached $13.6 billion. Among them, sales in the China region increased by 15% to 1.7 billion US dollars, accounting for approximately 12% of the company's total revenue.
The company claims that this is due to strong demand for its oncology and rare disease drugs. In the third quarter, AstraZeneca's oncology division saw a 21% increase in sales to $5.6 billion, accounting for over 40% of total revenue. The two drugs that have made significant contributions to the growth of AstraZeneca's oncology drug division are Tagrisso and Enhertu.
However, since the end of last month, AstraZeneca's stock price has fallen by over 10%, mainly due to the uncertainty faced by the company's China business.
On the evening of October 30th, AstraZeneca announced that its CEO in China, Wang Lei, is currently under investigation. On November 6th, AstraZeneca held a temporary investor meeting to disclose the latest developments regarding Wang Lei's "detention". However, AstraZeneca emphasized that the relevant Chinese departments are currently only investigating individual executives of the company and do not involve the company's business.
According to the latest disclosure by AstraZeneca at its investor meeting on November 6th, in addition to Wang Lei, the company has two current and former executives under investigation for illegal imports of drugs from Hong Kong to mainland China.
The first financial reporter learned from an institutional investor that AstraZeneca also emphasized that although China has always been the company's main growth driver, growth has slowed down. The company reminds investors that the profit margin in the Chinese market is limited by some regional specific factors, including approval time, national medical insurance catalog negotiations, centralized volume based procurement, and the increase in sales and marketing expenses related to drugs.
At the same time, AstraZeneca is increasing its investment in the US market. The company recently announced that it will invest $2 billion to expand the construction of factories for research and production of biopharmaceuticals and cell therapies in the United States. Subobo stated that the company "supports the United States' leadership in healthcare innovation" and strengthens the development of cutting-edge therapies.
AstraZeneca now expects its total investment in the United States to reach $3.5 billion by the end of 2026, with new investments located in production bases in Maryland, Texas, and California.