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AstraZeneca has said that an anti-corruption investigation launched by China in the healthcare sector has hit prescription volumes and access to doctors.
The FTSE 100 pharmaceuticals company, which is the biggest multinational drug group operating in the world’s second-largest economy, issued the warning in an “aide memoire” before its third-quarter trading update next month.
President Xi’s administration intensified a clampdown on bribery, embezzlement and fraud across the country’s healthcare sector in August. Hospital bosses and chief executives of local drug companies have been detained, pharma company access to hospitals has been curtailed, share prices have been hit and initial public offerings have been pulled.
Beijing’s campaign has created further uncertainty for overseas drug companies active in the country. AstraZeneca has grown quickly in China over the past decade, with the country accounting for 13 per cent of its $44.3 billion total group sales last year, up from 5 per cent a decade ago.
Underlining the growing importance of China to AstraZeneca’s future, Leon Wang, who heads its China operations, vowed in May that it would be a patriotic company that “loves the Communist Party and loves the country” during celebrations to mark the 30th anniversary of AstraZeneca in China.
In the note to investors and analysts AstraZeneca said it anticipated that the corruption investigation would “benefit compliant companies in the longer term” but said “the company has seen a reduction in access to physicians as well as some negative impact on prescription volumes. These investigations were not anticipated at the time of first-half results [in July].”
Analysts at Stifel told clients that the expectation had been for a return to growth in China this year for AstraZeneca, adding: “The statement underpins possible unexpected consequences on the business impacting the end of the third quarter and possibly fourth quarter.”
Was this post meant for AZN message board? Just checked AZN board, couldn’t see it posted.
Or, is there relevance to HCM?
Sorry Amones, yes it was, apologies for the lack of context
I thought it was interesting given AZ's tie-up with HCM. Not directly related of course but I thouigh the background iswas interesting and relevant
What price did you sell out davey..lol
Haha well I am buying again at the moment ;o-)
It cant be anymore than 20 posts since you were selling at 200p or thereabouts, now at 300p you are buying ?
What are you doing 1pencil? are you buying?
This has understandably had a good run….if it keeps going it will be around 375p at PDUFA date.
I wonder when some more significant profit taking will set in?
No, and this is why -
'What are you doing 1pencil? are you buying?'
HK seems to be ignoring the China regulatory activity….or atleast allowing optimism about global revenues for HCM to override that headwind.
It has recovered opening losses to less than 1% fall compared to 6-8% in UK/US yesterday.
Bodes well….but I would not be surprised to see some resistance / profit taking happen ahead and after the PDUFA decision…..
Perhaps its the weaker players that will ultimately lose out, hence long/short strategy mentioned below?
Astra mentioned it would be a benefit in the longer term
Strange choice of names 'Junshi' at least in Japanese
Corruption reviews will impact all as it is aimed as much at the administration as the pharma cos.
However we can hope that it will affect specialist innovative younger companies less. Generics and easily substituted (cheap?) products would appear more susceptible. I would hope that Drs will choose to use innovative more effective products regardless of price/corrupt practices by competitors (I may be being naive).
Not convinced Jatw, we have had so many 'events' like this which turned out to be non-events it makes me sceptical, we can all watch the share price go down then pick from a selection of 'events' but no one really knows if that is accurate or not.
The only thing which has made a notable difference revolves around global interest rates coupled with China economy, Hutchmed tanked after rates started going up and recovered almost back to where it started following Covid exit by China.
We also know short borrowing jumped significantly around this time, look at the spike in puts ratio, this was well planned by those moving the chess pieces imo
https://images.fintel.io/us-hcm-put-call-ratio.png
Here's the Crest loan data covering that period, borrowing went up hand in hand with put ratio, this was well planned organised imo.
Jun-22 2.90%
May-22 3.17%
Apr-22 4.15%
Mar-22 6.72%
Feb-22 6.69%
Jan-22 7.42%
Dec-21 5.79%
Nov-21 3.37%