Astrazeneca bruised by China’s anti-corruption drive14 Oct 2023 06:03
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.”
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