Two days after AstraZeneca announced that Wang Lei, head of its China operations, is under investigation, questions are growing over the company’s role within China’s health care sector.

The British-Swedish pharmaceutical company confirmed that Wang, also AstraZeneca’s executive vice president, is cooperating with authorities, though specifics of the investigation remain unclear. The case emerges amid China’s heightened efforts to address irregularities in its health care sector.

While shares of AstraZeneca fell more than 4% on the NASDAQ exchange Wednesday, the company announced that its operations in China would continue under the current general manager’s leadership, adding that it would fully cooperate with authorities if needed.

Lin Jian, a spokesperson for China’s Ministry of Foreign Affairs, advised the public to await announcements from relevant authorities when asked about the case during a Thursday media briefing. He emphasized, however, that China welcomes foreign enterprises and will protect their legitimate rights and interests.

The company did not respond to queries about the case when contacted by Sixth Tone.

In recent years, China has increased efforts to curb irregularities in the health industry, particularly in medical insurance fraud. Among recent cases, authorities in September uncovered thousands of instances of health providers billing for gender-specific procedures performed on patients of the opposite gender. Last month, authorities also exposed a significant insurance fraud case valued at 100 million yuan ($14 million).

AstraZeneca has faced insurance fraud scandals in recent years. In 2022, 17 AstraZeneca employees were arrested for allegedly helping patients manipulate gene-testing results to claim insurance benefits for Tagrisso, the company’s lung cancer drug. The investigation eventually implicated over 100 employees in the cities of Chongqing, Shanghai, and Shenzhen, as well as Fujian and Jiangxi provinces.

Changing lanes

The investigation into Wang is a rare instance of a high-ranking executive from a foreign company in China coming under scrutiny. Wang, who started his career as a tour guide in Shanghai, joined AstraZeneca in 2013 after a 16-year stint at the Swiss health care company Roche, where he entered the industry with no pharmaceutical background.

Wang recalled his unconventional entry into the pharmaceutical industry in the ’90s, underscoring that he had no relevant experience when he first applied. “I had to submit my résumé three times before finally getting the job,” he said in an interview with the Shanghai-based outlet The Paper, crediting his strong English skills and outgoing personality for securing his initial role.

Wang said he was motivated to transition to the industry after witnessing families struggle with illness. “I believed the medical and pharmaceutical industry could help a lot of people,” he said.

After 16 years with Roche, Wang joined AstraZeneca China in March 2013, at a time when the company’s revenues were under pressure as three of its key drugs faced a “patent cliff” — losing patent protection and allowing for generic competition.

Over the last decade, his leadership has helped AstraZeneca’s China operations grow to account for more than 20% of its global revenue at its peak in 2020, driven by an aggressive localization strategy and partnerships with Chinese institutions.

According to AstraZeneca’s 2023 annual report, Tagrisso, a lung cancer treatment approved in 101 countries, generated $5.8 billion in revenue, followed by Imfinzi, another drug for lung cancer, which brought in $4.2 billion. The company generated about 13% of its global revenue from China last year, making it AstraZeneca’s third-largest market.

Active localization has become a hallmark of AstraZeneca’s strategy in China, including partnerships with China International Capital Corporation to establish an industrial fund, a regional headquarters in Shanghai, and collaborations with local governments on industrial parks.

Editor: Apurva.

(Header image: VCG)