AstraZeneca Shares Plunge 7.22% Amidst Unfolding Insurance Fraud Scandal

Mover TrackerTuesday, Nov 5, 2024 5:31 pm ET

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On November 5, AstraZeneca (AZN) experienced a 7.22% decline, with its intraday low reaching levels not seen since March 2024.

Recently, a significant issue has unfolded involving AstraZeneca and allegations of insurance fraud. As of October 30, Wang Lei, AstraZeneca China’s president, is confirmed to be cooperating with police investigations. This development has cast a shadow over the future of AstraZeneca's operations in China.

For the past three years, multiple regions, including Shenzhen, Fujian, and Jiangxi, have been embroiled in what has been termed AstraZeneca's "insurance scam rings." Employees within the company have pointed fingers upwards, indicating systemic compliance risks within the organization. This has gradually involved managers at various hierarchical levels from regional directors to core executives, with Wang Lei ultimately unable to evade the fallout.

To date, several AstraZeneca employees have been sentenced for fraud, with the main perpetrators receiving sentences exceeding ten years. A person familiar with the case highlighted that this is the largest insurance fraud case involving a pharmaceutical company in recent years.

This scandal primarily revolves around the manipulation of gene testing results to increase the sales of Tagrisso, a prominent lung cancer medication. It's alleged that employees collaborated with gene-testing companies to fabricate positive test results, allowing more patients to qualify for insurance reimbursements. This situation underscores significant compliance management issues within the company, driven by immense sales target pressures on pharmaceutical representatives.

A reliable source disclosed evidence that numerous gene testing reports handled by AstraZeneca were crudely altered, with identical genetic similarities noted after the fourth decimal point in many reports. The extent to which these practices were condoned or ignored within AstraZeneca will significantly influence the case's outcome.

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