Market Turmoil: AstraZeneca Shares Plummet Amid Chinese Investigation
£14 Billion Wiped Off Market Value in a Single Day
AstraZeneca Plc’s stock price took a drastic hit in London, erasing a staggering £14 billion ($18 billion) of market value, as concerns escalate over a Chinese probe into the UK-based pharmaceutical giant. The sudden decline was triggered by a report from the Yicai news service, which sent traders scrambling to offload their shares.
Company Remains Tight-Lipped Amid Investigation
AstraZeneca has chosen not to comment on the “speculative media reports” surrounding the ongoing investigation in China. However, the company has pledged to “fully cooperate with Chinese authorities” if requested. Despite the lack of transparency, the stock’s losses continued to mount during afternoon trading, ultimately closing down 8.4% – its steepest one-day decline since March 2020.
Analysts Weigh In: Is the Selloff Overdone?
BMO Capital Markets’ Etzer Darout believes the selloff may be an overreaction, citing a “sell first, ask questions later” mentality among investors. While the probe has undoubtedly created uncertainty, Darout suggests that AstraZeneca’s stock may have been oversold.
Local President Under Investigation
AstraZeneca’s local president, Leon Wang, is currently under investigation and is cooperating with authorities. The probe is reportedly focused on aggressive sales tactics used for at least two of its oncology drugs, Tagrisso and Imjudo. The inclusion of Wang in the investigation has been seen as a significant escalation, with Beijing widening its scrutiny of Astra’s operations in mainland China.
History of Anti-Corruption Crackdowns in China
Drugmakers, including AstraZeneca, have faced anti-corruption crackdowns in China in the past. In 2014, GSK Plc was fined £297 million and imposed a suspended prison sentence on an executive for bribing doctors. Astra generated about 13% of its sales in China in 2023, making the ongoing investigation a significant concern for investors.
Uncertainty Looms Over AstraZeneca’s Future in China
As the investigation continues to unfold, AstraZeneca’s future in China remains uncertain. With the company’s stock price at its lowest since March, investors are left wondering what’s next for the pharmaceutical giant. One thing is certain – the road ahead will be closely watched by investors and industry experts alike.
Leave a Reply