In September, Chinese authorities detained five current and former employees of AstraZeneca Plc ( AZN ) as part of a broader investigation into alleged illegal activities in the pharmaceutical sector.

The investigation focuses on potential breaches of data privacy laws and the importation of unlicensed cancer medications.

CEO Pascal Soriot said AstraZeneca ( AZN ) complies with Chinese policies and works closely with authorities following the detention.

As per a financial media company Yicai report, senior executives at AstraZeneca China are embroiled in a significant insurance fraud case, marking one of the most extensive scandals in China’s pharmaceutical industry in recent years.

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Citing sources, the report adds that Leon Wang, President of AstraZeneca China, is cooperating with authorities in a rapidly expanding investigation that now involves multiple government bodies, including the public security bureau and the supervisory commission.

In October, the company disclosed that Leon Wang is cooperating with an ongoing investigation by Chinese authorities. AstraZeneca ( AZN ) also added that China operations continue under the leadership of the current General Manager of AstraZeneca China.

The ongoing probe has exposed fraudulent practices tied to the sale of Tagrisso, a lung cancer treatment.

The case gained initial traction in 2021 when an AstraZeneca ( AZN ) medical representative in Yibin, Sichuan province, was found to have forged prescriptions, enabling patients to purchase Tagrisso through insurance coverage.

Tagrisso is AstraZeneca’s top-selling cancer drug, generating around $5.8 billion in 2023 sales.

The report added that some staff members reportedly faked genetic testing results to qualify patients for insurance-covered Tagrisso treatments.

Over the past three years, additional insurance fraud cases have emerged involving AstraZeneca ( AZN ) employees in various Chinese regions.

In these instances, regional and district managers and even senior executives were reportedly complicit in directing employees to use unethical practices to meet sales quotas.

AstraZeneca ( AZN ) issued a statement saying, ” We do not comment on speculative media reports, including those related to ongoing investigations in China.”

“If requested, we will fully cooperate with the Chinese authorities,” the company added.

Price Action: AZN stock is down 6.75% at $66.61 at last check Tuesday.

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