AstraZeneca boss says staff in China breached rules by using WeChat

Former AstraZeneca employees in China used the messaging service WeChat to breach compliance controls, the group’s chief executive has revealed, as he vowed the FTSE 100 company was in the country for “the long haul” amid continued investigations by the authorities.
Responding for the first time to concerns about widening investigations in China and the detention of its international head, alongside a positive third-quarter trading update, Sir Pascal Soriot was defiant about the company’s systems and future in what has become its second-biggest market.
Soriot, 65, who has led AstraZeneca during its rapid growth in China over the past 12 years, rejected suggestions the Cambridge-based group had been complacent or had a lack of oversight of its 16,000 employees in the country.
• AstraZeneca raises forecasts amid investigations in China
“In China we have very strong compliance policies in place. We have more than 200 people dedicated to compliance. The head of compliance in China reports to our global head of compliance. The legal council in China reports to our global legal council. Our [China] chief financial officer reports to our global CFO. So the organisation in China is not on its own, it’s totally integrated in our global organisation.”
The company’s systems monitor emails and expenses, sales representatives only use credit cards, and meeting and lunch places are accredited.
However, Soriot said its systems “can only track internal information” and the “recent lack of compliance moved outside of these systems and people used their own WeChat system, and then they basically went out”.
He added: “When you have such a large number of people, unfortunately some will be tempted. And I think it’s important to remember we have 12,000 people in the sales force.”
In response to the breaches, “to be even closer to people, to make sure that we identify these behaviours that our systems cannot capture”, it has introduced field-based compliance officers in every region and it plans to rotate regional sales directors “on a regular basis so people don’t have a chance to become too connected to their local environment”.
There was speculation last year that AstraZeneca was considering separating its large China business via a separate listing, to protect the group amid rising geopolitical tensions.
Soriot said: “I don’t think we have anything to regret … We never said we wanted to spin off the business in China. There were lots of rumours about it.”
About £17 billion was wiped off AstraZeneca’s market value last week and it lost its position as the most valuable company on the FTSE 100 to Shell as details emerged of the investigations in China.
The company clarified last Wednesday that Leon Wang, its executive vice-president for international and China president, has been detained in Shenzhen as part of an unknown investigation.
“Leon has a lawyer that is in touch with him, but we have no information as a company,” Soriot said on Tuesday.
Separately, about 100 former employees have been sentenced over a separate alleged medical insurance fraud investigation dating back three years, where patient test results were allegedly falsified to qualify patients for reimbursement for its blockbuster cancer drug, Tagrisso.
Chinese authorities are also pursuing an investigation into the alleged illegal importation of unapproved medicines from Hong Kong into mainland China and the inappropriate collection of patient data. This relates to three other cancer drugs, Enhertu, Imjudo, and Imfinzi.
AstraZeneca is aware of two current and two former executives in China who are under investigation out of a total of about eight individuals.
Soriot said it was premature to draw conclusions with the situation at a “very early stage”.
“You’ve got to realise this [the People’s Republic] is not a system that you may be used to. It’s different. So we haven’t been given any information as a company. And we need to wait before concluding.”
AstraZeneca is not aware that the company is directly under investigation, which analysts have said is an important distinction with the bribery and sex scandal GSK, Britain’s other big pharma company, faced a decade ago.
“As a company, we will definitely, of course, collaborate with the authorities if we are asked, if we are requested to,” Soriot said.
Despite the uncertainty over the continued investigations, Soriot said AstraZeneca remained “very committed” to China, a “very important market for us”.