AstraZeneca has been hit with a US class action lawsuit that claims the UK’s largest listed company misled shareholders in connection with investigations by Chinese authorities.
The lawsuit, which AstraZeneca detailed in its annual report on Tuesday, alleges that the company, its chief executive Pascal Soriot and chief financial officer Aradhana Sarin made “materially false and misleading statements”, related to the probes.
The lawsuit was filed in December in California, after it had emerged the previous month that Leon Wang, the company’s former top executive in China, had been detained in the country.
AstraZeneca said in its annual report that it was “aware of a number of investigations by Chinese authorities which, to the best of AstraZeneca’s knowledge, relate to allegations of medical insurance fraud, illegal drug importation, and personal information breaches by current and former AstraZeneca employees”.
In the legal complaint, lawyers for the plaintiffs write that risk factors in the company’s 2021 annual report understated the potential for government investigations, fines and criminal prosecutions, given the situation in China.
“Defendants’ statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times,” they wrote.
They added that the plaintiffs have “suffered significant losses and damages” as a result of the “wrongful acts and omissions, and the precipitous decline in the market value of the company’s common shares”.
Shares in AstraZeneca fell about 15 per cent in late October and early November, after news of the Chinese investigation and Leon Wang’s detention was published. But they have since made up their losses.
The plaintiffs’ lawyers also cited a Financial Times story that reported that AstraZeneca executives expected a dip in sales in China after the investigation.
In full-year results this month, AstraZeneca reported a 3 per cent drop in sales in China in the last quarter of 2024, which it said was mainly because the mild winter had led a fall in sales of drugs used to treat respiratory infections, and a budget cap at Chinese hospitals.
The company also said it was being investigated in China over suspected unpaid import taxes of $900,000, which could result in a fine of up to $4.5mn. It said the unpaid taxes were probably related to sales of cancer drugs Imfinzi and Imjudo, and possibly also to sales of breast cancer drug Enhertu.
The annual report also shows that Soriot’s pay fell from £16.9mn in 2023 to £14.7mn in 2024, primarily because of lower share price appreciation. According to data compiled by UK think-tank the High Pay Centre, he was the highest-paid FTSE 100 CEO in 2023, with the chief executive of data and analytics company RELX in second place on £13.6mn.
Sarin’s pay increased from £4.4mn in 2023 to £6.8mn in 2024, as her two- year performance share plan paid out.
AstraZeneca said the pay of its directors and workforce reflected the company’s performance, pointing to a total shareholder return of 33 per cent over the past three years.
In the annual report, it said Soriot had “led AstraZeneca to deliver strong results in 2024, with another year of robust top-line growth and impressive results from the pipeline”.
Additional reporting by Robert Wright in London
