AstraZeneca Plc is increasingly looking to the United States for growth as its once fast-expanding China business faces challenges amid a probe that has battered the drug maker’s share price.
Chief executive Pascal Soriot set out the British drug maker’s ambitions in the United States, including a big investment in research and development, as the company reported third-quarter earnings and raised its annual forecast. The company said its US expansion would be carried out by the end of 2006, and that some of that effort will be focused on a research and development center in Cambridge, The Wall Street Journal reported.
“We are very confident in the future growth of the economy in the United States. We believe the policies that will be put in place will drive economic growth of course, but also drive innovation,” he said Tuesday on a call with reporters.
Astra plans to invest $3.5 billion in R&D and manufacturing in the United States by the end of 2026. This includes $2 billion of new investment as Astra seeks to further bulk up its US business, which now generates twice as much revenue as Europe and is the biggest driver of sales of any region.
“We see the US as a really critical market for our future,” said Soriot, who expects Astra’s share of the market to grow as the drugmaker launches new medicines.
Soriot’s upbeat take on the United States, where President-elect Donald Trump is likely to make domestic manufacturing a priority, comes as the company faces significant challenges in China. Soriot said Tuesday the recent compliance issues in China involved the use of the WeChat messaging platform, which is outside of Astra’s monitoring systems.
Long championed by Soriot, Astra’s China unit was a weak point in the third quarter, reporting the lowest regional sales growth amid a deepening investigation by Beijing authorities. Leon Wang, president of Astra’s China division, is still being detained and Soriot said he has few details on the probe.
“We basically have been given no information,” Soriot said of the detention of Wang. “People like to jump the gun and make conclusions. We have to wait and hear the conclusions of the authorities.”
Astra’s shares fell early on Tuesday but closed the day broadly flat. The stock has fallen 5.75 percent since the start of the year.
Around 100 ex-employees of Astra have been sentenced on charges of medical insurance fraud. A handful of current and former senior executives are also being investigated for alleged illegal importation of cancer drugs.
Speaking on a call with investors, Soriot denied that difficult sales targets were to blame for the compliance issues. Instead, he said the medical insurance fraud was a result of demand for its hit Tagrisso cancer drug, which is only available to patients who met a specific genetic criteria. This had created an incentive to falsify genetic tests in order to gain access to the treatment, he said.
The drug importation probe, which Bloomberg has previously reported was linked to Imjudo, also involves another cancer drug Enhertu, Soriot said. He said there was a “temporary situation” when Enhertu was not approved in mainland China but was authorized in Hong Kong. Now, with the drug green lit in both regions, Soriot said he hoped that the “for lack of a better word, temptations,” for some of the drug maker’s sales reps would be removed. In the future, Astra will try to time drug launches to coincide in both Hong Kong and mainland China, he said.
Soriot said Astra has strong compliance mechanisms in China but it can’t police every single employee. Its systems use AI to track internal information such as emails and expense reports. Astra has since put in place new measures including field-based compliance officers to more closely monitor its employees, he said.
It’s “reasonable to expect” that Astra will be affected by the situation in China, Soriot said, but he reiterated the drug maker’s ambition for $80 billion of sales by 2030, up from about $46 billion last year.