AstraZeneca on Thursday warned that it could be fined millions of dollars in importation tax fines as Chinese authorities investigate the company’s former China head.
AZ has received a notice from the customs office in the Chinese city of Shenzhen flagging $0.9 million in suspected unpaid importation taxes. The case has been forwarded to the local prosecutor and could lead to a fine of up to five times the unpaid tax amount, or $4.5 million, according to the company.
AZ believes the unpaid importation taxes stem from its immunotherapy duo Imfinzi and Imjudo, which can be used together to treat liver cancer. The indication has not been approved in mainland China.
The illegal importation case may not stop there, AstraZeneca CEO Pascal Soriot warned.
“It’s possible that a similar issue is raised around Enhertu,” Soriot told reporters Thursday.
The amount tied to Enhertu “would be potentially a bit bigger, but not that much bigger,” Soriot said, adding that AZ has to wait for more updates from authorities.
Enhertu is a HER2-targeted antibody-drug conjugate from AstraZeneca and its partner Daiichi Sankyo. Last year, Chinese authorities put several current and former AZ employees under investigation, culminating in the detention of the company’s then-China president and international chief, Leon Wang.
The probes reportedly centered on the alleged illegal importation of Imjudo and Enhertu from Hong Kong to the mainland, as well as improper collection of patient data.
AZ has not been allowed to speak with Wang since his detention, Soriot said. The company has put Wang on extended leave and appointed Iskra Reic as its new international head in December.
A few million dollars of fines would be a slap on the wrist for AZ in comparison to the 3 billion Chinese yuan ($412 million today) penalty that GSK was levied in a high-profile China bribery scandal back in 2013, or compared to the $6.4 billion in sales that AZ generated in the country in 2024.
Meanwhile, the ongoing probe also didn’t stop Enhertu from winning national reimbursement following price negotiations with the Chinese government in October.
However, in the fourth quarter of 2024, AZ’s China business logged a 3% sales decrease at constant exchange rates compared to the same period in 2023. While this came after several quarters of double-digit sales growth for AZ in the country, investors had clearly expected worse given uncertainties around the investigations.
AZ’s stock price, which has recently come under pressure from the China situation, rose about 4% Thursday morning.
The fourth-quarter decline was “primarily driven by year-end hospital ordering dynamics, which affected Tagrisso and Farxiga revenues at the end of the year," Soriot explained. In addition, a mild start to winter and fewer viral infections also hurt demand for AZ’s respiratory medicines, Soriot said.
Hospitals typically rein in spending at the end of the year, Soriot acknowledged, and authorities last month said that trends in acute respiratory infections were similar versus prior-year levels.
Overall, AZ’s China sales still grew by 11% at constant exchange rates in 2024 thanks to the unit’s strong performance in the first three quarters of the year.
For 2025, AZ expects more China headwinds as several of its medicines will be included in the country’s volume-based procurement program—a price-cutting initiative targeting off-patent medicines.
“But longer term, we see continued opportunity for growth in China for our company,” Soriot said, adding that “we continue to be very committed to China in the long run.”
All told, AZ generated $14.9 billion in fourth-quarter revenue, a 24% year-over-year increase. For the full year, the company's revenue reached $54.1 billion, a 21% jump at constant exchange rates.
The company doesn’t expect the same level of growth this year. For 2025, AZ plans to grow total revenue by a high single-digit percentage. Soriot on Thursday said AZ remains on track to achieve his goal of reaching $80 billion in total revenue by 2030. The company will have a “very good idea of whether this ambition can be achieved” by the end of 2025, he said.
“This performance and the sales guide will likely put the China concerns to bed (in the absence of materially worse news,” Intron Health analysts wrote in a Tursday note.