A decade ago, the "anti-corruption storm" in China led to a major upheaval for the British pharmaceutical company GlaxoSmithKline (). A decade later, another British pharmaceutical company, AstraZeneca, finds itself on the brink of a "snowslide". On the 10th, Wang Lei, President of AstraZeneca China, has been detained for half a month. So far, the outside world remains completely in the dark about the reasons for Wang's investigation. Even Pascal Soriot, CEO of AstraZeneca globally, has stated that "this is part of an unknown investigation" and "it is too early to draw conclusions at such an early stage".

An employee from AstraZeneca's UK headquarters told Yicai Global that both AstraZeneca headquarters and China have dispatched specialized personnel to handle the latest case in China. Relevant lawyers told Yicai Global that the large-scale "insurance fraud case" involving AstraZeneca has not led to a case being filed against the company, which is peculiar, and the detention of Wang Lei, the head of AstraZeneca China, may be just the beginning.

Although AstraZeneca's headquarters repeatedly emphasized that the current investigation only involves individual executives and the company itself has not become the target, Wang Lei, as the most important figure of AstraZeneca in China, if his actions are not within the oversight of the headquarters, then the development of AstraZeneca China is also worrisome. AstraZeneca's latest statement said that to address violations, the company has introduced local compliance officers in each region and plans to rotate regional sales directors regularly to avoid these directors "having too much opportunity to become overly associated with the local environment."

The crisis AstraZeneca has encountered in China has disrupted the company's steady development in recent years, causing investors to panic. Over the past month, AstraZeneca's stock price has fallen by more than % cumulatively, and it has lost its title as the most valuable company in the UK's FTSE index, being replaced by Shell. In the past week, AstraZeneca has responded to ongoing cases in China in a row, from to, in an effort to reassure investors.

China is AstraZeneca's second-largest market, second only to the United States. Investors believe that the more detailed information the company discloses, the more reassured they will be. However, AstraZeneca has not disclosed any new information regarding the Wang Lei case, but instead revealed that hundreds of former employees were prosecuted in the "insurance fraud case" of the year. Such a widespread criminal case, AstraZeneca only disclosed the relevant situation recently, which was interpreted by the outside world as a slow response.

The case at the time involved falsifying genetic test results for tumor patients, enabling these patients with "fake reports" to qualify for medical insurance reimbursement for AstraZeneca's star oncology drug, Tagrisso. According to publicly available information online, over the past few years, AstraZeneca's pharmaceutical representatives and their family members who have been sued for insurance fraud have been in a stalemate with the company over the issue of reimbursement. Among the employees who were sentenced, many were unable to provide the reimbursement funds, and some wrote letters to Wang Lei and the company, hoping for financial support from the company.

The claims of these employees mostly revolve around the fact that pharmaceutical representatives work for the company, earning only "small profits," while the "big profits" are taken by the company. However, the ultimate legal responsibility falls entirely on the pharmaceutical representatives, which is unfair. Most of their appeals have not been addressed, and AstraZeneca has never publicly responded to arrangements regarding reimbursement for insurance fraud.

A relevant lawyer told the First Financial Daily reporter, "There are indeed peculiar aspects to AstraZeneca's case. Insurance fraud can be committed by an organization as the principal offender, involving large-scale fraudulent insurance claims, and the organization should logically also become a defendant, but the specifics of each case need to be analyzed based on the circumstances." He added that organizational crime often results in liability for compensation, as it is impossible to hold the organization itself criminally liable, so ultimately it is the organization's leaders who are sentenced. This was the case with the previous incident.

Most lawyers currently believe that Wang Lei, as the "top leader" of AstraZeneca China, can be understood as the "person in charge of the unit." Another lawyer told the First Financial Daily reporter, "The publicly available information online is fragmented and does not represent the whole truth, so it is difficult to determine whether the company should bear legal responsibility based on this information. The public security organs are particularly cautious in filing cases against multinational companies, especially in the current business environment."

AstraZeneca has over 10,000 employees in China, including 10,000 pharmaceutical sales representatives, a rarity among multinational pharmaceutical companies with such a large sales force. Wang Lei is the driving force behind the rapid expansion of AstraZeneca's sales team. His achievements were quickly recognized—AstraZeneca China became the fastest-growing multinational pharmaceutical company in China and has been the unchallenged "sales champion" for many years.

Such radical measures once gained approval from AstraZeneca's headquarters. Since Pascal Soriot took the helm of AstraZeneca, the company has fully shifted its strategy towards oncology drugs. The facts have also proven that this strategy is effective. AstraZeneca's latest third-quarter earnings report shows that sales in the oncology division grew by % to $ billion, accounting for more than % of total revenue. Two drugs that have made significant contributions to the growth of AstraZeneca's oncology division are Tagrisso () and Enhertu (), both of which were involved in AstraZeneca's investigation.

Until the beginning of this year, Alberto said to investors, "Mr. Wang Lei, who has a strong competitive spirit, wants to be number one in every country. Growth is the real driving force that stimulates vitality." But Alberto's enthusiasm has since cooled. On a certain date, he told investors, "Unfortunately, some employees may be 'tempted' to maximize sales." He also stated that measures are being taken to further strengthen compliance, enhancing the compliance team of over 1,000 people in China, introducing resident compliance officers, and using artificial intelligence to audit sales personnel's expense reports, among other measures, to monitor any improper behavior.

Pascal Soriot also mentioned that some employees use communication services such as WeChat for illegal activities, which are not within the scope of the company's monitoring system. It is reported that the company's system only monitors internal information such as emails. Although AstraZeneca's case this time is not entirely the same in nature as the bribery case involved ten years ago, the results faced by the two companies may be similar. Once charged with bribery, it paid nearly 100 million pounds in settlement, and its highest-level executive in China was also expelled from the country.

In the case, the implicated senior executives at the time were also driven by the need to meet the high sales growth targets set by headquarters, fully advocating an "operations oriented towards product sales" philosophy, emphasizing the sales tactic that "no expenses, no sales," and by bribing hospitals, doctors, medical institutions, pharmaceutical-related association organizations, and other pharmaceutical sales departments and their personnel to promote drugs, they illicitly profited by billions of yuan.

Compliance issues are fatal for a pharmaceutical company. Although AstraZeneca has not yet become the target at the corporate level, this incident is likely to trigger a major internal compliance overhaul. A senior figure in the medical industry told the First Financial Daily reporter, "The lesson is profound, and ten years later, it has not fully recovered. Today's negligence by AstraZeneca may lay hidden dangers for its development over the next decade."

Wang Lei has not yet been charged, but he has already hired a lawyer. First Financial Daily reporters were unable to ascertain whether AstraZeneca headquarters has provided any assistance to Wang Lei. Meanwhile, despite AstraZeneca's business continuing as usual, the investigation into Wang Lei is like a "time bomb" that could trigger a larger "avalanche" at any moment.

A pharmaceutical investor told First Financial Daily, "The state's determination to crack down on medical corruption is strong. Every pharmaceutical company, whether domestic or multinational, faces this reality. Managers must shift their thinking. Actions that were once considered normal operating costs may now constitute a crime, and behaviors that were previously taken for granted and overlooked will now be re-examined and subject to legal constraints."

In China, multinational pharmaceutical companies have adopted different strategies, with some being particularly aggressive, such as AstraZeneca, and others relatively conservative, such as Bristol-Myers Squibb. A former senior executive of a multinational pharmaceutical company in China told the First Financial Daily, "AstraZeneca China has long been regarded as a 'Chinese company' in the industry, and it is paying the price for its overly aggressive development."

The above-mentioned person also stated that such giant enterprises, from the very first day they entered China, have been particularly strict in terms of risk control and compliance. "This is related to the strategic priorities of the headquarters in the Chinese market; for some companies, compliance is the highest priority, not seeking high sales but ensuring no trouble." He said. He acknowledged that this is also related to the management style of Chinese executives. "If Wang Lei, like the majority of Chinese executives in multinational companies, were to 'follow orders without question' and 'dare not step out of bounds,' then it would be difficult for his performance to reach such a large scale today. Everything has two sides," the person added.

Another healthcare institution representative told the First Financial Daily reporter, "AstraZeneca entered China as early as the year and has long been aware of the risks of operating in China, but it has also reaped bountiful harvests here. Now, the assessment of risks and returns needs to be recalculated. But it certainly won't abandon the Chinese market, so it must bring its utmost sincerity to resolve this crisis."