AstraZeneca PLC, the British-Swedish pharmaceutical giant, is facing a securities class action lawsuit in the US. The action alleges that the company misled investors about its business practices in China.

The lawsuit, filed in the US District Court for the Central District of California, claims that AstraZeneca made false and misleading statements and omitted material information regarding the company’s exposure to legal and regulatory risks in China.

It follows reports of regulatory investigations into AstraZeneca’s operations in China, including allegations of insurance fraud and bribery. In late October 2024, AstraZeneca announced that its China President, Leon Wang, was cooperating with an ongoing investigation by Chinese authorities. The company’s share price subsequently fell on the news but losses have since been made up.

In December 2024, AstraZeneca announced the appointment of Iskra Reic as Executive Vice-President, International. Iskra succeeded Leon Wang who is currently on extended leave from the Company while under investigation in China.

Insurance fraud

The lawsuit alleges that AstraZeneca engaged in insurance fraud in China and faced heightened legal exposure in the country. The company is also accused of understating the significant legal and regulatory risks associated with its China operations. The lawsuit claims that AstraZeneca failed to disclose that these issues could materially harm its business activities and financial performance in China.

AstraZeneca’s annual report, published last week, listed the lawsuit in its Commitments, contingent liabilities and contingent assets section. The report documented that the complaint alleges that AstraZeneca “made materially false and misleading statements” in connection with the Company’s business in China. The report also recognized the regulatory risks to the company in the Legal, regulatory and compliance risks overview, acknowledging the “broadening of government investigations into the healthcare industry in China.”

The lawsuit seeks to recover losses on behalf of AstraZeneca investors who were adversely affected by the alleged securities fraud.

The lead plaintiff deadline is February 21, 2025.