19th Jun 2023 10:50
(Alliance News) - The Financial Times reported on Monday that AstraZeneca PLC has drafted plans to separate its China business amid geopolitical tensions.
The FT, citing people familiar with the matter, reported that the pharmaceutical firm began discussing the idea with bankers "several months ago" and is among a growing number of multinational companies now considering that option.
https://www.ft.com/content/d195f3d0-0101-414e-b190-9691e6c5661d
Victoria Scholar, head of investment at interactive investor, said a spin-off could potentially allow AstraZeneca to circumvent "any potential regulatory clampdown" on global pharma companies from Beijing and could also expedite its drug approvals pipeline in China, where the FTSE 100-listed firm generated 13% of its total sales last year.
The Chinese market is an attractive one for pharmaceutical firms, as the nation has an ageing population and as the government there speeds up the regulatory process for innovative medicines.
Scholar noted that AstraZeneca has signed three licensing deals with Chinese companies in recent months, which she said highlighted the significance of the world's second-largest economy to the business.
"Astra's CEO Pascal Soriot recently returned from a visit to China saying the country was 'completely open' to pharma investment, paving the way for Astra to continue with its focus on China, shrugging off geopolitical concerns," she said, noting that AstraZeneca is China's largest overseas pharmaceutical company.
Shares were down 1.0% at 11,668.02 pence on Monday morning in London. The stock is up just 1.2% in the year-to-date, ii's Scholar said the stock has struggled amid concerns about China's bumpy recovery out of Covid.
Over the past 12 months, the stock is 16% higher.
By Heather Rydings, Alliance News senior economics reporter
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