AstraZeneca Mulls China Business Unit Spin-Off Amid Geopolitical Tensions

European drugmaker AstraZeneca plc AZN is reportedly drafting a plan to spin off its China business, and listing a separate unit in Hong Kong is considered an option amid mounting geopolitical tensions.

Last month, during an event held in Wuxi to commemorate its 30th year in China, AstraZeneca's China president, Wang Lei, said the company will seek to be a patriotic company in China that "loves the Communist Party."

In 2022, China accounted for 13% of the company's overall sales.

The spin-off could protect AstraZeneca from tensions between China and other global powers while the company retained business control, the Financial Times report said.

AstraZeneca will retain control of the business if it proceeds with the plans, though a separation might not ultimately take place, according to the report. 

A spokesperson for Astra said the company "does not comment on rumors or speculations around future strategy or M&A."

Listing a separate unit in either Hong Kong or Shanghai could insulate Astra politically from moves by China to crack down on foreign companies, a person briefed on the company's plans told the Financial Times. It would also offer a separate source of capital. 

In 2017, AstraZeneca created an R&D joint venture, Dizal Pharmaceutical, with a Chinese fund. The venture was listed in Shanghai two years ago.

Price Action: AZN shares are down 0.65% at $74.74 during the premarket session on the last check Tuesday.