In the pattern of localization, high-end and oligopoly, how can Chinese vaccine companies break through?

The global vaccine industry has shown an oligopoly pattern, but with the continuous improvement of the comprehensive strength of China's vaccine enterprises, domestic vaccines are moving towards the international market, and the market space will be further expanded
.

In 2020, the new crown epidemic broke out in the world, mRNA vaccine came out for the first time, showing significant advantages in research and development efficiency, protection effectiveness and other aspects, and the emerging vaccine technology represented by mRNA technology is expected to drive the upgrading of the entire vaccine industry
.
In addition to disease prevention, vaccine products have also expanded into the field of disease treatment, and adult vaccine therapeutic vaccines have further opened up the growth space
of the vaccine industry.
The global vaccine industry is an oligopoly, with GSK, Sanofi, Merck and Pfizer accounting for more than 80% of the market share
.
The vaccine industry presents a variety-driven characteristic, Peier 13, HPV4/9 and other blockbuster products have been on the market for more than 10 years, the annual sales are still in the forefront, and the market demand continues to be strong
.
According to EvaluatePharma data, the global vaccine market size in 2019 is $32.
6 billion, excluding the incremental impact of the new crown vaccine, the market size will reach $47.
6 billion in 2025, and the compound growth rate between 2020 and 2025 is expected to be 6.
8%.

In 2019, the market size of China's non-immunization program seedlings reached 42.
5 billion yuan, and it is expected to achieve a compound growth of 12.
2% in the next decade, reaching 132 billion yuan
in 2030.
Since the new crown epidemic, domestic vaccine companies have performed excellently, rapidly developed and listed a number of new crown vaccines, and in 2021, China's vaccine exports amounted to 15.
7 billion US dollars, China's vaccine enterprises have made important contributions to the global fight against the epidemic, and also demonstrated the rapid growth of domestic vaccine companies' research and development strength, and established a good brand image
.
With the continuous improvement of the comprehensive strength of China's vaccine enterprises, domestic vaccines are moving towards the international market, and the market space will be further expanded
.

01 The global vaccine market is growing steadily, and the industry is showing an oligopoly pattern

According to EvaluatePharma data, the global vaccine market maintained growth between 2015 and 2019, with a market size of about $32.
6 billion in 2019, an increase of 6.
9%
year-on-year.
In 2020, the new crown epidemic broke out on a global scale, and the new crown vaccine was approved for marketing, benefiting from the huge incremental contribution of the new crown vaccine, and the global vaccine market has achieved high growth in
the past two years.
Excluding the incremental impact of the new crown vaccine, with the improvement of vaccination rate, product iteration and replacement of vaccines to cancer and other therapeutic areas, the global vaccine market is expected to continue to grow well, and the global vaccine market size is expected to reach $47.
6 billion by 2025, and the compound growth rate is expected to be 6.
8%
between 2020 and 2025.

Global vaccine market size

Source: EvaluatePharma, Tokai Securities Research Institute

From the perspective of vaccine product sales, the global vaccine market is oligopolistic, and the vaccine products of GlaxoSmithKline (GSK), Sanofi, Merck and Pfizer occupy more than 80% of the market share
.
From the perspective of vaccine product sales, the Indian Serum Institute is the world's largest vaccine supplier, with low-cost vaccines as its main product, mainly for low- and middle-income countries and regions
.
From the perspective of regional distribution, the purchase volume of vaccines in Southeast Asia and Africa is large, but according to sales statistics, although the purchase volume of developed countries in Europe and the United States is not large, due to the high product price system and the greater demand for high-quality vaccines, it occupies more than 70% of the global vaccine market

The competitive landscape of the global vaccine market in 2020

Source: WHO, Prospective Industry Research Institute, Tokai Securities Research Institute

From the perspective of vaccine varieties, the top ten products in global sales in 2020 are all produced by four vaccine giant companies, and the industry as a whole presents a variety-driven characteristic
.
Pfizer's 13-valent pneumococcal polysaccharide conjugate vaccine, Merck's HPV vaccine and other blockbuster products have been on the market for more than a decade, and sales are still at the forefront
.
The launch of blockbuster products is expected to maintain a good competitive advantage for a long period of time after listing, contributing to stable cash flow
for enterprises.

Top 10 products sold globally in 2020

Source: Public Information Collation, Tokai Securities Research Institute

In 2020, the global outbreak of the new crown epidemic, vaccine manufacturers have begun to develop and produce new crown vaccines; At the end of 2020, vaccine products were approved for emergency use, and countries around the world began the vaccination of new crown vaccines to cope with the spread
of new crown virus.
The mRNA vaccine was first launched in the new crown epidemic, and it has shown good advantages over other types of vaccines in terms of research and development speed and protective efficacy; Pfizer's Comirnaty achieved $36.
8 billion in sales in 2021 and Moderna's Spikevax achieved $17.
7 billion in sales in
2021.
The new vaccine technology represented by mRNA technology has developed rapidly in recent years, and it is expected to gradually replace traditional vaccines and become mainstream technologies
in the future.
There are currently fewer vaccine products using new technologies, and their safety and immunogenicity need to be further observed and evaluated
.
With the continuous deepening of research, new vaccines will continue to improve and improve in research and development, production, technology and other aspects, thus driving the development and change
of the entire vaccine industry.

02 From Pfizer vaccines, we will see the development of international vaccine giants

Pfizer is one of the four giants in the vaccine field, holding the blockbuster variety Prevenar13, and has also become the biggest winner
in the mRNA new crown vaccine by partnering with BioNTech in the new crown epidemic.
From the perspective of the development history of Pfizer's vaccine business, strategic cooperation and mergers and acquisitions have become important measures for
the company's development and growth.
Founded in 1849 and headquartered in New York, Pfizer is a global pharmaceutical company with diversified product layouts
such as health care, animal health care and consumer healthcare.
In 2021, Pfizer's total global sales revenue was $81.
3 billion and net profit was $22 billion
.
In 2000, Pfizer acquired Warner Lambert for $90 billion; In 2002, another $60 billion was acquired by Famacia Pharmaceutical Works
.
In 2009, Pfizer acquired Wyeth for $68 billion to acquire its biopharmaceutical technology and vaccine businesses, and has since entered the vaccine field.
Since then, Wyeth's blockbuster product Prevenar has made Pfizer one of
the world's top four vaccine manufacturers.
After the COVID-19 pandemic in 2020, Pfizer partnered with BioNTech to develop an mRNA vaccine, Comirnaty/BNT162b2
.

From the perspective of Pfizer's vaccine business revenue composition in the past three years, in 2019 and 2020, the total revenue of vaccine products was about 6.
5 billion US dollars, accounting for 15.
90%
of the company's total revenue 。 The main varieties are the pneumonia vaccine Prevnar series, meningococcal A, C, W135 and Y group conjugate vaccine Nimenrix (this product was obtained from Pfizer's acquisition of GSK in 2015), tick-borne encephalitis vaccine FSME-IMMUN/TicoVac (the product was acquired by Pfizer in 2014 for the vaccine portfolio listed by Baxter International), and group B meningococcal vaccine Trumenba
。 Among them, nearly 90% of the sales revenue comes from the Prevnar series Pfizer Prevnar series products, including Prevnar13 and Prevnar20 (before 2013, there was also Prevnar, which is a 7-valence product).

Prevnar13 has grown well since its launch in 2010 and is included in immunization programmes in more than 100 countries around the
world.
Sales exceeded $6 billion in the highest year, ranking first in vaccine products for many years, known as the "king of vaccines", contributing to Pfizer's sustained and stable cash flow
.

In 2020, in the process of research and development of the new crown vaccine, Pfizer chose to cooperate
with BioNTech, a German company with an mRNA vaccine technology platform.
The core technology of the early stage of the product comes from BioNTech, and the clinical, production and sales of the follow-up products are responsible for
Pfizer.
Prior to that, Pfizer had already worked
well with BioNTech on other vaccine products.
With excellent clinical data and government procurement in many countries, Pfizer has achieved sales revenue of $36.
8 billion in 2021, accounting for 45%
of Pfizer's total revenue in 2021.

03 High-end localization of domestic vaccines has opened internationalization

At present, some multi-valent high-quality products are only supplied by foreign manufacturers, such as quadrivalent, nine-valent HPV vaccine, pentavalent rotavirus vaccine, DTaP-IPV/Hib pentavaccine, herpes zoster vaccine, etc.
; The products of foreign manufacturers are facing the world and the amount of supply to China is small, so there will be a phenomenon
such as the domestic nine-valent HPV vaccine in short supply.
In recent years, the research and development efforts of domestic vaccine companies have increased, the efficiency of pipeline promotion has been improved, and heavy products have been launched, and the 13-valent pneumonia vaccines of Watson and Kangtai have been listed one after another, forming a good alternative to Pfizer's Peier 13; The bivalent HPV vaccines of Wantai and Watson were successfully listed, although they have not yet formed a replacement for quadrivalent and nine-valent HPV vaccines, but they have filled the gap of domestic cervical cancer vaccines and formed a dislocation competition
with quadrivalent and nine-valent HPV vaccines.

From the perspective of domestic enterprises in research pipelines, four-valent HPV, nine-valent HPV, DTaP-IPV/Hib pentaplasm seedlings, shingles and other exclusive varieties of foreign companies have been laid out, and some have entered the late clinical stage, and are expected to be listed
in the next 3-5 years.
From the perspective of product quality, there is no obvious gap between domestic vaccines and imported vaccines; From the price point of view, the price of domestic vaccines is relatively low; From the perspective of production capacity, the production capacity of domestic vaccines is stable and sufficient
.
Therefore, in the face of competitors of foreign companies, domestic vaccine products have good competitive strength
.
In summary, domestic vaccines are in the process of product upgrading, and there will be more and more high-quality products to choose from in the future, and the consumption attributes will be further revealed; With the continuous advancement of domestic enterprises' research products, the future will gradually replace the existing exclusive products of foreign companies, and occupy a larger market share in the domestic vaccine market
with comprehensive advantages such as price and production capacity.

From the perspective of China's vaccine exports, according to the statistics of the General Administration of Customs, before 2020, the number of vaccine exports in China will be in the order of 100,000 kilograms, and the export amount will be below 200 million US dollars; In 2021, benefiting from the increase in the new crown vaccine, China's vaccine exports reached 5 million kilograms, and the export amount increased sharply to 15.
7 billion US dollars.

In 1987, in order to ensure the safety of purchasing vaccines from different channels, WHO launched the "Vaccine Pre-certification System"; After that, if vaccine products want to enter the United Nations procurement directory, they must be "pre-certified" by the WHO, and if enterprises want to apply for pre-certification from the WHO, there is an important prerequisite, that is, the country's vaccine regulatory system must be recognized by
the WHO.
China's vaccine regulatory system has passed the assessment twice in 2011 and 2014, and in July 2022, it ushered in a new round of comprehensive evaluation after the WHO upgraded the evaluation standard, which has greatly increased the evaluation indicators, the content is more comprehensive, and the standards are more stringent
.
On 23 August 2022, WHO announced that China has passed the assessment of the National Regulatory System (NRA) for vaccines
.
Through the assessment, it not only means that China has a stable, well-functioning and complete and unified regulatory system, which can ensure that the quality of vaccines produced, imported or circulated in China is controllable, safe and effective, but also an important foundation for
China's vaccine exports worldwide.

In 2013, the live attenuated Japanese encephalitis vaccine produced in Chengdu, a subsidiary of China Biologics, became the first Chinese vaccine product
to be pre-certified by the WHO.
WHO pre-certification is an important step for vaccine companies to go overseas, according to the first pre-certified Japanese encephalitis vaccine enterprise Chengdu Institute related personnel, Chengdu Institute from 2006 spent 7 years, invested nearly 800 million yuan, including Japanese encephalitis vaccine production workshop, spf animal production workshop and other plants and facilities
in line with international standards.
Up to now, 9 vaccines in China have been pre-certified by
the WHO.
In the wake of the COVID-19 pandemic, WHO, together with Gavi, the Vaccine Alliance for Vaccines and Vaccines and the Coalition for Epidemic Preparedness, established the COVID-19 Vaccine Implementation Plan (COVAX), and vaccine companies that have been awarded the WHO's Emergency Use List (EUL) have the opportunity to participate in COVAX and export
their products.

By the end of 2021, China has supplied more than 2 billion doses of COVID-19 vaccines and stock solutions to the world; After the new crown inactivated vaccines of Sinopharm and Kexing Bio were included in the EUL, they were exported to more than 100 countries and more than 50 countries around the
world, respectively.
China's vaccine enterprises have developed rapidly
in many aspects such as technology research and development, product layout, and capacity construction.
In May 2022, 1 million doses of Watson Biologics 13-valent pneumonia vaccine were successfully exported to Morocco
.
With the continuous improvement of comprehensive strength, domestic vaccines are expected to gradually enter the international market and become a global public health industry
.
At present, there are 11 listed companies in the A-share pharmaceutical and biological sector that produce and sell human vaccines
.
From the perspective of revenue scale, excluding other businesses and involuntarily produced vaccine products, the four listed companies with the highest revenue scale of independently developed vaccine products in 2021 are Zhifei Biological, CanSino, Kangtai Bio and Watson Biologics
.

The revenue scale of A-share vaccine listed companies

Source: Wind, Tokai Securities Research Institute

From the perspective of product pipeline, in addition to Zhifei Biologics' agent products such as Merck HPV vaccine and pentavalent rotary vaccine, all products of other companies are independently developed and produced
。 From the perspective of vaccine products that have been listed and have been issued in batches in recent years, Watson Biological, Zhifei Bio and Kangtai Bio have a relatively rich variety of products, and other companies' products are few and some of them have the characteristics of a single product, such as HPV2 of Wantai Biological, rabies vaccine of Chengda Bio and Kanghua Bio, influenza vaccine of Hualan Bio and Jindik; CanSino's MCV2 and MCV4 were approved for listing in mid-to-2021 and year-end respectively, and have not contributed revenue
yet.
Overall, in addition to the impact of the new crown vaccine, the overall scale of domestic vaccine listed companies is not large, except for Watson Biological, Zhifei Bio and Kangtai Biologics, which have a relatively rich variety of vaccines, other vaccine companies are still in the stage
of relying on the development of single products.