This is a preview of Periscope—a weekly report by KrASIA, delving into China’s industries and markets. We discuss a different space each week and include highlights of relevant top stories. If you would like to read the report in full and gain access to our library, please click here.
Inside the technology, market, and opportunities of the burgeoning vaccine industry
With 2020 in the rearview mirror, COVID-19 vaccines are on the minds of many. The coronavirus has wreaked havoc worldwide, yet respite is within sight, with multiple vaccine manufacturers reporting promising results.
Vaccines for other diseases are in the spotlight as well. In China, demand for flu shots has skyrocketed since September, with the stocks of its producers rising to new heights. Will the vaccine sector see a gold rush—like China’s IT industry?
In volume 9 of Periscope, KrASIA presents a deep dive into the matter in two parts:
Part I —
- Supply and demand of China’s vaccine industry
- Gap between vaccine industry development in China and the rest of the world
- Challenges in China as demonstrated by the recent shortage of flu shots
1. Supply and demand of China’s vaccine industry
1.1. Demand side: Government procurement is key
China has two categories of vaccines. One is compulsory for all citizens and free of charge, while the other is optional and comes with a price tag. In either case, all vaccines undergo a unified procurement and allocation process, which is overseen tightly by the Chinese government.
Vaccines are purchased through a provincial-level bidding system. The municipal government of Beijing or Shanghai, for example, procures vaccines for their public medical facilities. Once the orders are confirmed, vaccine manufacturers are responsible for delivering the shots to the
Centers for Diseases Control (CDC), a government agency that operates through offices located across China. At the CDC branches, the vaccines are injected to people’s arms.
1.2. Supply side: Upstream and downstream mechanics
Vaccine production is a complex, multi-stage process, involving, at a minimum, cycles of pathogen or protein generation, cultivation, isolation, purification, inactivation, and formulation. Specialized expertise ensures precise manufacturing operations.
The upstream providers include companies such as Weir Pharmaceutical, Shaunglin Bio-pharmacy, WuXi Biologics, Shandong Pharmaceutical Class, and Weigao Company, whose major products include adjuvants[1], inactivators[2], pre-filled syringes, and glass vials. Shuanglin Bio-pharmacy, which produces blood immunoglobin products, is China’s culture media market leader. The company generated an impressive operating income of RMB 427million (USD 65 million) at a gross profit margin of 47% in H1 2020.
Meanwhile, the Chinese excipients[3] market, which includes products such as pregelatinized starch and cellulose derivatives, is led by Erkang Pharmaceutical and Weir Pharmaceutical. InH1 2020, Erkang Pharmaceutical’s operating income achieved RMB 1.06 billion (USD 162million) with 14.6% gross profit margin. Weir Pharmaceuticals hit RMB 230 million (USD 35million) half-year revenue at 65.43% gross profit margin.
To keep reading further about China’s growing vaccine industry, click here.