Behind the suspension of Sinovac's new crown vaccine: market demand is reflected in reality

Sinovac's inactivated vaccine CoronaVac is one of the first COVID vaccines approved for use in China, and this vaccine sold more than 100 billion yuan in 2021. Prior to Sinovac, a number of companies had suspended the production of the new crown vaccine or stopped investing in the further development of the new crown vaccine. From a global perspective, multinational pharmaceutical companies are also slowly turning.

On January 10, 2024, a document titled "Suspension of the Performance-based Salary Plan for the Novel Coronavirus Project" was circulated online, and the payment was made to Beijing Sinovac Zhongwei Biotechnology Co., Ltd. (hereinafter referred to as "Sinovac Biotech", SVA.US), and the payment was made on "January 9, 2024". It mentions, "At this stage, the company's new crown vaccine has been completely discontinued and the company currently has no new crown vaccine product sales, and the company has decided to stop paying the new crown project performance salary to existing employees from January 2024." ”

According to Jimu News, at noon on January 10, the reporter called the Sinovac Biotech product consultation hotline, and the staff confirmed that the company's new crown vaccine has indeed been discontinued, and if you still need to inject the product, you have to ask the local CDC if there is any inventory.

It is reported that Sinovac's new crown inactivated vaccine "CoronaVac" is one of the earliest new crown vaccines approved for use in China, and this vaccine has sold more than 100 billion yuan in 2021.

Many companies have withdrawn from the new crown vaccine market

According to the financial report, in 2019 before the new crown pandemic, Sinovac's annual revenue was US$246 million, and the net profit attributable to the parent was US$39.801 million. In 2021, the company's annual sales will be US$19.375 billion, a year-on-year increase of 3694.36%, and the net profit will be US$14.459 billion, a year-on-year increase of 7729.37%. According to the 2023 semi-annual report, Sinovac's sales in the first half of the year were US$140 million, down 88% year-on-year, and net profit was US$16.92 million, down 96.51% year-on-year, mainly due to the decrease in sales of the new crown vaccine "CoronaVac".

Prior to this, a number of companies have suspended the production of the new crown vaccine, or stopped investing in the further development of the new crown vaccine.

On April 4, 2023, CanSino (688185. SH) said that due to changes in the external market environment, the company decided to start suspending the production of the new crown (vaccine) production line for about 180 days. In the first three quarters of 2023, CanSino achieved sales revenue of 414 million yuan, of which 239 million yuan was offset by the provision for returns (due to the decline in demand, returns can be returned according to the agreement), resulting in its operating income of 176 million yuan in the first three quarters, and the net profit loss attributable to the parent company expanded to 985 million yuan.

On June 13, 2023, Wantai Biotech (603392. SH) issued an announcement to terminate the fund-raising investment project "Nasal Spray Vaccine Industrial Base Construction Project", and will permanently replenish the working capital or repay the loan with the remaining raised funds to further optimize the capital structure. The project is planned to be used for the construction of vaccine production plants and supporting buildings, as well as the purchase of production equipment and the construction of two nasal spray new crown vaccine production lines. However, Wantai Bio comprehensively judged that the market demand for the nasal spray new crown vaccine was reduced compared with the estimated number of the original project, and the completed nasal spray new crown vaccine with an annual production capacity of 100 million doses could meet the existing market demand, so it decided to terminate the implementation of the project.

On July 21, 2023, the company decided to suspend the trial operation of the Tianci factory that supplies new crown mRNA vaccines, and the company said that due to major changes in the external objective environment, and considering that the Tianci factory has no new crown vaccine production demand in the near future, in order to reduce the operating costs of the enterprise, the Tianci factory will suspend the trial operation, and will return its main energy to research and development in the future.

Fosun Pharma (600196. SH) said in its 2023 semi-annual report that as the new crown epidemic no longer constitutes a "public health emergency of international concern", the revenue of anti-epidemic products such as Comirnaty has declined significantly year-on-year. In the first three quarters of 2023, Fuxing Pharmaceutical's revenue and net profit both declined, with the company's operating income falling by 2.92% year-on-year to RMB30.7 billion, and net profit attributable to the parent company falling by 6.39% year-on-year to RMB2.283 billion.

Clover-B (02197) also said in its 2023 semi-annual report that due to the changing and low overall demand for new crown vaccines in China and global national procurement departments so far in 2023, the company does not expect meaningful financial contributions from new crown vaccine sales in 2023, and its vaccine layout will shift to respiratory diseases such as RSV and influenza.

Are the global COVID vaccine companies in a similar situation?

From a global perspective, multinational pharmaceutical companies that previously focused on the research and development of new crown vaccines are slowly turning.

According to the 2021 financial report, the revenue of Pfizer's (PFE.US) vaccine business accounts for more than half of the revenue, and the revenue of its new crown vaccine Comirnaty accounts for more than 86% of the vaccine business. This directly contributed to the company's revenue in 2021 increased by 92% year-on-year to US$81.288 billion, becoming the second largest pharmaceutical company in the world in terms of revenue in 2021. But if the contribution of COVID-related products is excluded, Pfizer's revenue growth for the year was actually only 6%.

According to Pfizer's Q3 2023 financial report, its revenue was $13.23 billion, down 42% year-on-year, which was the first quarterly loss since 2019. Among them, the new crown vaccine Comirnaty is expected to have an annual revenue of $11.5 billion in 2023, a year-on-year decrease of 70%, and the new crown drug Paxlovid is expected to have an annual revenue of $1 billion in 2023, a year-on-year decrease of 95%. Pfizer CEO Albert Bourla said he is moving quickly to address the problem and plans to pin his company's hopes on one of the most growth-competitive areas of the pharmaceutical industry: cancer.

In December 2023, Pfizer completed the acquisition of cancer drug maker Seagen in a deal valued at up to $43 billion, which will provide Pfizer with four approved products and a rich pipeline of ADC (antibody drug conjugate) product candidates. Pfizer expects the merger to generate an additional $10 billion in annual revenue for the company by 2030.

Albert noted that weight loss drugs would be Pfizer's next big product and said the company's weight loss drugs could reach $10 billion in annual sales, "We believe that obesity is an area that we have the ability to participate in and win, and we have to be part of it." ”

The data showed that the decline in sales of the new crown vaccine of the US biotech company Moderna (MRNA.US) led to a 44% drop in the stock price for the whole of 2023. In January 2023, the company issued a shareholder letter highlighting its vision of "bringing 15 new products to market in five years" and expects to receive approval from the U.S. Food and Drug Administration (FDA) for an adult respiratory syncytial virus (RSV) vaccine in April 2024.

Analyst Hartaj Singh noted that while Moderna's COVID vaccine may experience a sales trough in 2024, vaccine sales are expected to return to growth in 2025 as awareness of infectious diseases increases. Moderna's other product lines are also highly bullish, including flu vaccines and personalized cancer vaccines, which are expected to be approved in the coming years. Moderna is currently working with US pharmaceutical company Merck (MRK.US) to develop a cancer vaccine aimed at treating diseases such as skin cancer.