With an inventory of nearly 50 million, the king of China's vaccines has been abandoned by the market

健识局

2024-04-24 10:19Posted on the official account of Beijing Health Knowledge Bureau

On April 23, Zhifei Biotech suffered a heavy decline at the opening, falling 11.99% as of the close.

Zhifei's 2023 financial report shows that the company's revenue last year was 52.92 billion yuan and net profit was 8.07 billion yuan, a year-on-year increase of 38.3% and 7.04% respectively. Such a performance is like an explosion in any company, but the stock price fell sharply after the results were released.

The poor performance of the first quarter of 2024 may be the reason for the bearish market. In the first three months of this year, Zhifei Biotech achieved revenue of 11.396 billion yuan, a slight increase of 2% over the same period of the previous year, and net profit fell sharply by 28.26% to only 1.458 billion yuan. Zhifei Biotech believes that the sales proportion of the nine-valent HPV vaccine increased in the first quarter of this year, and the profit margin of this vaccine is lower than that of the quadrivalent HPV vaccine, so the profit will decline if the revenue remains unchanged.

In 2023, the batch issuance of Zhifei's quadrivalent HPV vaccine decreased by 26.27% year-on-year, and the batch issuance of nine-valent HPV vaccine increased by 136.16% year-on-year, and the company's net profit margin decreased by less than 5 percentage points last year, while the net profit margin decreased by 5.4 percentage points in the first quarter of this year. If the company's statement is true, Zhifei's sales of the nine-valent vaccine in the first quarter of this year will at least double that of the same period last year.

With such a good sales trend, why is the market not recognized?

On April 11, Wantai Biotech announced that the unblinding results of the phase III clinical trial of its nine-valent HPV vaccine were in line with expectations. If it goes well, Wantai's nine-valent HPV vaccine will be approved within this year, which will have a serious impact on Zhifei Biotech. In addition, Zhifei Biotech lacks new growth points, and the GSK herpes zoster vaccine as an agent has just applied for batch issuance in January this year, and the market sales will have to go through at least 60 days of approval, and the performance will not be seen until the semi-annual report at the earliest.

1. The cake that is about to be carved up

Zhifei Biotech's status as the "first brother of vaccines" is well deserved, and last year's revenue of 50 billion yuan was 5 times that of Wantai Biotech and Walvax Biotech combined.

Some investors believe that Zhifei's accounts receivable are too high and there are risks. In fact, historically, Zhifei's accounts receivable have remained in a reasonable range, accounting for roughly 37%-54% of revenue since 2017. The proportion of accounts receivable in 2023 is only relatively high, and the operation should not be a problem.

The key to determining the market value of Zhifei Biotech is still the changes in the HPV vaccine market. The competition for HPV vaccines in China has become fierce. Merck has long been aware of the crisis, and in 2022 decided to increase the launch of HPV vaccines in the Chinese market, with obvious intentions, in order to complete the market harvest before the domestic 9-valent HPV vaccine is launched.

This year, Zhifei Biotech will also be ready to develop the market for herpes zoster vaccine. In the first quarter, Zhifei spent 10.84 billion yuan on cash for the purchase of goods and payment for labor services. This led to a significant decrease in Zhifei's operating cash flow in the first quarter of 2024, which was -4.274 billion yuan.

The outside world is not worried that Zhifei Biotech will not make money, but is worried that the nine-valent HPV vaccine market has reached its peak.

In 2023, Merck & Co., Ltd. will release 36,550,800 9-valent HPV vaccines, a record high. However, last year, the sales volume of all Zhifei Biotech's vaccines was 27.4906 million doses. On the one hand, there is a large amount of pressure in the market, as evidenced by the company's accounts receivable, and on the other hand, Zhifei Biotech still has 42.096 million doses of vaccines in stock, which is the highest since 2017 after removing the impact of the new crown vaccine.

The HPV vaccine is not like a drug, basically one is one less. Sales in the U.S., where the HPV vaccine was first available, have weakened, growing by only 0.8% in 2023, with Merck explaining that this is due to demand and price. The strong growth of 29% in the global market is driven by emerging markets dominated by China.

In the past two years, Merck has made many moves to please the market. In 2022, the age group of the domestic 9-valent HPV vaccine was expanded to women aged 9-45, and in September last year, Merck's marketing application for a new indication of 9-valent HPV for the male population was accepted. In March this year, Merck promoted the clinical trial of a single-dose HPV vaccination regimen for 9-valent HPV. If it goes well, people's vaccination costs will be reduced, and it will drive a wave of sales. In short, the market can grab a little is a little.

These actions need to be digested by the market little by little. But the current sales pattern will soon change, once Wantai's domestic nine-valent HPV vaccine is launched, those vaccines in Zhifei's inventory and market channels will be reduced in price and promoted or bad debts?

2. Cross-border diet pills?

Over the years, the characteristics of Zhifei's over-reliance on agent varieties have not changed, and they are even more than before. In 2023, the proportion of Zhifei's agent products will reach 98.05%.

Zhifei also wants to change. In March 2021, Zhifei's new crown vaccine, and in 2022, the sequential vaccine created another wave of growth for it. In 2021 and 2022, the overall sales volume of Zhifei Biotech's vaccines far exceeded usual, reaching 284 million and 159 million, which was about 7-10 times that of previous years. However, after the new crown epidemic passed, the revenue of independent products returned to 1.028 billion yuan.

Independent products have never been able to grow, and Zhifei Biotech wants to maintain the existing sales scale, so it can only continue to look for new agent varieties. In October last year, Zhifei Biotech and GSK signed an agreement to become the exclusive importer and distributor of its herpes zoster vaccine, with a total minimum purchase amount of 20.64 billion yuan from 2024 to 2026. In addition, Zhifei Biotech has also reached a preliminary intention with GSK to become its exclusive partner for RSV vaccine in China.

The herpes zoster vaccine does not have the explosive characteristics of the 9-valent HPV vaccine. Young women who received the 9-valent HPV vaccine are not a price-sensitive group, but to persuade middle-aged and elderly people to spend one or two thousand yuan to prevent the disease, GSK did not think of a good way in the Chinese market, so it was thrown to Zhifei Biotech. What's more, Baig Bio, the domestic player of herpes zoster vaccine, has entered the game, and has achieved more than 2 times net profit growth in the first quarter.

RSV vaccine is currently a track that is rapidly gaining popularity in the global market. In May 2023, GSK's RSV vaccine contributed £1.238 billion in the year it was approved. But whether the myth of overseas sales can be replicated is still a question mark.

In November last year, the news that Zhifei Biotech acquired the equity of Chen'an Biotech in cash attracted great attention. Chen'an Biotech is a company that makes insulin, GLP-1 and other drugs, and recombinant semaglutide injection has been in the third phase of clinical trial. The outside world believes that Zhifei Biotech has since crossed over to the now popular weight loss drug market.

Chen'an Biotech was established in 2015, and the major shareholder is Jiang Rensheng, chairman of Zhifei Biotech. Chenan Biotech has a recombinant protein technology platform, which can provide support for recombinant protein vaccines on the one hand, and develop peptide drugs on the other hand. At present, weight loss drugs on the market are hot, and Chen'an Bio has put on the concept of weight loss, which has attracted attention. As long as the action is fast enough, Zhifei's acquisition of Chen'an Biotech will still be valuable.

Written by Yang Xixia

Editor|Jiang Yun Jia Ting

Operations | Zhu Ying

Illustration: Visual China

View original image 130K

• 

•