CITIC Securities has released a research report highlighting key investment opportunities in the vaccine industry, focusing on sales improvements and advancements in innovative pipelines. Certain products have demonstrated strong sales performance, with sustained growth trends expected to continue.
**Industry Performance: Persistent Pressure but Signs of Improvement** The Chinese vaccine industry has faced prolonged challenges since 2024. Historically dominated by immunization programs, the sector was marred by negative incidents before 2019, impacting its development. However, stricter regulatory oversight and the launch of domestically developed blockbuster vaccines have revitalized the non-immunization market as a key growth driver.
Despite weakened industry attention in 2023, some companies achieved steady revenue growth through newly launched or high-demand products. In 2024, macroeconomic factors and intensified competition led to pricing pressures, causing the sector to underperform compared to broader healthcare indices. From January to October 2025, the Shenwan Vaccine Index fell 5.4%, lagging behind the Shenwan Healthcare Index (+18.3%) and the CSI 300 Index (+16.6%).
**Financial Performance: Declining Revenue and Profitability** In the first three quarters of 2025, vaccine sector revenue dropped 52.5% YoY, with net profit attributable to shareholders plunging 121.6%. The third quarter alone saw a 27.5% revenue decline and a 196.7% net profit slump. Key factors include: 1. Shifting consumer demand impacting terminal sales. 2. Fierce competition in products like 2-valent HPV vaccines, PCV13, and rabies vaccines. 3. Rising R&D expenses and price reductions due to government procurement programs.
Average gross margins fell to 65.8% (-7.4 ppts), while sales and management expense ratios increased. Accounts receivable turnover days rose to 381 days (+47.5 days YoY), reflecting liquidity pressures.
**Domestic Vaccine R&D: Homogenization and Innovation** Chinese vaccine developers largely follow global trends, leading to product homogenization. Key examples include 2-valent HPV vaccines by Wantai Biologics and Walvax Biotechnology, PCV13 by Walvax and Kangtai Biological, and varicella-zoster vaccines by Changchun BCHT.
To differentiate, companies are upgrading existing pipelines (e.g., higher-valent pneumococcal and HPV vaccines) or targeting unmet needs (e.g., *Staphylococcus aureus*, norovirus, and *Helicobacter pylori* vaccines).
**Therapeutic Cancer Vaccines: Emerging Frontier** Therapeutic cancer vaccines, which activate the immune system against tumors, represent a growing R&D focus. AI-driven antigen prediction and mRNA technology (pioneered by Moderna and BioNTech) are accelerating development. While China’s efforts remain nascent, domestic players are exploring diverse mRNA-based pipelines, particularly for HPV-related cancers.
**Notable Pipeline Updates** 1. **Staphylococcus aureus Vaccine (Olymvax)**: Completed Phase III enrollment (6,000 participants) in May 2025, with Phase II data showing strong safety and immunogenicity. A second indication (pressure ulcers) is under IND review. 2. **PBPV (CanSino Biologics)**: Phase I results demonstrated broad serotype coverage (98%) and robust immune responses in adults and the elderly. 3. **Hexavalent Norovirus Vaccine (Kanghua Biological)**: Licensed to HilleVax for global development (excluding China), with a $150M upfront and $255.5M in milestones. FDA clearance for U.S. trials was secured in 2023. 4. **Klebsiella pneumoniae Vaccine (Kangtai Biological)**: Targets drug-resistant strains, with preclinical efficacy >80%. A $53M technology transfer deal was signed in August 2025.
**Policy Trends: Insurance and Industry Consolidation** - **Commercial Insurance**: Vaccines are entering reimbursement lists (e.g., Zhonghui Biologics’ quadrivalent flu vaccine), easing financial burdens and unlocking new payment channels. - **Healthcare-Prevention Integration**: Recent policies reinforce vaccination services within clinical settings to boost coverage. - **M&A Policies**: Simplified approvals and incentives for biotech mergers aim to reduce fragmentation in the vaccine sector.
**Global Expansion: Diversifying Strategies** Exports remain the primary internationalization route, but companies are expanding into technical transfers, overseas production, and co-development. Post-pandemic experience and WHO’s 2022 NRA assessment of China’s regulatory system are expected to accelerate global outreach.
**Outlook: Sales Recovery and Innovation** Strong sales momentum is anticipated for blockbuster vaccines in Q4 2025 and 2026, supported by inventory optimization and favorable competitive landscapes.
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