Scientists believe cervical cancer may become the first cancer ever conquered in human history. Modern science confirms that cervical cancer is primarily caused by lesions from several high-risk HPV types; widespread vaccination among appropriate age groups could soon enable humanity to completely eradicate the disease. The development of the HPV vaccine is closely linked to Chinese scientists. German scientist Harald zur Hausen discovered the connection between HPV and cervical cancer, after which Chinese scientist Dr. Zhou Jian and Professor Ian Frazer of the University of Queensland advanced the laboratory synthesis of the HPV vaccine. Later, Dr. Zhou Jian passed away from overwork, and Frazer chose to collaborate with Merck to develop the HPV vaccine. Using Zhou Jian's technology, they spent 25 years to finally mass-produce the world's first cervical cancer vaccine.
At the administration site of the first cervical cancer vaccine in 2006, Zhou Jian's son Zhou Zixi attended on behalf of his father. When the college entrance exam resumed in 1977, 20-year-old Zhou Jian enrolled and was admitted to Wenzhou Medical College—a key that unlocked humanity's battle against cervical cancer. In the same exam, 24-year-old Jiang Rensheng entered Guilin Medical College. After graduating in 1980, the 27-year-old Jiang was assigned to work at the Guangxi Guanyang County Epidemic Prevention Station. The following year, in the 1978 college entrance exam, a man named Xia Ningshao tested into Shaoyang Health School—we will return to his story later. These three Chinese men, who never met, became pivotal figures advancing the history of HPV vaccine development.
In 2002, Jiang Rensheng, having ventured into entrepreneurship, invested his entire savings to acquire a nearly bankrupt vaccine company in Chongqing, renaming it Zhifei Biological Products. The gears of fate began to turn. In a sense, Jiang Rensheng carried forward Zhou Jian's legacy by introducing the HPV vaccine to China, benefiting millions of Chinese women. Naturally, Jiang also amassed considerable wealth; after the company went public, its market cap once exceeded 200 billion yuan, making him the richest person in Chongqing. On January 12, 2026, Zhifei released a performance forecast, announcing an annual loss of 10.7 to 13.7 billion yuan for 2025. What happened?
Merck's Waterloo: Outcompeted by Domestic HPV Vaccines After the HPV vaccine launched globally in 2006, it only reached the Chinese market in 2017 due to regulatory procedures, with Zhifei as the exclusive agent. During the intervening decade, many women from mainland China traveled to Hong Kong to get vaccinated at their own expense. Including travel and accommodation, the costs were substantial.
Data source: Tonghuashun iFind According to the data, after sales began scaling in 2018, Zhifei's performance soared like a hot-air balloon. By 2023, the company's revenue had skyrocketed to 52.9 billion yuan. While Zhifei was counting easy money, domestic HPV vaccine teams were working tirelessly on breakthroughs. When Zhou Jian was synthesizing the HPV virus in the lab, Xia Ningshao—one year his junior—was researching hepatitis C at Loudi Central Hospital, earning the second prize for Scientific and Technological Progress in Hunan Province in 1993. In 1994, Xiamen University exceptionally hired Xia, who held a technical secondary school diploma, as an associate researcher to lead a virology research group focused on HIV testing. In 1999, the year Zhou Jian passed away, Xia developed China's first third-generation HIV antibody diagnostic kit, winning the National Science and Technology Progress Award. Xia then led his team in 14 years of dedicated research on the hepatitis E virus; in 2012, China's first hepatitis E vaccine was successfully launched. Starting in 2003, Xia's team collaborated with Wantai Biological Pharmacy to develop an HPV vaccine. In 2019, Wantai's bivalent HPV vaccine officially launched; in June 2025, its 9-valent HPV vaccine hit the market. Walvax Biotechnology's bivalent vaccine entered the market in 2022, sparking a price war. The lowest procurement price for a bivalent vaccine dropped to just over 20 yuan, overwhelming imported vaccines. Merck's vaccine faced fierce competition in China, and as the exclusive agent, Zhifei's performance began to plummet.
Root Causes of the Huge Loss Looking solely at Zhifei's Q3 2025 report, the situation didn't seem disastrous—a 1.2 billion yuan loss was within expectations. So how did the full-year loss suddenly exceed 10 billion yuan? The root cause lies in the "minimum purchase" agreement Zhifei signed with Merck. After their contract expired in 2023, the two parties renewed it, committing Zhifei to purchase over 98 billion yuan worth of HPV vaccines by the end of 2026. Had domestic vaccines not disrupted the market, this would have been a guaranteed winning deal. After all, the company's revenue had surged from just over 400 million yuan in 2017 to 52.9 billion yuan precisely through such arrangements. However, when domestic vaccines drove prices down to rock-bottom levels, this purchase commitment became a catastrophe for the company.
Data source: Tonghuashun iFind Under the agreement, Zhifei must purchase the vaccines even if it cannot sell them. To ensure compliance, the once cash-rich Zhifei even applied for a syndicated loan exceeding 10 billion yuan.
Inventory Write-Downs Some investors might assume that if the company stops selling, it stops losing. It's not that simple. In accounting, there is an indicator called inventory write-downs. After products are purchased and stored, if market prices fall, the company must provision for inventory depreciation on its books. Provisioning for inventory write-downs directly reduces profits, meaning the company can incur massive losses even without operating.
Data source: Tonghuashun iFind Since retail investors cannot access detailed inventory information, they can only infer from related data in financial reports. The most telling indicator of inventory depreciation risk is days sales of inventory. Zhifei's days sales of inventory reached around 980 days in its Q3 2025 report—a sharp deviation from past trends, with a steep annual increase since 2023. Merck's HPV vaccines have a shelf life of 36 months; once Zhifei purchases and stocks them per the agreement, it faces price reduction risks. Reports indicate that in many cities, Merck has launched "buy two doses, get one free" promotions, effectively cutting prices by one-third. If large quantities of goods ultimately cannot be sold normally, the company, under auditor supervision, must assess and provision for inventory impairment. It's crucial to note that the projected 10 billion yuan loss is based on the company's financial estimates. If auditors cannot reach an agreement with the company, this figure could further increase after the audit!
Weak In-House R&D Beyond distributing Merck's products, does the company have no other leg to stand on? In reality, Zhifei had planned to heavily invest in proprietary products even before its contract with Merck expired in 2023. However, the agency business was too profitable and effortless, leaving the company with insufficient motivation for in-house R&D. Financial reports show that revenue from Zhifei's self-developed products was only about 1 billion yuan in 2024 and roughly 500 million yuan in the first half of 2025. The scale remains small, with sluggish growth. Unless the agreement is modified (which is highly probable), Zhifei could face insolvency by 2026. For a vaccine giant once valued over 200 billion yuan, two critical missteps led to this predicament: first, underestimating the progress of domestic 9-valent HPV vaccine R&D when signing the agreement—had Wantai's 9-valent vaccine been delayed by just two years, Zhifei would have nearly completed its "easy profit" mission; second, grossly inadequate investment in in-house R&D, resulting in a lack of viable proprietary products to sustain the company.
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