Price reduction wave sweeping across the vaccine industry

On October 23rd, information from "Jilin Release" indicated a reduction in the online prices of some non-immune planning vaccines, mainly involving vaccines such as tetanus, influenza, 23-valent pneumonia, measles-mumps-rubella, and hepatitis B in certain models.

This year, a wave of price reductions has swept through the vaccine industry, with many vaccine companies following suit, and the prices of some vaccine products have continuously hit historical lows.

There is no lowest, only lower.

The six non-immune planning vaccines announced for price reduction in Jilin Province are all from the China National Pharmaceutical Group (Sinopharm), specifically from the Wuhan, Chengdu, Shanghai, and Beijing institutes under Sinopharm. The price reduction range for these vaccines is between 14% and 37%.

Among them, the quadrivalent influenza vaccine (in a vial) developed by the Wuhan institute has been reduced from the original 108 yuan to 78 yuan, with a reduction of about 28%.

Compared with the previous price reductions of some vaccine products in some regions of the country by Sinopharm, the newly added hepatitis B vaccine is included this time. That is, the recombinant hepatitis B vaccine (brewer's yeast) from the Beijing institute has been reduced from the original 118 yuan to 98 yuan, with a reduction of about 17%.

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Regarding this price reduction, Jilin Province stated that it was "after consultation with the company."

This year, Sinopharm has also fired the first shot in reducing the market price of influenza vaccines on a self-paying basis. On May 20th, the Jiangsu Provincial Public Resources Trading Center announced that the winning price of the quadrivalent influenza vaccine (pre-filled or pre-filled syringe) from the Chengdu, Wuhan, and Shanghai institutes under Sinopharm was reduced from 128 yuan to 88 yuan, marking the first time the self-paying price of the quadrivalent influenza vaccine fell below 100 yuan.

Sinopharm's price reduction actions have had a chain reaction in the influenza vaccine industry, with influenza vaccine companies such as Hualan Vaccine, Beijing Kexing Biological, and Jin Di Ke following suit.

The wave of price reductions for influenza vaccines has also spread from the self-paying market to the public-funded market.On September 5th, the Zhejiang Province Public Resources Trading Service Platform published the "Announcement on the Winning (Transaction) Results of the Zhejiang Provincial Center for Disease Control and Prevention's 2024 Mass Preventive Inoculation Influenza Vaccine (Provincial Level) Project", which involves trivalent influenza vaccines. The winning company is the Shanghai branch of the China National Pharmaceutical Group, with a winning price of 10.857 million yuan and a winning quantity of 1.155 million doses. The price per dose is only 9.4 yuan, marking the first time that the winning unit price of publicly funded influenza vaccines has dropped below ten yuan.

Overall, this year has seen a reduction in the prices of various vaccines, including influenza vaccines, bivalent HPV vaccines, adsorbed tetanus vaccines, 23-valent pneumococcal polysaccharide vaccines, measles-mumps-rubella combined live attenuated vaccines, recombinant hepatitis B vaccines (brewer's yeast), human rabies vaccines, and varicella live attenuated vaccines. Some of these vaccines have seen price reductions in the private market, while others have seen reductions in the public market.

In August of this year, the winning price of Walvax Biotechnology's bivalent HPV vaccine in the procurement by the Shandong Provincial Center for Disease Control and Prevention was reduced to 27.5 yuan, once again setting a new record for the price of domestic bivalent HPV vaccines. Looking back at when the vaccine was approved for marketing in 2022, the initial price was over 300 yuan. In just two years, the price has dropped to less than one-tenth of the original.

Behind the Intensive Price Reduction Trend

Currently, China classifies vaccines into two categories. Category I vaccines are provided free of charge by the government to citizens and should be administered according to government regulations, also known as free vaccines (officially called "immunization schedule vaccines"). Category II vaccines are other vaccines that citizens pay for and choose to receive voluntarily and with informed consent, officially called "non-immunization schedule vaccines" or paid vaccines. In the vaccine market, the paid vaccine market accounts for the dominant share.

Xingye Securities stated in its research report that the prices of Category I vaccines are relatively low, with gross profit margins usually below 50%. The gross profit margins of proprietary products in Category II vaccines are relatively high, reaching over 90%, while the gross profit margins of agency products in Category II vaccines are generally below 50%.

Why has the vaccine industry seen an intensive wave of price reductions this year?

A person from a vaccine company told First Financial Daily that this wave of price reductions is both an attempt by some companies to expand their market share and a result of some companies being forced to follow suit. "Taking the China National Pharmaceutical Group as an example, they are the industry leader in the free vaccine market, but in the paid market, compared to the market share of private vaccine companies, there is still a gap. They have reduced the prices of several vaccine varieties in the paid market, and it is possible that they want to further expand their share of the paid market. The competition in the vaccine industry is really intense now, affecting both themselves and others."

The internal competition in the vaccine industry is also related to the severe homogenization of the vaccine industry. There are multiple manufacturers that can supply the same type of vaccine product, such as influenza vaccines and rabies vaccines, with the number of manufacturers exceeding 10 for both.

"In addition to intense industry competition, public hesitation about vaccination and a reduction in preventive consumption expenditure by the public are also testing the vaccine sales market," another person from a vaccine company told First Financial Daily.The vaccine industry insider stated that the impact of vaccine product price reductions on the companies themselves should be viewed differently. If a company's vaccine product has been on the market for many years and the research and development costs, as well as the depreciation and amortization of factory equipment, have been completed, then the production cost of the vaccine itself is quite low, and the impact is relatively minor. Conversely, if a company's product is newly introduced or has been on the market for a short period, the production cost will be higher, and the impact will be more significant. Additionally, production costs can vary among different companies due to different quality standards or processes. Furthermore, labor costs in different regions also lead to differences in production costs for companies.

At present, to break free from the internal competition in the domestic market, some companies have been increasing their efforts to expand into international markets.

On the evening of October 22nd, Walvax Biotechnology also announced that its subsidiary, Yuxi Walvax Biotechnology Co., Ltd., recently received a "Product Registration Certificate" issued by the Drug Safety Center of the Ministry of Health of the Sultanate of Oman for its 13-valent pneumococcal conjugate vaccine. This vaccine was approved for sale in China in 2020, and as of this year's mid-year report, the vaccine has been exported to 20 countries, covering Southeast Asia, South Asia, Central Asia, Africa, and the Americas.

Walvax Biotechnology stated that the acquisition of the "Product Registration Certificate" in Oman for the 13-valent pneumococcal conjugate vaccine is an important milestone in the company's internationalization strategy. It is of great significance for the vaccine to enter the international market and enhance the company's influence in the global market.