Sanofi Halts Flu Vaccine Supply in China: Will This Reshape the $10B Market?

Text | Chang Zeyu

Editor | Hai Ruojing

On the evening of August 26, news of an "urgent recall of Sanofi Pasteur vaccines" spread on social media. On the morning of August 27, Sanofi, the flu vaccine giant, confirmed that it had decided to suspend the supply and sales of its flu vaccine in China due to potency issues. There is currently no further information on whether it will re-enter the market during this year's sales period.

For a time, people who had already been injected with the vaccine raised questions about the product's safety and efficacy. In response, Sanofi stated, "No signs or evidence have been found indicating that the product’s safety or efficacy has been affected," and emphasized that this move is merely a "precautionary measure."

As of the time of writing, Sanofi has not disclosed the reasons for the downward trend in "potency." Multiple industry insiders told 36Kr that the reasons behind it are varied and currently cannot be confirmed.

Giant Presses "Pause Button," Also Causes Fluctuations in the Stock Market: On the morning of the 27th in China's A-share market, vaccine-related stocks frequently rose. As of midday, Hualan Vaccine, Jindike, Kanghua Bio, Hualan Bio, and others all saw varying degrees of increase. Among them, Jindike and Hualan Vaccine surged nearly 20%.

Industry insiders said that if Sanofi is unable to "launch" flu vaccines with expected efficacy in the Chinese market in the short term, domestic flu vaccine manufacturers will receive certain benefits. However, considering the current situation where Chinese flu vaccine manufacturers are competing on low prices and public awareness of flu vaccination is still insufficient, the extent to which this "pause" will boost the performance of Chinese flu vaccine manufacturers remains to be seen.

A downward trend in efficacy does not mean inefficacy or lack of safety.

On the evening of August 26, news of an "urgent recall of Pasteur flu vaccines" spread online, stating that Sanofi Pasteur's vaccines were recalled due to substandard efficacy, and multiple vaccination centers suspended its administration. Questions such as "Is the news true?", "Are there safety issues?", "Why did efficacy problems arise after passing inspection and entering the market?", and "Do people who have already been vaccinated need to receive another flu vaccine?" quickly sparked discussions on social media.

On the morning of August 27, 36Kr found that multiple places, including the Qiaozhong Street Community Health Service Center in Liwan District, Guangzhou, and the Taiyi Health Service Center in Beilin District, Xi'an, announced that the Pasteur influenza vaccine was "out of stock."

Later in the morning, 36Kr learned from Sanofi that due to a declining trend in the potency of the flu vaccines Vaxigrip® (trivalent) and VaxigripTetra® (quadrivalent), there is an expectation that vaccine efficacy may be affected before the end of the product's shelf life. The company has decided to temporarily halt the supply and sales of flu vaccines in China.

As for the much-concerned safety issues, a staff member of Sanofi responded that the influenza vaccines already on the market and in circulation have passed the market approval and met the release standards, "No signs or evidence have been found indicating that the safety and efficacy of the product have been affected." The suspension of the supply and sales of the vaccine in China is merely a "precautionary measure."

This is not the first such preventive measure encountered by Pasteur's influenza vaccine. As early as 2018, Sanofi had initiated a "preventive suspension of sales and use" for Pasteur, also due to a declining trend in "potency."

Potency, the effectiveness testing and evaluation of vaccines, corresponds to the ability of vaccines to enable the human body to produce specific immunity. Regarding the reasons for the downward trend in potency, Chen Jianguo, a business partner of the pharmaceuticals and healthcare division at Hejun Consulting, analyzed to 36Kr that the reasons are relatively complex. Improper control of raw materials during the production process, issues arising in the cold chain transportation process, or improper storage can all potentially affect vaccine potency.

Tao Liyan, former chief physician of the Immunization Program Department of the Shanghai Municipal Center for Disease Control and Prevention, analyzed that this might be related to the "distance" between the test indicators and the passing line. "A possible reason is that the vaccine barely exceeded the qualification criteria during the initial testing, but as a biological product, vaccines are inherently unstable. After being stored for some time, the indicators may drop, resulting in failure to meet the standards."

He further illustrated with an example: "One of the important efficacy indicators for influenza vaccine testing is the hemagglutination titer (one of the indicators), which, according to the 2020 edition of the Pharmacopoeia, should be no less than 1:160. If a batch of influenza vaccine barely passes the pre-market test at 160, it’s entirely possible that after a few months, the titer could drop below 160; however, if it initially reaches 320, there's a much greater likelihood it will still remain above 160 after a few months."

The two aforementioned industry insiders both indicated that the final determination of the cause shall be based on the official announcement from the manufacturer.

As for whether it is necessary to get a supplementary vaccination after receiving a vaccine with lower-than-expected efficacy, Tao Linapoints out: it can be done, but it's not necessary. Virology expert and Professor at the University of Hong Kong's School of Biomedical Sciences, Jin Dongyan, echoed a similar view, stating that any product brought to market only needs to meet national regulatory requirements and achieve corresponding standards to ensure quality and effectiveness. However, different manufacturers set varying factory standards. "Sanofi’s product is still effective at this point; it just may not have reached Sanofi’s own higher internal standard, which is why they decided on a full recall."

"This reflects Sanofi's strictness in quality control," commented Jin Dongyan.

As one of the largest influenza vaccine manufacturers in the world, Sanofi's global sales of influenza vaccines were 2.977 billion euros and 2.669 billion euros in 2022 and 2023, respectively. What chain reactions will the giant’s "pause" trigger in China's influenza vaccine market?

Giant's "Pause" May Bring Certain Benefits to Chinese Manufacturers

Generally speaking, the flu season in the Northern Hemisphere is from September to May of the following year. The optimal vaccination time is 2 to 4 weeks before the start of the flu season, with protection lasting 6 to 8 months. Therefore, the annual sales cycle for flu vaccines is concentrated from August to June of the following year. This "peak season" halt may impact the sales of Sanofi's related products in China.

When 36Kr inquired Sanofi about the subsequent measures regarding the suspended sales of the flu vaccine, the company responded that it was not yet informed and also uncertain whether the same category of flu vaccine products would still be supplied to the Chinese market during this year's sales period.

There is no doubt that the potential of China's influenza vaccine market cannot be underestimated.

According to Everbright Securities, the penetration rate of influenza vaccines in China is relatively low. As of 2020, the total batch release of influenza vaccines in China was 57.65 million doses. If calculated based on the total population of 1.41212 billion at the end of 2020, even if all the vaccines issued that year were administered, the vaccination rate for the entire population would only be 4.08%. This figure is far lower than the target influenza vaccine coverage rate (75%) recommended by the WHO.

As of now, the influenza vaccines approved for marketing in China mainly include trivalent inactivated vaccines, trivalent live attenuated vaccines, and quadrivalent inactivated vaccines. Among them, the trivalent vaccines can prevent three types of influenza: A/H1N1, A/H3N2, and B/Victoria strains, while the quadrivalent vaccines add protection against the B/Yamagata strain, making them the "main force" in the market. In 2023, there were 72 batches of trivalent split influenza virus vaccines approved for release, and 260 batches of quadrivalent split influenza virus vaccines, accounting for more than 78%.

Among the quadrivalent vaccines, HuLan Biological and the three major institutes (Changchun Institute, Wuhan Institute, and Shanghai Institute under China National Biologic Products) ranked first in 2023 with 88 batches of lot release. Sinovac Biotech and Sanofi Pasteur followed in second and third place with 41 and 25 batches, respectively.

According to statistics, in the first half of 2024, Sanofi accounted for 18% of the batch release of trivalent influenza vaccines and 15% of the batch release of quadrivalent influenza vaccines in China. If Sanofi does not resume the supply and marketing of influenza vaccines in the Chinese market in the short term, will it mean that domestic manufacturers will see a market boost?

According to previous reports, a staff member of Hualan Vaccine stated that the capacity planning and batch release of influenza vaccines are前置的工作; a staff member of Jindike also mentioned that the production scheduling cycle for influenza vaccines is relatively long, and unless facing extreme situations, the production plan would have been determined at least several months in advance.

In this regard, Chen Jianguo stated, "There is indeed a 'time gap' between the vaccine's lot release and its production and market entry. Planning production capacity in advance is a common practice. However, influenza vaccine companies will also increase their application volumes based on market conditions. Theoretically, the NIFDC (National Institutes for Food and Drug Control) will adjust the release volume accordingly. Therefore, if Sanofi does not resume supply and marketing for a long time, it would still be considered beneficial for related companies in China."

However, the extent of the benefit still depends on consumers' attitudes towards different brands. 36Kr observed that, on the demand side, consumers have mixed feelings about Sanofi's suspension of influenza vaccine supply and sales. Some people mentioned that they "have been getting Pasteur for several consecutive years" and are hesitant about switching to other brands of influenza vaccines.

As far as China's influenza vaccine market is concerned, compared to the possible "gap" that may be caused by Sanofi's "pause," what is more concerning is that, similar to the HPV bivalent vaccine, China’s influenza vaccine market has already shown a "highly competitive" situation. Therefore, the exit of individual manufacturers will have limited impact on increasing market dividends.

In May this year, the three major institutions took the lead in reducing the winning bid price of a quadrivalent vaccine from 128 yuan/dose to 88 yuan/dose. Subsequently, multiple companies such as Hualan Vaccine and Beijing Sinovac Biotech followed suit, with price cuts for several quadrivalent influenza vaccines roughly equivalent to those of the three major institutions.

There is no doubt that the main motivation for multiple companies to successively cut prices lies in maintaining and expanding their market share. For instance, on the evening of June 4, Hualan Vaccine issued an announcement stating that, in the long term, the price reduction "is conducive to stimulating the growth of the influenza vaccine market demand, further increasing the influenza vaccination rate, and expanding the market scale."

However, as a self-funded, voluntary vaccination non-immunization program vaccine, the influenza vaccine does not belong to a price-sensitive market, and whether "trading price for volume" can be effective is questionable.

Jin Dongyan, mentioned earlier, told 36Kr that when it comes to flu vaccines, the factor more directly related to vaccination rates is the cultivation of vaccination awareness. "Whether or not to get vaccinated and which type to choose are entirely personal decisions. What should be done now is to popularize scientific knowledge, such as who needs the flu vaccine more and within what scope the flu vaccine should be used."