Merck's Two-Dose 9-Valent HPV Vaccine Finally Approved in China, Slashing Vaccination Costs by Over 1,000 Yuan Ahead of Domestic Competitors

On January 10, HPV vaccine concept stocksWantai Bio(603392.SH, stock price 76.8 yuan, market value 97.398 billion yuan),Zhifei Biological(300122.SZ, stock price $52.32, market value $125.568 billion),Walvax Biotechnology(300142.SZ, stock price 21.66 yuan, market value 34.815 billion yuan) All stock prices fell. By the closing, the declines were 5.94%, 5.61%, and 1.23% respectively. In terms of news, on the 9th, MSD announced that the two-dose vaccination schedule (0, 6-12 months) for females aged 9-14 with the nine-valent HPV vaccine had been approved. This means that the multinational pharmaceutical company, which has monopolized the global nine-valent HPV market for six years, has begun to offer a "lower-cost" vaccination option.

Notably, currently, all other HPV vaccines in China have simplified the vaccination schedule to two doses for females aged 9-14; in the U.S., MSD's nine-valent HPV vaccine is also recommended by the CDC (Centers for Disease Control and Prevention) for two-dose administration in females aged 9-14.

The two-phase vaccination schedule has been "long overdue" in China, seemingly a preemptive move by MSD to counter domestic competitors. Even based on the normal market launch timeline, Wantai Biologics' nine-valent HPV vaccine is expected to be approved for marketing around 2025, leaving MSD with only a one-year window to acquire customers.

Two-dose regimen "aligns" with domestically produced vaccines, reducing vaccination costs by over a thousand yuan.

According to a research report by Ping An Securities, based on the 2023 winning bid price, MSD's nine-valent HPV vaccine is the most expensive HPV vaccine in China, with a single-dose price as high as RMB 1,298 to RMB 1,310, which is almost four times that of the domestically produced two-valent HPV vaccine; however, from the perspective of batch release volume, the demand for higher-valent HPV vaccines among eligible female groups continues to increase—In the first half of 2023, the batch release volume of MSD’s nine-valent HPV vaccine reached 14.678176 million doses, representing a year-on-year increase of 57.85%.

On the morning of January 10, a relevant person from MSD revealed to the reporter of the "Every Day Economic News" that the company's nine-valent HPV vaccine has received approval for an additional two-dose regimen specifically for female recipients aged 9 to 14. There is no change in the single-dose amount, and the price per dose remains unchanged.

The approval of the new vaccination procedure means that the corresponding immunization cost will be thousands of yuan cheaper.

Notably, in the Chinese market, MSD was the last manufacturer to adjust the number of HPV vaccine doses.

According to the梳理 by reporters from "每日经济新闻" (National Business Daily), currently in China, there are four manufacturers providing HPV vaccines, including MSD, GSK, Walvax Biotechnology, and Innovax Biotech. The bivalent HPV vaccines produced by Walvax Biotechnology and Innovax Biotech have simplified the vaccination schedule since their launch; females aged 9-14 can adopt a two-dose regimen (0, 6 months). GSK's bivalent HPV vaccine was also approved for a two-dose regimen in May 2022, applicable to females aged 9-14.

Data shows that girls aged 9-14 are the primary target group recommended by the World Health Organization for vaccination. Professor Qiao Youlin from the School of Population Medicine and Public Health at Peking Union Medical College pointed out that this group tends to elicit a stronger immune response when vaccinated with the HPV vaccine, and females who have not engaged in sexual activity will achieve the best preventive effects. The two-dose vaccination schedule of "0, 6-12 months" simplifies the vaccination process, frees up more vaccine resources, and will further increase the vaccination rate among younger females in China.

In fact, as early as December 20, 2022, the World Health Organization released an HPV vaccine position paper recommending that girls aged 9-14 receive one or two doses of the HPV vaccine, females aged 15-20 receive one or two doses of the HPV vaccine, and women over 21 receive two doses of the HPV vaccine with a 6-month interval.

The reporter also noticed that the CDC's official website recommends that children aged 9-14 receive only two doses of the HPV vaccine, as "data obtained from current scientific research indicate that in children aged 9-14, receiving two doses of the HPV vaccine with an interval of at least 6 months is as good as or better than receiving three doses." The last review date for this page was November 1, 2021.

Advance "Prevention" of China-produced Nine-valent HPV Vaccine, Multiple Vaccine Stocks Fall in Response

As the world's first company to launch the nonavalent and quadrivalent HPV vaccines, MSD's success in the HPV vaccine field is evident. According to the company's financial report, the HPV vaccine products achieved a revenue of 7.015 billion US dollars in the first three quarters of 2023, increasing by 29% year-on-year. It is the most "profitable" drug of the company except for K medicine.

By region, of the $70.15 billion in revenue, $17.18 billion came from the U.S., a year-on-year decrease of 5%; income from international markets amounted to $52.97 billion, a year-on-year increase of 46%. Meanwhile, in the first three quarters of 2023, the China market brought MSD $52.55 billion in revenue, accounting for 13%, making it the company's second-largest overseas market outside Europe and the Americas.

But Chinese competitors are bringing direct pressure. According toSouthwest SecuritiesNovember research report: Chinese-produced HPV vaccines are generally expected to be launched successively after 2025. The listed companies involved include Wantai BioPharm, Walvax Biotech,CanSino Biologics, including Recbio, among others. Among them, the nine-valent HPV vaccines (for female indications) developed by Wantai Bio and CanSino Biologics are the most advanced, both having entered Phase III clinical trials. In late December 2023, it was rumored that Wantai Bio's nine-valent HPV vaccine would be launched ahead of schedule, sparking a stock market rally.

At the same time, according to the annual report of Zhifei Biological Products, the agent of MSD's nine-valent HPV vaccine in China, the gross profit margin of the company's agency business in 2022 (MSD accounted for 93.16% of its procurement) was 28.66%, a year-on-year decrease of 4.40 percentage points.

Against this backdrop, MSD's two-dose regimen for the nine-valent HPV vaccine clearly shows a proactive approach. Previously, the company had also focused on demographics and production capacity. For instance, on August 30, 2022, the company announced that the target population for the nine-valent HPV vaccine had been expanded from females aged 16–26 to females aged 9–45, aligning with the eligible group for the bivalent HPV vaccine. Anna Tian, President of MSD China, stated that the company had invested over $1 billion to enhance its existing HPV vaccine production facility capacity. From 2017 to 2020, the supply of HPV vaccines nearly doubled, and with continued capacity expansion, the supply is expected to double again by 2023.

In addition, in 2021, MSD launched a Phase III clinical trial in China to evaluate the protective efficacy, immunogenicity, and safety of the nine-valent HPV vaccine in males. Currently, its male nine-valent HPV vaccine is in the "application for marketing" stage.

Before the official debut of China-produced nine-valent HPV vaccine, these successive defenses are likely to deliver a "dimensionality reduction blow" to the bivalent HPV vaccine. At the closing on the 10th, the stock price declines of Wantai Bio, Zhifei Bio, and Walvax Bio were 5.94%, 5.61%, and 1.23%, respectively.