Zhifei Biological Secures Exclusive China Distribution Rights for GSK's Shingrix Vaccine, Stock Surges

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　　Company Granted GSK's Shingles Vaccine Exclusive Distribution Rights in China, Viewed Optimistically

Our Staff Reporter Feng Yuyao

October 9,Chongqing Zhifei Biological Products Co.,Ltd.The stock price surged to the upper limit, closing at 58.4 yuan per share, with the latest market value reaching 140.2 billion yuan. On the same day, Chongqing Zhifei Biological Products Co., Ltd. drove the collective strengthening of the A-share biomedicine sector.

Chongqing Zhifei Biological Products Co., Ltd. announced on the evening of October 8 that the company had signed an agreement with GSK (GlaxoSmithKline PLC.), mainly regarding the supply, distribution, and co-promotion of GSK's recombinant shingles vaccine. GSK will designate Chongqing Zhifei Biological Products Co., Ltd. as the exclusive importer and distributor in the cooperation region.

Against the backdrop of domestic companies fiercely competing in the blue ocean track of shingles vaccines, Chongqing Zhifei Biological Products Co., Ltd. has secured the exclusive distribution rights from GSK. The impact of this move on the market is not hard to foresee. "It (Chongqing Zhifei Biological Products Co., Ltd.) will become the only company in China able to provide GSK's related products, expected to capture a significant market share and bring competitive pressure to other companies," said Jiang Han, a senior researcher at the Pangu Think Tank, to the Securities Daily.

　　Secures Exclusive Deal Worth 20 Billion Yuan

According to the agreement, GSK will exclusively supply Chongqing Zhifei Biological Products Co., Ltd. with Shingrix (recombinant zoster vaccine) and grant the company the rights to market, promote, import, and distribute the product in China (excluding Hong Kong, Macao, and Taiwan). The agreement is valid from October 8, 2023, to December 31, 2026, with a combined minimum purchase amount of 20.64 billion yuan for the agreed products.

For a long time, Chongqing Zhifei Biological Products Co., Ltd. has been the exclusive agent for the sales of relevant vaccines from Merck. According to the company's semi-annual report, in the first half of the year, the company achieved revenue and net profit of 24.445 billion yuan and 4.26 billion yuan, increasing by 33.19% and 14.24% respectively. However, when looking at the breakdown by product or service, Zhifei Biological’s self-developed products accounted for only 3.52% of revenue, while the revenue share of agency products was as high as 96.48%.

In January this year, Chongqing Zhifei Biological Products Co., Ltd. has renewed the supply, distribution, and co-promotion agreement with Merck. According to the agreement, Zhifei Biological will continue to purchase five types of agreement products from Merck, including HPV vaccines and pentavalent rotavirus vaccines. The agreement is valid until December 31, 2026, and the total basic procurement amount for the agreement products exceeds 100 billion yuan.

Regarding the recent acquisition of another major vaccine order from GSK, Chongqing Zhifei Biological Products Co., Ltd. stated that this agreement establishes the minimum annual procurement amount for the recombinant shingles vaccine over the next three years, ensuring the basic supply of the contracted product. If fulfilled as expected, it will positively impact the company's operating income and business profits from its agency operations. "The company will fully utilize its marketing network to ensure the normal fulfillment of the agreement, further consolidating the core competitiveness of the company’s development and strengthening its advantageous position in market competition."

　　Intensified Market Competition

Securing the exclusive distribution rights for GSK's vaccine not only has the potential to boost Chongqing Zhifei Biological Products Co., Ltd.'s future performance, but industry insiders also believe that the competitive landscape of China's shingles vaccine market may undergo changes.

"With the continuous expansion of China's shingles vaccine market, the number of entrants is increasing, and market competition will gradually intensify," Jiang Han told reporters.

Currently, there are four shingles vaccines available on the global market, namely Merck's Zostavax, GSK's Shingrix, SK's SkyZoster,Baike Biotech's GV. In addition to Shingrix, which is a recombinant subunit herpes zoster vaccine, the other three are all live attenuated vaccines. Among them, Zostavax has been discontinued in the United States due to its low preventive efficacy and weak market competitiveness.

Frost & Sullivan expects that by 2030, China's domestic shingles vaccine market will increase from 6 billion yuan in 2021 to 28.1 billion yuan. Currently, more than 10 domestic companies are entering the shingles vaccine field, some of which already have vaccines in the clinical stage.

In Jiang Han's view, the future competition in the shingles vaccine market will mainly be reflected in aspects such as product quality, price, and marketing. "In the fierce market competition, companies need to enhance their competitiveness by improving product quality and strengthening marketing, and may also capture market share through price reductions."

Deng Zhidong, General Manager of Hainan Boao Medical Technology Co., Ltd., also told the Securities Daily: "Some companies may adopt a price-cutting strategy to attract consumers and expand their market share. Companies need to carefully assess market demand and the competitive environment in order to balance the relationship between price and competition."

Editor: He Songlin