On October 9, Chongqing Zhifei Biological Products Co., Ltd. announced that the company had signed the "Exclusive Distribution and Co-Promotion Agreement" with GSK.GSK to Exclusively Supply Recombinant Shingles Vaccine to Chongqing Zhifei Biological Products Co., Ltd., Which Becomes the Exclusive Importer and Distributor in Mainland China.

Chongqing Zhifei Biological Products Co.,Ltd. disclosed,The initial term of this agreement is three years.From October 8 to December 31, 2026,The minimum procurement amount for the shingles vaccine totals 20.64 billion yuan.

This is another highlight for Chongqing Zhifei Biological Products Co., Ltd. after signing a billion-dollar deal with Merck earlier this year. Following the announcement, the company's stock price rose significantly on the same day, closing nearly 20% higher.

Chongqing Zhifei Biological Products Co., Ltd. stated that the cooperation agreement reflects the company's market promotion capabilities, demonstrating that its professional and efficient market competence, as well as its vertically integrated marketing network, have gained recognition from more business partners.After the initial period ends, the cooperation between the two parties may be extended for at least three more years.

According to the announcement, GSK has also reached a preliminary cooperation with Chongqing Zhifei Biological Products Co., Ltd. regarding its RSV vaccine, and subsequent actions will be carried out as soon as possible. This RSV vaccine was previously approved in the United States for use in the elderly population. Chongqing Zhifei Biological Products stated that it agrees to grant GSK a priority right in mainland China. In the development and commercialization of any RSV vaccine for the elderly, GSK will have the priority to become Chongqing Zhifei Biological Products' exclusive partner.

Powerful Combination

For GSK, the shingles vaccine business is crucial.

"Shingrix" is not the world's first shingles vaccine, but due to its excellent protective efficacy, "Shingrix" quickly became one of GSK's star products in its second year on the market, consistently ranking among the top ten best-selling vaccines globally, and is currently sold in 26 countries.

In 2022, "Shingrix" experienced a sales boom, with revenue reaching 2.958 billion pounds (approximately 3.6 billion US dollars), marking a 72% increase from the previous year.Sales reached 1.713 billion pounds in the first half of this year, with growth slowing but still robust.

Globally, "Shingrix" is GSK's star product. In June 2021, GSK proposed a target of doubling the sales growth of "Shingrix" at the investor meeting, with an expected reach of 4 billion pounds by 2026. GSK stated that everything is proceeding smoothly.

But such a major product has encountered difficulties in adapting to the Chinese market.

The vaccination rate for shingles in China is less than 1%.In recent years, after various science popularization and education efforts, people in China have gradually become aware of the existence of the shingles vaccine, but the vaccination rate has not seen a significant increase. Since its launch in China in 2020, the batch release of "Shingrix" has gradually slowed down, with only seven batches approved for release last year until October; in the first half of this year, there has been some recovery, with seven batches already approved for release.

"Shingrix" Faces Obstacles in China, High Price is the Key Factor.Herpes zoster is highly prevalent among middle-aged and elderly people. To complete the vaccination, two doses are required, costing a total of 3,200 yuan. According to statistics, in 2022, the average pension in China was highest in Beijing, Shanghai, Zhejiang, Qinghai, and Tibet, while most other provincial regions ranged between 3,000 and 4,000 yuan. The cost of the two-dose vaccine is equivalent to one month's pension income for the elderly.

Chongqing Zhifei Biological Products Co., Ltd. has become the "savior" for GSK in seeking a sales breakthrough. With over a decade of experience as the Chinese agent for HPV vaccines, Chongqing Zhifei Biological Products Co., Ltd. has gained a strong reputation. Even with the entry of domestic players such as Wantai and Walvax, the nine-valent HPV vaccine remains dominant.

In 2022, Merck's HPV vaccine global sales reached $6.897 billion, with the financial report specifically highlighting market demand represented by China.In the first half of 2023, Chongqing Zhifei Biological Products Co., Ltd.'s agency business revenue reached 23.583 billion yuan. Securities companies estimated that the sales of the nine-valent vaccine accounted for over 70% of the company's agency income, or 16.5 billion yuan.This figure is already sufficient to crush the remaining HPV vaccine manufacturers in China.

With its commercialization capabilities, it is a natural move for GSK to seek cooperation with Chongqing Zhifei Biological Products Co., Ltd.

Challenger Takes the Stage, GSK Defends

At this point, GSK handed over "Shingrix" to Chongqing Zhifei Biological Products Co., Ltd., a crucial factor being the competition from Chinese manufacturers. In the HPV field, Merck's nine-valent vaccine still reigns supreme, but GSK's "Shingrix" is a different story.

At the beginning of this year, Baike Biotech's attenuated live shingles vaccine "Ganwei" was launched in China, with its application extended to people over 40 years old. Although its technological approach is not as advanced as GSK’s, it has the advantage of a lower price. According to leaked online pricing, the full vaccination course of "Ganwei" costs only 1,369 yuan and requires just one shot.In terms of batch release volume, Baike Biotechnology surpassed GSK this year, with a total of 10 batches in the first half of the year.

Among the unlisted players, Green Bamboo Biotech and Recbio have shown their ambitions, both launching head-to-head clinical trials targeting "Shingrix". Green Bamboo Biotech pointed out that its recombinant zoster vaccine (LZ901) has milder side effects compared to "Shingrix", and can quickly induce higher levels of antibodies after the first dose, with subsequent antibody levels being basically equivalent.Green Bamboo Biotech offers a cheaper price than "Shingrix", with one shot costing 500 to 800 yuan.The full course of vaccination costs up to 1,600 yuan.

Facing the challenge from manufacturers in China, GSK also rose to the occasion. In September this year, GSK released the Phase IV clinical trial of "Shingrix" after its market launch. The results showed that among 6,000 Chinese participants aged over 50 who received two doses of "Shingrix," not a single case of shingles was reported, demonstrating 100% protective efficacy. In the previous Phase III clinical trial, this figure was 97%.

The battle between GSK and Chinese manufacturers continues. Chongqing Zhifei Biological Products Co., Ltd. has taken over "Shingrix," bringing the shingles vaccine competition back among Chinese companies. Whether it can revive the struggling imported shingles vaccine depends on this leading Chinese vaccine company.

Author: Yang Xixia

Editor | Jiang Yun, Jia Ting

Operation | Twenty-thirteen

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