GSK Bets Big on RSV Combination Vaccine: Can the High-Growth 'Legend' Continue?

Chongqing Zhifei Biological Products Co., Ltd. and GSK, two leading companies in the vaccine industry in China and abroad, have recently announced the deepening of their cooperation after a successful collaboration last year.

On December 5, GSK and Chongqing Zhifei Biological Products Co., Ltd. signed a new agreement to optimize the cooperation terms for the sales of GSK's shingles vaccine, Shingrix, in China.Extend the original three-year cooperation period (2024-2026) significantly to 2034.According to the new agreement, Chongqing Zhifei Biological Products Co., Ltd. will continue to enjoy the exclusive rights for importing, distributing, and co-promoting the vaccine in mainland China.

　　Chongqing Zhifei Biological Products Co., Ltd. is expected to gradually purchase Shingrix from GSK over a six-year period from 2024 to 2029, potentially bringing GlaxoSmithKline PLC. up to £2.3 billion (approximately $2.93 billion) in revenue.

Meanwhile, Chongqing Zhifei Biological Products Co., Ltd. also announced its collaboration withGSK Reaches Exclusive Agreement on Potential Commercialization Cooperation for Respiratory Syncytial Virus (RSV) Vaccine Arexvy in China, with an Initial Cooperation Term of 10 Years Pending Approval of the Vaccine by the National Medical Products Administration.Reportedly, as the world's first approved RSV vaccine, Arexvy received market authorization in the United States and Europe in 2023 for the prevention of lower respiratory tract disease (LRTD) caused by RSV in adults aged 60 years and above.

　This cooperation is a strategic choice for both parties to achieve a win-win outcome:"The two parties also had in-depth discussions on the commercial cooperation of the RSV vaccine Arexvy in mainland China, which is an important step for Chongqing Zhifei Biological Products Co., Ltd. in terms of product line expansion and market competitiveness enhancement. Given Arexvy's successful launch in other global markets and its positive clinical data, if it can be successfully launched in China, it will bring new growth opportunities for Chongqing Zhifei Biological Products Co., Ltd."

　　GSK's "Ace" Vaccine Breakthrough

According to the latest Q3 2024 financial report released by GSK, the company's revenue for the quarter reached £8.012 billion (approximately $10.496 billion), representing a 2% increase compared to the same period last year (at constant exchange rates). The cumulative sales for the first three quarters amounted to £23.259 billion (approximately $30.469 billion), marking an 8% year-on-year growth. However, the vaccine division's sales declined by 15%.

　　Specifically, the sales of the shingles vaccine Shingrix amounted to 739 million pounds, a 7% decrease year-on-year; while the sales of the respiratory syncytial virus (RSV) vaccine Arexvy plummeted by 72% to 188 million pounds. These two vaccine products have always been regarded as GSK's flagship products.

In recent years, the outstanding performance of Shingrix has driven the rapid expansion of the global herpes zoster vaccine market. According to GSK's financial report, the global sales of Shingrix reached 4.286 billion US dollars in 2023, increasing by 16.9% year-on-year.

Research analysis from CICC shows that, as of the end of 2023, the vaccination rate for shingles among people aged 50 and above in the United States has exceeded 45%, with approximately 37% being vaccinated with Shingrix. Considering that the global vaccination rate for shingles remains relatively low, this market is expected to maintain steady growth, particularly in China, where the growth rate will be significantly faster than the global average.

Moreover, the RSV vaccine is also regarded as the next significant battleground in the biopharmaceutical field, with a potential market size exceeding 10 billion US dollars. Currently, major pharmaceutical companies worldwide are actively deploying efforts in this area. Data from Smart芽 shows,More than 60 RSV vaccines are under development worldwide, with GSK and Pfizer taking the lead in completing product development.

In terms of market layout, GSK's Arexvy is primarily used to prevent lower respiratory tract disease (LRTD) caused by respiratory syncytial virus (RSV) infection in individuals aged 60 and above, making it the world’s first RSV vaccine approved for use in the elderly. Pfizer's ABRYSVO is also used to prevent RSV-caused lower respiratory tract disease in people aged 60 and above. Notably, Pfizer is the only company that has applied for two indications for its RSV vaccine candidate, including protection for the elderly and maternal immunization to protect infants. On June 3, 2023, information disclosed by the Center for Drug Evaluation of the National Medical Products Administration showed that Pfizer had submitted a clinical trial application for its respiratory syncytial virus vaccine, which was accepted on June 1.

According to the 2023 financial report, GSK's RSV vaccine product Arexvy achieved revenue of 1.238 billion pounds (approximately 1.564 billion US dollars) within seven months of approval; while Pfizer's Abrysvo reached sales of 890 million US dollars in its first year on the market.

　　Currently, the battle for the billion-dollar RSV market is heating up, with numerous pharmaceutical companies in China joining the competition.. According to a research report by Guosen Securities, products from Chinese companies such as Ark Biosciences and Advaccine have entered the clinical stage, while Chongqing Zhifei Biological Products Co., Ltd., Walvax Biotechnology/Bluebird Bio, and CSPC Pharmaceutical Group are also making arrangements in the RSV market and are currently in the preclinical research stage.Another Freeze-Dried RSV mRNA Vaccine in China Files for IND, with Overview of Ongoing Competitive Landscape!

The aforementioned analyst told reporters from the 21st Century Business Herald that the difficulty in developing RSV prevention products is a consensus within the industry, which imposes extremely high standards on the research and development of drugs or vaccines. In order for pharmaceutical companies to gain an early advantage in this competition, they not only need to carefully design their products but also pay high attention to the design of clinical studies, focusing on the efficacy and safety of the products, with the hope of capturing a larger market share.

　　How Much Can China and Foreign Countries "Join Hands" Win?

In the wave of globalization, multinational pharmaceutical companies have increasingly regarded win-win cooperation as the core of their development strategies. In the vaccine field, Chongqing Zhifei Biological Products Co., Ltd. has become a key ally for these pharmaceutical companies.In addition to the in-depth cooperation with GSK, Merck also joined this strategic alliance, with their collaboration mainly focusing on the key sector of HPV vaccines.。

However, the partnership with these two industry giants did not catalyze a rapid improvement in Chongqing Zhifei Biological Products Co., Ltd.'s performance. According to the company's Q3 2024 financial report, Zhifei Biological achieved 4.528 billion yuan in revenue for the quarter, with cumulative revenue for the first three quarters reaching 22.786 billion yuan, representing a year-on-year decrease of 41.98%. The net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, was 2.143 billion yuan, marking a year-on-year decline of 66.41%.

Despite a significant decline in performance, Chongqing Zhifei Biological Products Co., Ltd. has not reduced its investment in research and development. A securities analyst pointed out in an interview that although the company's revenue and net profit have suffered a severe blow, its continuous investment in R&D and project progress indicate that the company is actively addressing industry challenges and laying a foundation for future development.

"In the context of ongoing price wars in the vaccine market continuously hitting new lows, Chinese vaccine companies must deeply consider how to address market competition and pricing pressures through new products and technological innovation," the analyst pointed out. "As the industry gradually returns to rationality, the R&D achievements of leading companies will become the key driver for future performance growth."

Strengthening R&D efforts, implementing a differentiated strategic layout, and expanding the scale of cooperation may be one of the effective strategies to address the current competitive landscape.The biggest difference between the vaccine market and the general therapeutic drug market lies in the uniqueness of its products—once vaccinated, there is no need for a certain period of time.Therefore, the limitation of market scale has become an inevitable reality. The widespread pursuit of popular product development within the industry has led to an oversupply of homogenous products in the market. However, deeper cooperation between multinational pharmaceutical companies and leading vaccine enterprises will help improve market distribution efficiency and alleviate inventory pressure.

Deng Yong, director of the Center for Health Law Research and Innovation Transformation at Beijing University of Chinese Medicine, also stated in a previous interview,To achieve new growth points, enterprises should consider increasing R&D investment to develop novel vaccines or enhance the quality, efficacy, and safety of existing vaccines while advancing commercial cooperation.For example,Develop combination vaccines for multiple protections in one shot to enhance product value; simultaneously, broaden market channels, actively expand into international markets, and promote products to countries and regions in need; and provide value-added services.Such as providing professional vaccine cold chain transportation solutions and vaccination technology training to vaccination institutions, etc.

Government departments also need to ensure that more people can afford vaccines, thereby increasing vaccination rates. Professor Tang Shenglan, Director of the Global Health Research Center at Duke Kunshan University, has pointed out that the national immunization program should establish a scientific dynamic adjustment mechanism as soon as possible, evaluate domestic and international vaccine programs, vaccination coverage, and their impacts, reasonably determine priorities, and formulate adjustment plans for the national immunization program for the next 5 to 10 years.

"In addition, in the vaccine bidding and procurement process, innovative mechanisms and more refined management methods should be introduced to balance corporate profits with market share coverage, while also encouraging companies to develop towards higher standards," suggested Professor Tang Shenglan.

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