GSK and Zhifei Extend Shingrix Collaboration by 8 Years and Forge 10-Year RSV Vaccine Partnership

Dec 06, 2024 12:01 CST Updated 12:01

GSK

Pharmaceutical R&D Manufacturer

ZFSW

Vaccine R&D and Manufacturing Companies

On December 5, 2024, Chongqing Zhifei Biological Products Co., Ltd. announced the optimization and adjustment of its strategic cooperation with GSK.Both Parties Extend Shingles Vaccine (Shingrix) Partnership，But the supply has decreased somewhat.; while taking a step forward in the cooperation on the Respiratory Syncytial Virus (RSV) vaccine,Facilitate an initial 10-year commercialization partnership for the RSV vaccine.

01 Zhifei and GSK Adjust Cooperation Content to Address Challenges in China's Vaccine Market

In October 2023, Chongqing Zhifei Biological Products Co., Ltd. signed an agency agreement with GSK to complete procurement worth over 20.6 billion yuan (for the purchase of recombinant shingles vaccines) by 2026. However, this year, China's vaccine market has undergone a dramatic shift, impacting multinational pharmaceutical companies such as Merck and GSK. ThisChongqing Zhifei Biological Products Co., Ltd. and GSKThe cooperation adjustment was carried out against this background. On December 4th, Chongqing Zhifei Biological Products Co., Ltd.Signed the "Supplementary Agreement to the Exclusive Distribution and Co-Promotion Agreement" with GSK, adjusting the strategic cooperation term and procurement plan in the original agreement.：

CompanyThe exclusive rights period for importing, distributing, and co-promoting the recombinant shingles vaccine in ChinaExtended from the end of 2026 to the end of 2034The estimated recombinant zoster vaccineThe procurement amount is approximately 21.6 billion yuan, and the specific procurement situation will be adjusted according to market expected demand.
The company agrees to exclusively explore with GSK in mainland China and activelyFacilitate an initial 10-year commercialization collaboration for the Respiratory Syncytial Virus (RSV) vaccine.

Obviously, a year later, both companies realized that their initial sales forecasts for the shingles vaccine were overly optimistic.According to statistics from GF Securities,From January to October 2024, GSK's recombinant shingles vaccine was batch-released 37 times, and Baik Biologics' live attenuated shingles vaccine was batch-released 40 times.。

GSK Chief Commercial Officer Luke Miels said in a statement on Thursday: "The revised agreement with Zhifei allows our cooperation to continue, enabling us to address the challenges of the macroeconomic environment in the short term."And help us provide our innovative adult vaccines to more people in China over the long term."

In fact, the situation of GSK's shingles vaccine is not optimistic, and it's not just the case with the agency.The HPV vaccine product Gardasil,代理的默沙东的HPV疫苗产品佳达修（Gardasil）in China, distributed by Chongqing Zhifei Biological Products Co., Ltd., had already experienced ""Warning Signal"Chongqing Zhifei Biological Products Co., Ltd. is well-known for serving as the distributor of GSK's Gardasil in China, which has helped GlaxoSmithKline PLC.In 2023, it surpassed AstraZeneca to become the multinational pharmaceutical company with the largest sales volume in China. This growth was significant enough to be considered a driving force.The driving force behind MSD's overall growth.

But by the second quarter of 2024,Merck suddenly reported a decline in Gardasil revenue in China. Although sales in other regions have grown, these increases only barely offset its losses in China. This disappointing result led to MerckThe stock price plummeted 9% when the report was released on July 30. During the investor conference call on the same day,Merck & Co.CEO Rob Davis pointed out that the entire HPV market in China is facing challenges, and this is not "Merck & Co."Unique Event".

It is speculated that price competition among domestic companies and the Chinese government's anti-corruption campaign targeting hospitals and the healthcare industry are responsible for the decline in Cervarix sales, a trend that has continued into the third quarter. Davis warned that this trend is not likely to reverse anytime soon.

Similarly, GSK subsequently alsoFelt the chill in the market.Despite the launch of Shingrix in China, sales of the shingles vaccine fell 10% overall in the third quarter.

During the company's third-quarter earnings call, when discussing the situation of Shingrix in China, Miels said: "The broader economic slowdown has undoubtedly impacted the market and also affected local governments' ability to replenish and purchase vaccines, which will eventually be bought by individuals."

Mills said,GSK signed a contract worth approximately 400 million pounds with Chongqing Zhifei Biological Products Co., Ltd. this year, and has sold about 240 million pounds so far."If we look at it from a medium- to long-term perspective, the cooperation with Zhifei has gotten off to a very good start," Mills said of Chongqing Zhifei Biological Products Co., Ltd. "They are impressive operators, and the number of their vaccination sites far exceeds what we could achieve with our own infrastructure."ItsAdded that GSK is currently focusing on the long-term opportunities in China.

Since both Gardasil and Shingrix are distributed by Zhifei in China, thereforeItsRevenue plunged nearly 70% year-on-year in the third quarter to 4.53 billion yuan ($620 million)In China's shingles vaccine market, Shingrix is competing with the attenuated live shingles vaccine developed by Baike Biotechnology, while other domestically developed candidate vaccines are in the pipeline.In Phase 3 or earlier clinical trials.

As for the RSV vaccine, when GSK signed an agreement with Chongqing Zhifei Biological Products Co., Ltd. last year, both parties indicated the possibility of expanding the cooperation to include GSK's new respiratory syncytial virus (RSV) vaccine, Arexvy. According to the revised agreement, the two parties have moved the cooperation on the RSV vaccine a step further. Zhifei has agreed to exclusively collaborate with GSK on the commercialization of the RSV vaccine, with an initial cooperation period of 10 years.

02 Agency Products as the Absolute Mainstay, Zhifei in Urgent Need of a New Growth Curve

From the types of products currently sold by Chongqing Zhifei Biological Products Co., Ltd.,According to its 2024 interim report,CompanyCurrently, there are 13 products on the market for sale, and one product is conditionally approved for marketing, including vaccine products for the prevention of meningitis, cervical cancer, pneumonia, rotavirus, herpes zoster, and other infectious diseases.Among them, six products are distributed, including five vaccine products from Merck and one product from GSK.。

From 2019 to 2023, except for 2021 when the revenue share of self-developed products exceeded 30% due to the sales of self-developed COVID-19 vaccines, in other years, the company...Revenue from self-developed products does not exceed 15%.；AndThe average revenue share of agency products over five years is 87.3%., The proportion in 2023As high as 98%。The poor performance of代理 products will inevitably lead to a sharp decline in the performance of Chongqing Zhifei Biological Products Co., Ltd. Expanding the scale of self-developed products is the key to long-term development.

According to Chongqing Zhifei Biological Products Co., Ltd. in a recent investor communication, the company has always emphasized independent research and innovation, continuously increased investment in R&D, and persistently strengthened the layout of cutting-edge technologies.From 2019 to 2023，The company's total R&D investment exceeds 4 billion yuan. First half of 2024，The company's R&D investment amounted to 5.70 billion yuan.，The number of R&D personnel has further increased to 979., injecting powerful momentum into scientific and technological innovation.

The company currently has a total of 32 self-developed projects.(Excluding COVID-19 related projects),Among them, there are 18 projects in the clinical trial and registration application stages.Among them, the registration application for the quadrivalent influenza virus split vaccine (pre-filled syringe packaging) has passed the on-site inspection and is currently in the technical review stage; the production registration applications for the freeze-dried human rabies vaccine (human diploid cells) and the influenza virus split vaccine have been accepted; innovative products such as the 15-valent pneumococcal conjugate vaccine, quadrivalent meningococcal conjugate vaccine, quadrivalent recombinant norovirus vaccine, and bivalent shigellosis conjugate vaccine are all in Phase III clinical trials. In the next two to three years, the company will have its own vaccine products launched successively, further consolidating its market position and providing positive support for the stable operation and development of the company.

References:

[1]GSK cuts Shingrix deliveries in revised Zhifei China pact， moves closer to RSV vaccine deal.By Angus Liu.Dec 5， 2024 10:52am.

[2]241128 Chongqing Zhifei Biological Products Co.,Ltd. Communication Summary. Medical Stock Research. December 02, 2024.

[3] Revenue Decreased by Over 10 Billion Yuan in a Single Quarter, How is Chongqing Zhifei Biological Products Co., Ltd. Doing?. Yunli Finance. November 30, 2024.

[4] Announcement of Chongqing Zhifei Biological Products Co., Ltd.

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