The price war in the vaccine industry should stop.

The intense competition in the vaccine industry has made it the "most miserable" sector in the A-share market.

Calculating from the peak, many domestic vaccine companies have seen their stock prices drop by over 80%. Despite the recent bullish market trend, most leading vaccine companies still face year-to-date declines of more than 30%.

As a high-barrier, high-tech industry with lengthy R&D cycles, the vaccine sector is clearly severely undervalued by the market. Being the most strictly regulated segment in the pharmaceutical industry, China's vaccine sector has lagged behind Europe and the US by approximately 15 years.

Therefore, the current logic driving the entire vaccine industry remains domestic substitution.

With fierce competition around blockbuster products, the price war in vaccines rivals that in solar PV. However, unlike solar PV, vaccines have extremely high entry barriers and require massive investments. If such price wars continue unchecked, they will profoundly impact the industry's future.

As is well known, vaccine and innovative drug companies generally follow the blockbuster drug model - where one breakthrough product can create infinite growth potential.

For example, BeiGene's zanubrutinib reported global sales of 8.018 billion yuan, up 122% YoY. But unlike such drugs, vaccines are "one-shot" products. Without strong policy support, vaccine R&D faces greater challenges than other innovative drugs.

Notably, chaotic competition within the industry has severely eroded profits, leaving vaccine makers stuck in quagmire and losing market favor.

Since last year, major domestic vaccine players have joined the price-cutting wave, expanding from flu and HPV vaccines to rabies and pneumonia vaccines.

Take HPV vaccines - the price war between Wantai Bio and Walvax Biotechnology completely "crashed" the HPV market within just two years. This year, both companies won government procurement bids at record-low prices, with HPV vaccine prices breaking below 100 yuan and plunging to as low as 27.5 yuan per dose - equivalent to a cup of milk tea.

Consider that both companies spent over 15 years developing their bivalent HPV vaccines. Such extreme price cuts don't foster healthy competition but destroy the industry.

Actually, the fiercest price war this year isn't in HPV but flu vaccines. Since H1, quadrivalent flu vaccines have seen average price cuts exceeding 30%, dropping below 100 yuan, involving Sinopharm, Hualan Bio, Sinovac and Jindike.

An October 19 government procurement notice showed Wuhan Institute of Biological Products won a flu vaccine bid at just 38 yuan per dose. Days earlier, Sinovac secured a bid at 10.5 yuan per trivalent dose in Shenzhen, while Fosun Pharma offered a historic low of 6.5 yuan.

Amid this cutthroat competition, many vaccine makers face R&D deadlocks with plunging profits and financing difficulties. Consequently, foreign players are exiting China's vaccine market, shifting to licensing models - further weakening domestic competitiveness.

Kanjian Finance argues that as a unique pharmaceutical segment, vaccines reflect a nation's industrial strength. Unchecked price wars will slash R&D investments, trapping domestic players in copying foreign blockbusters and widening the gap with global leaders.

The industry must stop destructive price wars. Market entry for known blockbusters should be restricted to avoid excessive competition, while companies should be encouraged and supported to innovate and build global competitiveness.