A whopping 66% month-on-month increase! CanSino Biologics is the first to make it ashore.

The winter of the pharmaceutical industry continues to plague every company.

As the hardest-hit sector in the pharmaceutical industry, the vaccine industry's situation is far from optimistic. Due to severe internal competition, the vaccine industry has long been stuck in the me-worse stage. Without intervention, future innovation in the vaccine industry will be unsustainable, which would be disastrous for the sector.

In fact, vaccines are a unique segment of the pharmaceutical industry. There has always been a gap of over a decade between us and the vaccine giants in Europe and the U.S. After 2018, with the global investment boom, domestic innovative drugs and vaccines saw significant development. The success of companies like BeiGene has greatly narrowed the gap with Europe and the U.S.

Unlike the innovative drug industry, the vaccine sector quickly returned to the old path of competing over blockbuster products after a brief period of prosperity. Due to the long R&D cycles and high costs, many vaccine companies have chosen to focus on established blockbuster products.

The consequence of this approach is extreme internal competition and a lack of innovation. Vaccines that require massive investments and years of R&D see their product lifecycles exhausted within just two years.

Take the HPV vaccine as an example. In 2022, Wantai Biotech's revenue from its bivalent HPV vaccine exceeded 11 billion yuan. However, after Walvax's bivalent HPV vaccine entered the market, the entire HPV vaccine sector collapsed within two years. Even the once highly sought-after nine-valent HPV vaccine was dethroned.

By 2024, the price war had spread to more vaccine varieties, including flu vaccines, bivalent HPV vaccines, tetanus vaccines, 23-valent pneumococcal polysaccharide vaccines, MMR vaccines, recombinant hepatitis B vaccines (brewer's yeast), rabies vaccines, and varicella vaccines.

In this frenzied price war, there are no winners.

Starting in 2023, the performance of major vaccine companies plummeted, including industry leaders like Walvax Biotech, Kangtai Biological Products, CanSino Biologics, and Wantai Biotech.

Amid this intense competition, stock prices of these giants also crashed, with many dropping over 80%. This is a devastating blow to the industry.

Falling stock prices and declining performance hinder further financing. As the most technologically demanding segment of the pharmaceutical industry, meaningless internal competition only widens the gap with Europe and the U.S.

Solutions do exist: R&D, global expansion, and mergers & acquisitions. By Q3 2024, the industry began to diverge. For instance, Wantai Biotech reported a non-GAAP net loss of 22.5246 million yuan, with revenue in freefall. Zhifei Biological Products posted a net loss of 83.6964 million yuan, marking a decline from its peak. Both companies primarily focus on HPV vaccines, proving that cutthroat competition benefits no one.

However, after steep declines, some companies with robust pipelines and successful global expansion have stabilized. For example, Walvax Biotech reported Q3 revenue of 708 million yuan and a net profit of 85.7982 million yuan, showing clear signs of recovery. Its overseas revenue exceeded 350 million yuan in the first three quarters, setting a valuable example for the industry.

Kangtai Biological Products also performed well, with Q3 revenue up 11.21% year-on-year to 816 million yuan and net profit up 66.94% quarter-on-quarter to 186 million yuan. For the first three quarters of 2024, Kangtai's revenue reached 2.018 billion yuan, with a net profit of 351 million yuan.

From a performance perspective, Walvax and Kangtai have emerged from the "quagmire." However, due to severe internal competition, the industry as a whole remains in the doldrums.

KanJian Finance believes the vaccine industry is high-barrier, capital-intensive, and time-consuming. Walvax and Wantai spent over 15 years developing their bivalent HPV vaccines, yet their competition collapsed the entire HPV vaccine sector in just two years. This serves as a stark lesson for the industry.

As a critical part of the pharmaceutical industry, vaccines require policy guidance to foster healthy competition. Entry into mature blockbuster markets should be restricted, while innovation should be encouraged. Mergers and acquisitions should also be promoted to revitalize the sector.