news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

The loneliness after the boom.

1

Plunge

Days are also difficult for major vaccine companies.

About half a month ago, Wantai Bio (603392.SH) issued an announcement on the expected reduction of its semi-annual performance in 2024. The information shows that the net profit attributable to the parent company's owners is expected to be 240 million to 290 million yuan in the first half of 2024.A year-on-year decrease of 85.90% to 82.96%.

It is expected that the net profit attributable to the owners of the parent company after deducting non-recurring items will be between RMB 58 million and RMB 70 million.A year-on-year decrease of 96.43% to 95.69%.

My goodness, this drop in profit can no longer be described as being cut in half, but rather it has been cut completely above the calf.

This is not the first time that Wantai Bio has faced this situation. According to the financial report, in 2023, Wantai Bio achieved revenue of 5.511 billion yuan, a year-on-year decrease of 50.73%; the net profit attributable to the parent company was 1.248 billion yuan.A year-on-year decrease of 73.65%.

Looking at the long term, the growth rate of Wantai Biological's net profit attributable to shareholders has been declining in the past two years, following a slide curve.

The trend is also reflected in the capital market. Public data shows that Wantai Biopharma was listed on the Shanghai Stock Exchange in April 2020. It once brought surprises to the market. Within 25 trading days after listing, Wantai Biopharma's stock price rose by the daily limit, with a cumulative increase of more than 1,000%.

According to data from Yiniu.com, in 2021, Wantai Biological's share price exceeded 140 yuan per share, and its total market value was close to 180 billion yuan.Its market value once surpassed that of Zhifei Bio, becoming the "King of Chinese Vaccines".

Such glory is no longer there. As of the close of July 30, 2024, Wantai Bio's share price was 66.88 yuan per share, a 54% drop from its previous high, and its total market value has evaporated by more than 90 billion yuan.

What happened to the former "vaccine king"?

2

External pressure and internal involution

The answer also needs to be found in the financial report.

What does Wantai Biological do? From the financial report, we can see that Wantai Biological mainly focuses on two business segments: vaccine business and in vitro diagnostic business. The vaccines that have been marketed mainly include hepatitis E vaccine and bivalent HPV vaccine, while the in vitro diagnostic business includes in vitro diagnostic reagents and in vitro diagnostic instruments.

Among them, the vaccine business is the absolute largest.Data shows that in 2022 and 2023, Wantai Biological Vaccine's revenue was 8.493 billion yuan and 3.96 billion yuan respectively, accounting for more than 70% of its overall revenue.

Among vaccines, the bivalent HPV vaccine is the main force, which was once a legendary product of Wantai Biological.

Back in 2020, Wantai Biological's bivalent HPV vaccine "Xinkening" was launched on the market. This is the first domestically produced bivalent HPV vaccine.

To explain briefly, the HPV vaccine can be said to be "good news for women". Cervical cancer in women is mainly caused by HPV virus infection. Vaccination can immunize against infection and naturally effectively prevent cervical cancer. This is also the only vaccine that can prevent cancer so far.

According to research data, only three countries have successfully approved HPV vaccines, namely Merck in the United States, GlaxoSmithKline in the United Kingdom, and Wantai Biological and Watson Biological in China. Among them, only Merck has a nine-valent HPV vaccine, GlaxoSmithKline has a four-valent vaccine, and Wantai and Watson have a two-valent vaccine.

Because of this, the bivalent HPV vaccine directly brought Wantai Biological to the forefront. According to the financial report, from 2020 to 2022, Wantai Biological's vaccine segment revenue reached 865 million yuan, 3.363 billion yuan and 8.493 billion yuan respectively, an increase of nearly 9 times in two years! In 2022, the company's vaccine revenue accounted for more than 75%, with a gross profit margin of nearly 94%.

But the luck did not last, and setbacks came one after another.

In August 2022, Merck China announced that the age group of its nine-valent HPV vaccine will be expanded from 16-26 years old to 9-45 years old. This highly overlaps with the age group of the two-valent HPV vaccine.

Moreover, starting in 2023, Merck's nine-valent HPV vaccine suddenly increased in volume. You know, in terms of protection effect, the nine-valent HPV vaccine completely crushes the two-valent HPV vaccine. One of the important reasons why Wantai Bio's two-valent HPV vaccine can sell well is the insufficient production capacity of imported nine-valent HPV vaccines.

▲Batch release of HPV vaccines in my country in each month of 2023, source: Jinduan Research Institute

On the other hand, the domestic bivalent HPV vaccine has become popular.In May 2022, in Nanjing's procurement of bivalent HPV vaccines, Watson Biopharma won the bid for 22,400 doses with a bid of 246 yuan per dose, while Wantai Biopharma's winning bid was 329 yuan per dose.

Since then, the winning bid price has been declining. Data shows that from 2020 to 2022, Wantai Biological's winning bid price ranged from 329 to 344 yuan per bottle, and by 2023, this range became 116 to 344 yuan per bottle. In 2024, the Jiangsu Government Procurement Network announced that Wantai Biological's winning bid price for the bivalent HPV vaccine was 86 yuan per dose.

On one hand, there is the "dimensionality reduction attack" of Merck's nine-valent HPV vaccine, and on the other hand, there is the "extreme internal circulation" of the domestic two-valent HPV vaccine. Wantai Biological is unable to withstand it.

In January 2024, Wantai Biological pointed out in its performance forecast announcement that the revenue from the bivalent HPV vaccine decreased by approximately 4.2 billion yuan compared with the same period last year.

The bivalent HPV vaccine is not selling well, and the "king of vaccines" is indeed a bit sad.

3

The only hope?

Although the bivalent HPV vaccine was blocked, Wantai Biological did not sit idly by.

In June 2023, Wantai Biotech disclosed that the company's nine-valent cervical cancer vaccine and a new generation of cervical cancer vaccine are also under development. At the end of 2023, Wantai Biotech also disclosed on the investor platform that "the on-site work of the company's nine-valent HPV vaccine Phase III main clinical trial V8 visit has been completed, and specimen testing is in progress."

Wantai Biotech did leave a back-up plan for itself. As early as September 2019, Wantai Canghai, a subsidiary of Wantai Biotech, signed a "Cooperation Agreement" with GlaxoSmithKline. The two parties agreed to jointly develop a new generation of cervical cancer vaccine based on Wantai Canghai's Escherichia coli prokaryotic expression vaccine antigen technology and GlaxoSmithKline's adjuvant technology.

According to the agreement, GlaxoSmithKline will pay a total of 134 million euros in milestone payments to Wantai Canghai in stages based on the cooperation plan and progress, and will share the international market sales revenue in a certain proportion after commercialization.

In theory, this is a win-win game. Wantai Canghai has also received two milestone payments totaling 22 million euros during the cooperation process.

But surprisingly, just a few days ago, Wantai Biological issued an announcement stating that its subsidiary had terminated its cooperation with GlaxoSmithKline Biologicals and would no longer continue the development and commercialization cooperation of the new generation of cervical cancer vaccine.

The cooperation came to an abrupt end when the fruits were about to be harvested? The specific reasons were not disclosed too much, but according to information obtained by the media, GlaxoSmithKline said it was because the jointly developed vaccine did not meet the requirements of the Phase III study. Other researchers said that the two sides may not have reached an agreement on the R&D costs and the distribution of future market profits.

Although the cooperation failed, Wantai Bio still has a plan B.Information disclosed by Wantai Bio shows that its subsidiary is also cooperating with Xiamen University to develop a nine-valent HPV vaccine. After the cooperation with GlaxoSmithKline is terminated, its subsidiary will no longer be restricted.

From the outside world's perspective, Zhong Shanshan is also concerned about this development.On the 2024 New Fortune 500 Wealth Creation List, Zhong Shanshan topped the list for the fourth time with a shareholding value of 456.27 billion yuan.

Shareholder information shows that Zhong Shanshan is the actual controller of Wantai Biological, holding a total of about 73% of the shares. Wantai Biological has made an indelible contribution to Zhong Shanshan's journey to becoming the "richest man in China".

Judging from the current situation, the richest man wants to restart his "money printing machine", and the nine-valent HPV vaccine seems to be the only hope left.

Will the goddess of luck favor Wantai Bio again? We can only wait and see.