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China News Service, August 6 (Fu Jianqing) The winning bid price for a single dose of domestically produced bivalent human papillomavirus vaccine (bivalent HPV) has dropped to more than 20 yuan.

　　Watson Bio responded late at night

Recently, the Shandong Provincial Public Resources Electronic Trading Platform released a notice on the purchase of bivalent HPV vaccines for girls of school age in Shandong Province in 2024. Among them, Watson Bio's subsidiary Zerun Bio won the bid for 1.0162 million doses at a price of about 27.9465 million yuan. Based on this calculation, the winning bid price for a single dose of bivalent HPV vaccine has dropped to 27.5 yuan.

Source: Shandong Provincial Public Resources Electronic Trading Platform

At present, the only domestic bivalent HPV vaccine manufacturers are Watson Biopharma and Wantai Biopharma, and the two companies have raised prices.

In the first half of this year, the lowest winning bid price for the bivalent HPV vaccine of Watson Biopharmaceuticals subsidiary Zerun Biopharmaceuticals was 63 yuan, while that of Wantai Biopharmaceuticals was 86 yuan. When the products were first launched, the initial prices of both vaccines were more than 300 yuan, but the winning bid prices have dropped by 90% in a few years.

Regarding the drastic price cut in a short period of time, investors asked on the interactive platform, "What is the company thinking about this?"

Watson Bio responded to investors late on the 5th that the company's bivalent HPV vaccine products have clearly focused on key people-benefiting procurement projects since their launch, continuously improving the accessibility of products, and striving to benefit more women of appropriate age; the winning bid price this time is determined in combination with the overall procurement quantity and relevant conditions of the local government's people-benefiting projects. In the future, the company will continue to promote high-quality bivalent HPV vaccine products to cover more people-benefiting procurement projects.

Source: Investor Interaction Platform

Wantai Bio told the media, "This is government procurement, and the price in our own-pay market is still 329 (yuan/unit)."

So, can the company still make money in the context of a sharp drop in winning bid prices in government procurement?

The financial report shows that in 2023, Watson Bio's operating income fell by 19% to about 4.1 billion yuan, and its net profit attributable to the parent company fell by 42%. In 2024, Watson Bio's net profit attributable to the parent company in the first quarter plummeted by nearly 92% to only about 14.13 million yuan.

As for Wantai Bio, it is expected that the net profit attributable to the parent company will drop by more than 80% in the first half of 2024. The company bluntly stated that the main product of the vaccine segment, the bivalent HPV vaccine, continued to be affected by the expansion of the age of the nine-valent HPV vaccine, market competition, inventory reduction and other factors, and sales revenue and profits fell compared with the same period last year.

　　The “troublemakers” are pressing

As the competition between the two leading companies was stalemate, a company listed on the Beijing Stock Exchange also came on strong.

On the evening of August 5, Kangle Guard announced that its wholly-owned subsidiary Kunming Kangle received the "Drug Production License" issued by the Yunnan Provincial Drug Administration.

As a biopharmaceutical company with structure-based antigen design as its core technology, Kanglewei's core products under development, trivalent HPV vaccine, nine-valent HPV vaccine (for female indications) and nine-valent HPV vaccine (for male indications), are all in Phase III clinical trials. Based on the expected market demand for HPV vaccines, the company invested in the construction of a recombinant vaccine clinical and industrialization base in Kunming.

Source: Announcement

Kangle Guards said that Kunming Kangle's acquisition of the "Drug Production License" this time provides qualification guarantee for the relevant products under development to obtain marketing approval and conduct commercial production. According to the current national regulatory requirements for vaccine products, it is still necessary to obtain a drug approval number and pass the GMP compliance inspection before commercial production can be carried out. The acquisition of the "Drug Production License" this time is not expected to have a significant impact on this year's operating performance.

In addition to the trivalent and nine-valent HPV vaccines, in a previous announcement, Kangleweishi also mentioned that the fifteen-valent HPV vaccine jointly developed by the company and Chengda Biopharma held a project kick-off meeting on March 28 and officially launched Phase I clinical trials.

This vaccine is the highest-priced HPV vaccine that has been marketed or obtained IND approval worldwide to date. It covers all high-risk HPV types defined by IARC and can increase the protection rate against cervical cancer to more than 96%. At the same time, this vaccine is used to prevent persistent infections caused by more than 10 types of HPV, including HPV types 6, 11, and 16, as well as diseases such as CIN, VIN, VaIN, AIN, cervical cancer, vaginal cancer, vulvar cancer, anal cancer, and genital warts (condyloma acuminatum) caused by HPV infection.

However, since its establishment, Kangleweishi has been continuously conducting research and development of vaccine products, no vaccine products have been put on the market for sale, the company has not yet made a profit and has accumulated unrecovered losses.

Kangleweishi has stated regarding product pricing that it expects the pricing of the trivalent HPV vaccine to be higher than the domestically produced bivalent HPV vaccine currently on the market, and lower than the imported quadrivalent HPV vaccine currently on the market; the nine-valent HPV vaccine is expected to be lower than the selling price of Merck's nine-valent HPV vaccine in the target market.

As the winning bid price for the bivalent HPV vaccine has dropped to the price of a cup of milk tea, Watson Bio and Wantai Bio have also stepped up the promotion of the nine-valent HPV vaccine.

According to Southwest Securities, Wantai Biological's nine-valent HPV vaccine may be approved as early as 2025, and Watson Biopharma will follow closely behind, with approval expected in 2026-2027.

Source: Southwest Securities Research Report

Judging from the approval data, Southwest Securities pointed out that the quadrivalent HPV vaccine will basically withdraw from the market in the future, and the proportion of the nine-valent HPV vaccine will continue to increase, mainly because the nine-valent HPV vaccine has been expanded to 9-45 years old, and the overall cumulative penetration rate of HPV vaccines has increased significantly in recent years. It is expected that a similar trend will continue in 2024.

Guangdong Securities believes that the layout of listed vaccine companies is relatively overlapping, and multiple products have entered the phase III clinical stage. In the short term, they may continue to experience internal clearance. At present, the barriers to entry for large consumer products are not high, and the factors for price competition are yet to be explored. (China News Service APP)

　　(The views in this article are for reference only and do not constitute investment advice. Investment is risky and you should be cautious when entering the market.)

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