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Chinese Vaccine Industry Research Series III
China’s Vaccine Market Dynamics
In our ‘Introduction to vaccine’ piece we discussed different types of vaccines. In this note, we will focus on China’s vaccine market dynamics.
Sizing the Opportunity
China’s vaccine market grew at 6.2% CAGR from RMB19.9bn to RMB25.3bn by 2013-2017, according to “CIC” (China Insights Consultancy), according to CLSA report dated May 10th, 2019. Per CIC forecasts the sector is expected to accelerate to RMB106.5bn in 2030, that is an 11.7% compound annual growth rate (“CAGR”) from 2017.
Meanwhile, the country’s private vaccine sector delivered a faster 14.9% CAGR over 2013-17, when it nearly doubled from RMB12.4bn to RMB21.7bn, according to CLSA report dated May 10th, 2019). CIC, according to CLSA report dated May 10th, 2019, forecasts that it will reach RMB101.9bn by 2030, representing a 12.7% CAGR from 2017. This will be driven by strengthening R&D capabilities supporting the development of new and innovative vaccines.
Vaccines that Lead in the Global Market
The global vaccine market reached US$43.8bn in 2017, an 8.7% CAGR 2013-17, according to CIC.
Pfizer’s Prevnar 13, a preparation that immunizes against pneumonia, had the largest market share by sales with 13% in 2017. Gardasil/Gardasil 9 (HPV vaccines) ranked second with a combined 5%. Meanwhile, Hexaxim, Hexyon, Pentacel and Pentaxim, which help to prevent DTP, Hib and Polio, are made by Sanofi; together they accounted for another 5%.
China Vaccine Market Segmentation
According to the Regulation on the Administration of Circulation and Vaccination of Vaccines issued by the State Council of China, according to CLSA report dated May 10th, 2019, China’s vaccine market is divided into two categories. Category-1, refers to vaccines that are free of charge to citizens, while category-2, vaccines are paid out-of-pocket by individuals.
Category-1 vaccines are purchased from manufacturers by provincial CDCs (Centre for Disease Control and Prevention) at relatively lower prices compared to category-2 products, and are offered to the public for free. Vaccine prices in the public market are regulated by the government and are generally low, while those distributed in the private market are sold at higher prices and have better margins.
State-Owned Enterprises (SOEs) Account for 40% by Volume
Lot-release volume data by China’s National Institutes for Food and Drug Control (NIFDC) show that China’s vaccine market was highly segmented in 2018, with more than 40% controlled by SOEs. There are seven SOEs that provide vaccine products in China.
Category-1 vaccines are mainly supplied by SOEs. Some private-sector players, such as Kangtai Biological and Changsheng Biotech, also manufacture and provide several types of category-1 vaccines. With the further expansion of the national immunization program, we expect more category-2 vaccines to be included in the scheme, with private-sector players’ market share gradually increasing.
We discuss below 3 key sub-segments in China’s vaccine market.
Meningococcal Vaccine Market
Neisseria meningitides is a bacterium that causes meningitis and other forms of meningococcal disease. There are two main types of meningococcal vaccines: MPSV and MCV (Meningococcal polysaccharide vaccine and Meningococcal vaccine). Both of have bi-valent and quadra-valent versions. MPSV is the primary meningococcal vaccine in China, while MCV2 is the only available meningococcal conjugate vaccine in the country and can only be purchased in the private market. However, in developed countries, MPSV has already been replaced by MCV products and the meningococcal vaccine market is dominated by MCV4 vaccines. MCV4 vaccines, which have broader serogroup coverage, are forecast to gradually replace MCV2 products in China.
The meningococcal vaccine market in China is expected to reach RMB7bn in sales in 2030, from RMB2.1bn in 2017, a 9.9% CAGR, according to CIC, according to CLSA report dated May 10th, 2019. MCV products are expected to be the key growth driver, especially the launch of MCV4 vaccines.
Competitive landscape – There are three marketed MCV2 products and one combination vaccine of MCV2 with Hib in China that are manufactured by Walvax, Royal and Zhifei Lvzhu, as well as four MCV2 candidates are under the development stage. The combination vaccine of MCV2 with Hib from Zhifei Lvzhu dominated the market with a 57% share in 2018, followed by Royal’s MCV2 preparation at 32%.
Pneumococcal Vaccine Market
According to CIC, according to CLSA report dated May 10th, 2019, China’s pneumococcal vaccine market recorded RMB1.5bn in sales in 2017. The 23-valent pneumococcal polysaccharide vaccine (PPV23) and 13-valent pneumococcal conjugate vaccine (PCV13) are the two available products domestically for the prevention of pneumococcal diseases. The pneumococcal vaccine market is expected to reach RMB14.6bnin 2030, a 19.7% CAGR 2017-2030, according to CIC(c).
Competitive landscape – Pfizer’s Prevnar 13 was the biggest-single player in the pneumococcal vaccine market in 2018 with a 38% market share, closely followed by Chengdu Institute, an SOE company, with 37%, Walvax (15%) and Merck (10%), according to lot-release data provided by NIFDC. There are also several PCV13 candidates that are under different development stages.
DTP (Diphtheria, Tetanus and Pertussis) Vaccine Market
In China’s DTP vaccine market, co-purified DTaP and DTcP (Diphtheria, Tetanus, Pertussis) vaccines are the two main types of preparations.
The DTP vaccine market in China is expected to reach RMB 8.6bnin 2030 (from RMB1.9bn in 2017), a 12.6% CAGR.
Given that DTcP is a key backbone component of a combination of vaccines and there is an emerging trend of increasing development of combination preparations in the industry, according to CanSino Bio (“CanSino”), DTcP, the DTcP-based combination vaccine in China is expected to gradually replace co-purified DTaP in the coming years.
Competitive landscape – According to lot-release data provided by NIFDC, in DTP vaccine market in China, DTaP products in total accounted for 97% of market share. DTaP vaccines from Wuhan Institute, which is an SOE company, dominated the sector with an 81% market share. DTaP-Hib from Minhai and DTaP from Walvax accounted for 9% and 7% of the market in 2017, respectively. CanSino and Beijing Bio-Institute are the only two developers who have DTcP vaccine candidates and both have received clinical-trial application (CTA) approval. In addition, CanSino also has a booster schedule for children four-to-six years old, along with adolescents and adults, according to CLSA report dated May 10th, 2019.
Domestic vaccine companies have a strong understanding of China’s unique vaccine distribution supply chain; this acts as a barrier of entry for new entrants.
The mentioned companies are strictly for educational and fund marketing purposes only. For more information on our product offering, please refer to our website.
Disclaimer
This document is intended for Hong Kong investors only. This material is neither an offer to sell nor solicitation to buy a security to any person in any jurisdiction where such solicitation, offer, purchase or sale would be unlawful under the laws of that jurisdiction. Investment involves risk.
The information in this material is based on sources we believe to be reliable but we do not guarantee the accuracy of completeness of the information provided. This material has not been reviewed by SFC and shall only be circulated in countries where it is permitted.
This material is intended solely for your private use and shall not be reproduced or recirculated either in whole or in part, without the written permission of Mirae Asset Global Investments. This document has been prepared for presentation, illustration and discussion purposes only and is not legally binding. Whilst compiled from sources Mirae Asset Global Investments believes to be accurate, no representation, warranty, assurance or implication to the accuracy, completeness or adequacy from defect of any kind is made. The division, group, subsidiary or affiliate of Mirae Asset Global Investments which produced this document shall not be liable to the recipient or controlling shareholders of the recipient resulting from its use. The views and information discussed or referred in this report are as of the date of publication, are subject to change and may not reflect the current views of the writer(s). The views expressed represent an assessment of market conditions at a specific point in time, are to be treated as opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. In addition, the opinions expressed are those of the writer(s) and may differ from those of other Mirae Asset Global Investments’ investment professionals.
The provision of this document shall not be deemed as constituting any offer, acceptance, or promise of any further contract or amendment to any contract which may exist between the parties. The issuer of this article is Mirae Asset Global Investments (HK) Limited (“we”) which we may or our managed funds may hold the mentioned securities. It should not be distributed to any other party except with the written consent of Mirae Asset Global Investments. Nothing herein contained shall be construed as granting the recipient whether directly or indirectly or by implication, any license or right, under any copy right or intellectual property rights to use the information herein. This document may include reference data from third-party sources and Mirae Asset Global Investments has not conducted any audit, validation, or verification of such data. Mirae Asset Global Investments accepts no liability for any loss or damage of any kind resulting out of the unauthorized use of this document. Investment involves risk. Past performance figures are not indicative of future performance. Forward-looking statements are not guarantees of performance. The information presented is not intended to provide specific investment advice. Please carefully read through the offering documents and seek independent professional advice before you make any investment decision. Products, services, and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries, and/or distributors of Mirae Asset Global Investments as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction.
Hong Kong: This material is prepared by Mirae Asset Global Investments (HK) Limited (Mirae HK). Mirae HK is regulated by the SFC (CE reference: ALK083).
Australia: The information contained on this document is provided by Mirae Asset Global Investments (HK) Limited (“MAGIHK”), which is exempt from the requirement to hold an Australian financial services license under the Corporations Act 2001 (Cth) (Corporations Act) pursuant to ASIC Class Order 03/1103 (Class Order) in respect of the financial services it provides to wholesale clients (as defined in the Corporations Act) in Australia. MAGIHK is regulated by the Securities and Futures Commission of Hong Kong under Hong Kong laws, which differ from Australian laws. Pursuant to the Class Order, this document and any information regarding MAGIHK and its products is strictly provided to and intended for Australian wholesale clients only. By accessing this document and any information or content contained in it, you represent that you are a ‘wholesale client’ under the Corporations Act. This document is strictly for information purposes only and does not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances. Further, this document should not be regarded by investors as a substitute for independent professional advice or the exercise of their own judgement. The contents of this document is prepared and maintained by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Australian Investments & Securities Commission. No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission of MAGI HK. Copyright 2020. All rights reserved.
Chinese Vaccine Industry Research Series III
China’s Vaccine Market Dynamics
In our ‘Introduction to vaccine’ piece we discussed different types of vaccines. In this note, we will focus on China’s vaccine market dynamics.
Sizing the Opportunity
China’s vaccine market grew at 6.2% CAGR from RMB19.9bn to RMB25.3bn by 2013-2017, according to “CIC” (China Insights Consultancy), according to CLSA report dated May 10th, 2019. Per CIC forecasts the sector is expected to accelerate to RMB106.5bn in 2030, that is an 11.7% compound annual growth rate (“CAGR”) from 2017.
Meanwhile, the country’s private vaccine sector delivered a faster 14.9% CAGR over 2013-17, when it nearly doubled from RMB12.4bn to RMB21.7bn, according to CLSA report dated May 10th, 2019). CIC, according to CLSA report dated May 10th, 2019, forecasts that it will reach RMB101.9bn by 2030, representing a 12.7% CAGR from 2017. This will be driven by strengthening R&D capabilities supporting the development of new and innovative vaccines.
Vaccines that Lead in the Global Market
The global vaccine market reached US$43.8bn in 2017, an 8.7% CAGR 2013-17, according to CIC.
Pfizer’s Prevnar 13, a preparation that immunizes against pneumonia, had the largest market share by sales with 13% in 2017. Gardasil/Gardasil 9 (HPV vaccines) ranked second with a combined 5%. Meanwhile, Hexaxim, Hexyon, Pentacel and Pentaxim, which help to prevent DTP, Hib and Polio, are made by Sanofi; together they accounted for another 5%.
China Vaccine Market Segmentation
According to the Regulation on the Administration of Circulation and Vaccination of Vaccines issued by the State Council of China, according to CLSA report dated May 10th, 2019, China’s vaccine market is divided into two categories. Category-1, refers to vaccines that are free of charge to citizens, while category-2, vaccines are paid out-of-pocket by individuals.
Category-1 vaccines are purchased from manufacturers by provincial CDCs (Centre for Disease Control and Prevention) at relatively lower prices compared to category-2 products, and are offered to the public for free. Vaccine prices in the public market are regulated by the government and are generally low, while those distributed in the private market are sold at higher prices and have better margins.
State-Owned Enterprises (SOEs) Account for 40% by Volume
Lot-release volume data by China’s National Institutes for Food and Drug Control (NIFDC) show that China’s vaccine market was highly segmented in 2018, with more than 40% controlled by SOEs. There are seven SOEs that provide vaccine products in China.
Category-1 vaccines are mainly supplied by SOEs. Some private-sector players, such as Kangtai Biological and Changsheng Biotech, also manufacture and provide several types of category-1 vaccines. With the further expansion of the national immunization program, we expect more category-2 vaccines to be included in the scheme, with private-sector players’ market share gradually increasing.
We discuss below 3 key sub-segments in China’s vaccine market.
Meningococcal Vaccine Market
Neisseria meningitides is a bacterium that causes meningitis and other forms of meningococcal disease. There are two main types of meningococcal vaccines: MPSV and MCV (Meningococcal polysaccharide vaccine and Meningococcal vaccine). Both of have bi-valent and quadra-valent versions. MPSV is the primary meningococcal vaccine in China, while MCV2 is the only available meningococcal conjugate vaccine in the country and can only be purchased in the private market. However, in developed countries, MPSV has already been replaced by MCV products and the meningococcal vaccine market is dominated by MCV4 vaccines. MCV4 vaccines, which have broader serogroup coverage, are forecast to gradually replace MCV2 products in China.
The meningococcal vaccine market in China is expected to reach RMB7bn in sales in 2030, from RMB2.1bn in 2017, a 9.9% CAGR, according to CIC, according to CLSA report dated May 10th, 2019. MCV products are expected to be the key growth driver, especially the launch of MCV4 vaccines.
Competitive landscape – There are three marketed MCV2 products and one combination vaccine of MCV2 with Hib in China that are manufactured by Walvax, Royal and Zhifei Lvzhu, as well as four MCV2 candidates are under the development stage. The combination vaccine of MCV2 with Hib from Zhifei Lvzhu dominated the market with a 57% share in 2018, followed by Royal’s MCV2 preparation at 32%.
Pneumococcal Vaccine Market
According to CIC, according to CLSA report dated May 10th, 2019, China’s pneumococcal vaccine market recorded RMB1.5bn in sales in 2017. The 23-valent pneumococcal polysaccharide vaccine (PPV23) and 13-valent pneumococcal conjugate vaccine (PCV13) are the two available products domestically for the prevention of pneumococcal diseases. The pneumococcal vaccine market is expected to reach RMB14.6bnin 2030, a 19.7% CAGR 2017-2030, according to CIC(c).
Competitive landscape – Pfizer’s Prevnar 13 was the biggest-single player in the pneumococcal vaccine market in 2018 with a 38% market share, closely followed by Chengdu Institute, an SOE company, with 37%, Walvax (15%) and Merck (10%), according to lot-release data provided by NIFDC. There are also several PCV13 candidates that are under different development stages.
DTP (Diphtheria, Tetanus and Pertussis) Vaccine Market
In China’s DTP vaccine market, co-purified DTaP and DTcP (Diphtheria, Tetanus, Pertussis) vaccines are the two main types of preparations.
The DTP vaccine market in China is expected to reach RMB 8.6bnin 2030 (from RMB1.9bn in 2017), a 12.6% CAGR.
Given that DTcP is a key backbone component of a combination of vaccines and there is an emerging trend of increasing development of combination preparations in the industry, according to CanSino Bio (“CanSino”), DTcP, the DTcP-based combination vaccine in China is expected to gradually replace co-purified DTaP in the coming years.
Competitive landscape – According to lot-release data provided by NIFDC, in DTP vaccine market in China, DTaP products in total accounted for 97% of market share. DTaP vaccines from Wuhan Institute, which is an SOE company, dominated the sector with an 81% market share. DTaP-Hib from Minhai and DTaP from Walvax accounted for 9% and 7% of the market in 2017, respectively. CanSino and Beijing Bio-Institute are the only two developers who have DTcP vaccine candidates and both have received clinical-trial application (CTA) approval. In addition, CanSino also has a booster schedule for children four-to-six years old, along with adolescents and adults, according to CLSA report dated May 10th, 2019.
Domestic vaccine companies have a strong understanding of China’s unique vaccine distribution supply chain; this acts as a barrier of entry for new entrants.
The mentioned companies are strictly for educational and fund marketing purposes only. For more information on our product offering, please refer to our website.
Disclaimer
This document is intended for Hong Kong investors only. This material is neither an offer to sell nor solicitation to buy a security to any person in any jurisdiction where such solicitation, offer, purchase or sale would be unlawful under the laws of that jurisdiction. Investment involves risk.
The information in this material is based on sources we believe to be reliable but we do not guarantee the accuracy of completeness of the information provided. This material has not been reviewed by SFC and shall only be circulated in countries where it is permitted.
This material is intended solely for your private use and shall not be reproduced or recirculated either in whole or in part, without the written permission of Mirae Asset Global Investments. This document has been prepared for presentation, illustration and discussion purposes only and is not legally binding. Whilst compiled from sources Mirae Asset Global Investments believes to be accurate, no representation, warranty, assurance or implication to the accuracy, completeness or adequacy from defect of any kind is made. The division, group, subsidiary or affiliate of Mirae Asset Global Investments which produced this document shall not be liable to the recipient or controlling shareholders of the recipient resulting from its use. The views and information discussed or referred in this report are as of the date of publication, are subject to change and may not reflect the current views of the writer(s). The views expressed represent an assessment of market conditions at a specific point in time, are to be treated as opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. In addition, the opinions expressed are those of the writer(s) and may differ from those of other Mirae Asset Global Investments’ investment professionals.
The provision of this document shall not be deemed as constituting any offer, acceptance, or promise of any further contract or amendment to any contract which may exist between the parties. The issuer of this article is Mirae Asset Global Investments (HK) Limited (“we”) which we may or our managed funds may hold the mentioned securities. It should not be distributed to any other party except with the written consent of Mirae Asset Global Investments. Nothing herein contained shall be construed as granting the recipient whether directly or indirectly or by implication, any license or right, under any copy right or intellectual property rights to use the information herein. This document may include reference data from third-party sources and Mirae Asset Global Investments has not conducted any audit, validation, or verification of such data. Mirae Asset Global Investments accepts no liability for any loss or damage of any kind resulting out of the unauthorized use of this document. Investment involves risk. Past performance figures are not indicative of future performance. Forward-looking statements are not guarantees of performance. The information presented is not intended to provide specific investment advice. Please carefully read through the offering documents and seek independent professional advice before you make any investment decision. Products, services, and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries, and/or distributors of Mirae Asset Global Investments as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction.
Hong Kong: This material is prepared by Mirae Asset Global Investments (HK) Limited (Mirae HK). Mirae HK is regulated by the SFC (CE reference: ALK083).
Australia: The information contained on this document is provided by Mirae Asset Global Investments (HK) Limited (“MAGIHK”), which is exempt from the requirement to hold an Australian financial services license under the Corporations Act 2001 (Cth) (Corporations Act) pursuant to ASIC Class Order 03/1103 (Class Order) in respect of the financial services it provides to wholesale clients (as defined in the Corporations Act) in Australia. MAGIHK is regulated by the Securities and Futures Commission of Hong Kong under Hong Kong laws, which differ from Australian laws. Pursuant to the Class Order, this document and any information regarding MAGIHK and its products is strictly provided to and intended for Australian wholesale clients only. By accessing this document and any information or content contained in it, you represent that you are a ‘wholesale client’ under the Corporations Act. This document is strictly for information purposes only and does not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances. Further, this document should not be regarded by investors as a substitute for independent professional advice or the exercise of their own judgement. The contents of this document is prepared and maintained by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Australian Investments & Securities Commission. No part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission of MAGI HK. Copyright 2020. All rights reserved.
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Australia: The information contained in this document is provided by Mirae Asset Global Investments (HK) Limited (“MAGIHK”), which is exempted from the requirement to hold an Australian financial services license under the Corporations Act 2001 (Cth) (Corporations Act) pursuant to ASIC Class Order 03/1103 (Class Order) in respect of the financial services it provides to wholesale clients (as defined in the Corporations Act) in Australia. MAGIHK is regulated by the Securities and Futures Commission of Hong Kong under Hong Kong laws, which differ from Australian laws. Pursuant to the Class Order, this document and any information regarding MAGIHK and its products is strictly provided to and intended for Australian wholesale clients only. The contents of this document is prepared by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Australian Investments & Securities Commission.
Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.