Merck's original nine-valent HPV vaccine has been in short supply for a long time in China, and the quadrivalent and bivalent vaccines are also sought after, and the performance of domestic agents and independent manufacturers has continued to exceed expectations.

Zhifei Bio (300122.SZ)

is the only domestic agent of Merck & Co.'s HPV vaccine. The company's net profit in 2021 is 10.2 billion yuan, a year-on-year increase of 209%. The company claims that the steady increase in sales of its own products and agency products has brought about a substantial increase in performance .

As the only bivalent HPV vaccine manufacturer in China,

Wantai Bio (603392.SH) will have

a net profit of 2.016 billion yuan in 2021, a year-on-year increase of 197.83%.

  As more companies join the fray, can the HPV vaccine continue to write the high-growth myth?

Who can take on the overflowing HPV vaccination demand?

Demand gap may exceed 500 million doses

  HPV, or human papillomavirus, is a common sexually transmitted, skin-to-skin contact virus.

HPV infection is very common, the infection rate of the population is as high as 75%, and long-term persistent infection with HPV virus has a certain probability of eventually developing into cervical cancer.

  The HPV vaccine is the only vaccine that can prevent cancer in the world. It mainly covers high-risk subtypes with a high infection rate and can prevent cervical cancer to a large extent.

At present, there are mainly three types of HPV vaccines: bivalent, quadrivalent, and nine-valent. "Price" represents the type of virus subtype covered by the vaccine. The higher the "price", the more virus types are covered.

The bivalent vaccine protects against infections caused by the HPV16 and HPV18 viruses - which are responsible for more than 70% of cervical cancers.

  At present, the products sold in the global market are mainly Merck's quadrivalent and nine-valent vaccines, and GSK's bivalent vaccines.

Wantai Bio's "Cecolin" bivalent human papillomavirus vaccine (Escherichia coli route) is the first approved domestic HPV vaccine, which provides a new option for the prevention of HPV infection in my country.

  Since Merck's quadrivalent HPV vaccine was approved for domestic marketing in 2017 to 2021, the total batch of HPV vaccines issued in my country has accumulated to 60 million doses, while Merck's nine-valent HPV vaccine has always been in a situation of "hard to get one shot".

  "Production capacity is the biggest factor limiting the growth of domestic HPV vaccination scale." Xu Xiaoxin, an analyst in the pharmaceutical industry of Tianfeng Securities, told Yicai.com.

As the world's only nine-valent HPV vaccine supplier, Merck has not handed over its vaccine production to other companies for OEM. Therefore, although the company itself has a strong willingness to expand production, the actual production capacity expansion progress is relatively slow.

  In recent years, with the outbreak of domestic demand, the batch issuance of Merck's nine-valent HPV vaccine in my country has grown rapidly.

According to the data from the China Inspection and Quarantine Institute, as of the first half of 2021, my country's nine-valent HPV vaccine batches issued about 11.097 million doses, an increase of more than 400% over the same period of the previous year, but compared with the huge demand group of more than 300 million people in China, this is One volume is still a drop in the bucket.

  Data show that since 2017, the overall size of the vaccinated population in my country has increased from 340 million to about 366 million, and the number of vaccinated people has been about 20 million, and the overall vaccination rate is less than 6%.

According to the 9-valent HPV vaccine per capita 3 doses and 50% vaccination rate, the demand gap may exceed 500 million doses.

  Xu Xiaoxin said that from 2022 to 2023, the supply scale of Merck's HPV vaccine to China may accelerate, but the specific scale and timing are still difficult to determine.

At the same time, the 26-45-year-old clinical trial of Merck's nine-valent vaccine is about to be submitted for approval, and its domestic vaccination age range will be extended from the original 9-26 years old to 45 years old. Being included in the scope of vaccination may further stimulate market demand.

One big profit, many catch up

  As the supply of Merck's nine-valent vaccine continues to be in short supply, and its domestic vaccinated population only covers 9-26 years old, some consumers who are over-aged or who have not been able to grab the vaccination quota have turned to the quadrivalent and bivalent vaccines.

  Wantai Bio, with an annual output of 30 million doses, is currently the only bivalent HPV vaccine manufacturer in China, and has become the main beneficiary of the overflow of demand for the nine-valent HPV vaccine.

In 2020, Wantai's bivalent HPV vaccine received batches of 2,456,200 doses, and it is expected to exceed 10 million doses in 2021.

In January 2022, nearly 3 million doses of Wantai's bivalent HPV vaccine have been issued. Some institutional sources believe that according to this trend, its batch issuance in 2022 may reach the scale of 20 million doses.

  Benefiting from the rapid growth of HPV vaccine sales, Wantai Bio's performance in 2021 exceeded expectations.

According to the company's performance report, during the reporting period, the company's net profit attributable to the parent company reached 2.016 billion yuan, a year-on-year increase of 197.83%.

  At the same time, a number of domestic companies are stepping up the pace of clinical trials of bivalent vaccines. Among them, Watson Bio's (300142.SZ) bivalent HPV vaccine has completed Phase III clinical trials and is expected to be approved for marketing within this year.

At present, the planned production capacity of its production workshop is about 15 million doses.

  Xu Xiaoxin said that the addition of Watson will effectively promote the rapid increase in the overall production capacity of the domestic bivalent HPV vaccine and increase the product penetration rate.

Considering the current huge demand gap for HPV vaccines in China, even if new players intervene in the short term, the industry supply and demand pattern will not change significantly.

  Some local governments have begun to promote free bivalent HPV vaccination for 9-14 year olds, and the school market is expected to gradually open.

Xu Xiaoxin believes that the current bivalent HPV vaccine suppliers have high bargaining power. Even if the centralized procurement is carried out in various places in the future, the price will not drop sharply in the short term.

  The days when HPV vaccine companies "lie down and make money" may continue for a long time.

  According to incomplete statistics, there are a total of 14 types of HPV series products that have entered the clinical research stage in China. The HPV nine prices of Wantai Bio, Bowei Bio, Recreation Guard and Anbaisheng/Reco have entered the third clinical phase.

Among them, Recreation Guard and Ruike Bio have recently submitted listing applications to the Beijing Stock Exchange and the Hong Kong Stock Exchange.

Both companies have invested heavily in vaccine research and development, even at the expense of expanding losses.

  Recreation Guard recently released a performance report saying that the company will have a net loss of 380 million yuan in 2021, a year-on-year increase of 149.08%, and its research and development expenses will reach 218 million yuan in the same period.

Ruike Bio’s prospectus stated that the company’s loss in the first nine months of 2021 was as high as 520 million yuan, and R&D expenses reached 372 million yuan.

The company said that its HPV nine-valent vaccine will be launched as soon as 2025. Before that, losses and R&D investment will continue to expand.

  Judging from the actual progress, Wantai Bio and Bowei Bio have made faster progress in the research and development of the nine-valent HPV vaccine. Both companies have now completed Phase III clinical enrollment, and are expected to be launched in around 2024 at the earliest.

If Wantai Bio finally uses persistent viral infection as the primary clinical endpoint, its launch process will be faster.

  An analyst in the pharmaceutical industry of a brokerage said that the future incremental demand for HPV vaccines mainly depends on the number of new born population. Compared with the current stock demand of over 300 million people, its scale is dwarfed. Therefore, in the short term, HPV vaccine companies need to fight more. It is the speed, and the HPV vaccine that is launched faster will be able to occupy and consume the stock market earlier.

In the long run, as the scale of supply continues to expand, industry profits may cease to exist.