China’s Sinovac aims for 600 million dose capacity for COVID-19 vaccine

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China's Sinovac aims for 600 million dose capacity for COVID-19 vaccine
China's Sinovac aims for 600 million dose capacity for COVID-19 vaccine

One of China’s biggest generic drug makers is investing around $500 million to fund research and production of a frontrunner coronavirus vaccine candidate from Sinovac Biotech Ltd. that could be weeks away from being administered across the world.

Sino Biopharmaceutical Ltd. will purchase a 15% stake in a Sinovac unit called Sinovac Life Sciences Co., the Beijing-based vaccine maker said in a statement posted on its website Monday. Sino Biopharm’s stock rose as much as 4.6% on Monday morning before paring gains.

The investment comes as Sinovac’s CoronaVac shot starts being shipped to countries across the world in preparation for mass inoculation efforts. The Chinese company is expected to release data from final stage testing within days that will show how effective the vaccine is.

For Sino Biopharm, the investment is an effort at pivoting its business as a government policy to slash the prices of generic drugs puts pressure on its core revenue stream. Last week, its stock plunged 12% after its third-quarter earnings missed expectations, and analysts expect the drop in revenue to worsen in the final quarter.

Sinovac said it would use the funding for “further development, capacity expansion and manufacturing” of its vaccine. It’s now in the midst of analyzing interim data from its Phase III trials in Brazil. The next step is for the company to submit the data to the Chinese drug regulator for approval for mass use. A large ramp-up in production for distribution locally and across the globe would then follow.

Sinovac said it aims to manufacture 300 million doses of CoronaVac annually and is nearing completion of a second factory that will double its production capacity.

In addition to supplying the shot in China, the company will need to ship the vaccine either in bulk or in vials to countries including Indonesia, Turkey and Brazil.

Sino Biopharm’s push into innovative therapies reflects how the generic drugs are increasingly a non-viable business model for both local and foreign pharmaceutical companies. Though the company was an early winner in Beijing’s centralized drug procurement program that awards supply tenders to the lowest bidders, its offer to slash prices by more than 90% has eroded revenue and profits.

The company said in its earnings statement that it expected the effects from China’s latest round of centralized drug procurement, which cut prices by an average of 53%, to materialize in the last quarter.

In a research note, Daiwa analysts led by Dennis Ip wrote that the company’s revenue in the first nine months fell by 6%. Excluding the impact of the procurement program, the company would have posted revenue growth of 13%, the note said.

Sino Biopharm’s shares have lost more than a third of their value since late July.

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