Wantai Biopharma's stock hit the limit-up! When will the bottom of the vaccine industry come?

The pharmaceutical industry has fallen into a value range after three years of decline.

Except for the traditional Chinese medicine sector, which remains unaffected, other sub-sectors of the pharmaceutical industry are still searching for a bottom, especially the vaccine sector, which is one of the worst-hit areas in the entire industry.

How bad is the vaccine sector?

The leading company Zhifei Biological has seen a drop of over 70%, Walvax Biotechnology has fallen by more than 80%, and the worst-hit is CanSino Biologics, a star company in the vaccine sector, which has plummeted by over 90% from its peak.

And there are still no clear signs of a reversal.

However, compared to the aforementioned vaccine leaders, Wantai Biological, under Zhong Shanshan's leadership, has recently shown an independent upward trend over the past six months. What lifted Wantai Biological out of the gloom was its nine-valent HPV vaccine.

So, how much potential does the nine-valent HPV vaccine have? How big is the market space?

Globally, the only company currently holding the nine-valent HPV vaccine is Merck & Co. (MSD). Just this one drug, the nine-valent HPV vaccine, brings MSD annual revenues exceeding 64 billion yuan. In China, MSD's agent Zhifei Biological has also become the highest-market-cap vaccine company in the A-share market thanks to the nine-valent HPV vaccine.

Besides the nine-valent HPV vaccine, there is also the bivalent HPV vaccine, primarily produced by Wantai Biological and Walvax Biotechnology. Previously, these two companies rode a significant wave of growth with their bivalent HPV vaccines. However, after 2023, with MSD expanding its age range for vaccination and the nationwide promotion of HPV immunization plans, competition in the sector intensified, and the price of the bivalent HPV vaccine kept dropping.

How fierce is the competition for the bivalent HPV vaccine?

In 2022, Wantai Biological's bivalent HPV vaccine was initially priced at 329 yuan per dose. By July 2023, in Guangdong Province's HPV vaccine procurement project, Wantai Biological's winning bid price was 116 yuan per dose—a 50% drop in just one year. By March 2024, according to Jiangsu's government procurement website, Wantai Biological won a bid for 499,206 doses of the bivalent HPV vaccine at 86 yuan per dose, setting a record low for domestic HPV vaccine bidding prices.

Walvax Biotechnology faced a similar situation. In May 2022, during Jiangsu's HPV vaccine bidding, Walvax won a bid for 22,400 doses at 246 yuan per dose. In 2023, Walvax directly wrote down 250 million yuan in asset impairment provisions for its HPV vaccine inventory.

These adverse effects were directly reflected in their financial reports. According to Wantai Biological's 2023 annual report, its revenue was 5.511 billion yuan, down 50.73% year-on-year; net profit was 1.248 billion yuan, a sharp decline of 73.65%, and adjusted net profit was 1.078 billion yuan, down 76.12%.

Walvax Biotechnology is in an even more awkward position. With the end of the COVID-19 pandemic and intensified competition in the bivalent HPV vaccine market, its 2023 revenue was 4.114 billion yuan, down 19.12% year-on-year; net profit was 419 million yuan, down 42.44%, and adjusted net profit was 574 million yuan, down 33.95%.

Public data shows that the batch release volume of the nine-valent HPV vaccine in 2023 increased by 133.82% year-on-year. This alone demonstrates the market potential of the nine-valent vaccine.

On the evening of April 10, Wantai Biological announced that its nine-valent HPV vaccine had completed the V8 visit sample testing as planned, with key analysis data accumulating to the predetermined 12-month persistent infection endpoint events. The blind review has been completed, and preliminary analysis results of the main data have been obtained.

Due to the progress of Wantai Biological's nine-valent HPV vaccine development, market imagination has been unleashed, which is why it has shown an independent upward trend. As a result, on April 11, Wantai Biological's stock hit the daily limit-up.

Of course, in the long run, the pharmaceutical industry remains a sector with enduring potential. As an important branch of the industry, although the pandemic has drained much of the growth expectations for the vaccine sector, the steep declines have already fully digested previous negative factors. While the market remains sluggish, the fundamentals of these companies remain stable.

Kan Jian Finance believes that the vaccine sector has entered an oversold phase, and the industry needs an inflection point. If Wantai Biological's nine-valent HPV vaccine can be successfully launched, it will likely become the catalyst for a sector reversal. Therefore, from this perspective, the downward cycle of the vaccine industry is likely to end, and a new upward cycle is on the horizon.