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LONDON/SHANGHAI Oct 9 (Portal) – China’s biggest vaccine company Zhifei (300122.SZ) will pay British drugmaker GSK (GSK.L) 2.5 billion pounds ($3.05 billion) for exclusive rights to distribute the vaccine GSK’s shingles vaccine in the world’s leading company. 2 pharmaceutical market.
The deal is part of a series of moves by Western pharmaceutical companies to capture a larger share of the Chinese market, including announcements from companies such as AstraZeneca.
The vaccine, called Shingrix, is GSK’s best-selling drug. GSK said the deal with Zhifei is part of its efforts to more than double Shingrix’s sales to more than 4 billion pounds ($4.88 billion) by 2026.
Speaking to reporters, GSK Chief Commercial Officer Luke Miels said Zhifei has an impressive track record of improving access to medicines in China, citing the company’s deal with drugmaker Merck & Co (MRK.N). on the distribution of its Gardasil human papillomavirus (HPV) vaccine: “We essentially tried to replicate that with Shingrix.”
The deal will see the vaccine available at more than 30,000 sites across China, up from 9,500 currently. This is important, Miels said, because unlike most countries, people only have access to vaccines in these locations and not in hospitals, doctor’s offices or health centers.
Zhifei will buy 2.5 billion pounds worth of Shingrix for GSK over an initial period of three years, GSK said. GSK expects an extension beyond these three years, Miels said. The market for Shingrix in China, as well as Brazil and Mexico, is “largely self-funded,” and the vaccine rollout in those markets is still in its early stages.
Miels said Monday’s deal gives GSK more money for research and development and “more room to focus on developing the drugs in its pipeline rather than distributing them.”
POTENTIAL FOR FUTURE VACCINATION OFFERS
The agreement is scheduled to come into force on January 1st. Zhifei shares rose as much as 20% to 58.40 yuan ($8.00) after the filing, the highest since March 27. GSK shares rose 1.2% by 08:12 GMT, approaching their session high.
Shingrix is currently GSK’s biggest product and strongest growth driver, with first-half sales of £1.7 billion, up 20% on the previous year.
JPMorgan analysts said in a note that the announcement “reduces risk to GSK’s Shingrix China sales over the next three years” and raises the potential for an increase in consensus core earnings per share (earnings per share) forecasts for 2026 by up to up to 6%.
GSK’s statement also said that Zhifei had granted the company the “right of first refusal to be their exclusive partner for the joint development of an RSV vaccine for older adults in China.”
The company launched its respiratory syncytial virus (RSV) vaccine called Arexvy in the United States after it was approved by regulators in May.
Barclays analysts said in a note last month that the first five weeks of prescription data showed the vaccine rollout was off to a good start and that GSK appeared to be ahead of Pfizer’s (PFE.N) rival RSV vaccine.
A GSK shareholder then told Portal that if the strong start was maintained through September, consensus estimates for Arexvy sales in 2023 would be “far too low” at around 215 million pounds.
GSK is betting on Arexvy to be its next blockbuster drug. This is part of its growth efforts as the company faces a combination of patent expirations and declining revenue from its current best-sellers by the end of this decade.
($1 = 0.8192 pounds)
($1 = 7.2960 Chinese Yuan Renminbi)
Reporting by Maggie Fick in London and Andrew Silver in Shanghai, additional reporting by Eva Mathews in Bengaluru and Lucy Raitano in London; Edited by Savio D’Souza and Louise Heavens, Kirsten Donovan
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