China’s $1 flu shots show price squeeze for vaccine makers

BEIJING – Chinese vaccine makers are caught in a steep downturn, as intensifying competition pushes prices lower and erodes profits, underscoring the far-reaching deflationary pressure across the world’s second-largest economy.

Two of the country’s biggest vaccine makers – Chongqing Zhifei Biological Products and Beijing Wantai Biological Pharmacy Enterprise – posted their first nine-month losses since going public in 2010 and 2021, respectively.

Meanwhile, other vaccine producers reported their weakest quarterly earnings in years, with profits plunging by 36 per cent or more. Those poor results reflect how far prices have collapsed in the absence of demand.

Companies have resorted to “buy one, get one free” promotions to lure customers, while one firm in Beijing’s latest city-wide procurement round won a contract to supply 630,000 flu shots at just 5.5 yuan (S$1) each – down from peaks of around 150 yuan.

Once riding high on the Covid-19 boom, China’s vaccine industry now faces a reckoning. Demand has weakened while supply has surged, triggering race-to-the-bottom rivalries reminiscent of those that have plagued other Chinese sectors, from solar panels to consumer goods.

After years spent challenging Western dominance in staple vaccines – with hopes of reaping a windfall in the world’s second-largest pharmaceutical market – home-grown alternatives are instead saddling Chinese vaccine makers with heavy losses.

“Most of the vaccines are experiencing overcapacity,” said Mr Bing Zhao, head of equity research at China Renaissance Securities. “Supply is far exceeding demand.”

Falling vaccine prices in China have drawn both fascination and perplexity in local media. One October headline quipped: “This flu season, vaccines are cheaper than Mixue,” referencing the budget bubble tea chain.

Unlike many Western markets, where state or commercial insurance covers a wide range of vaccines,

Chinese consumers often pay entirely out of pocket

for many common shots. For some, that dynamic places vaccines in the same category of discretionary spending as liquor or clothing.

To draw customers, GSK and Merck distributor Zhifei offered customers one free shot for each shingles and human papillomavirus (HPV) vaccine they buy – a move partly aimed at competing with cheaper domestic rivals.

The steepest discounts have appeared in regional government procurement programmes, where companies bid aggressively for large contracts.

Wantai and Walvax Biotechnology, which produce HPV vaccines competing with Merck’s, have slashed prices by as much as 90 per cent over two years. Discounts have also spread to pneumococcal, tetanus and rabies shots.

Noting the severe situation, a vaccine industry association recently urged companies to heed China’s call against “involution” – a term used to describe destructive internal competition – and resist disorderly price wars.

While the group stopped short of proposing specific measures to rein in the discounting, its call comes just weeks after China’s top market regulator pledged more cost investigations, price supervision and enforcement actions against rule breakers.

Heightened awareness and need for vaccines during the pandemic drove excitement for the market. Since then, demand has waned as China’s declining birth rate reduces paediatric needs, economic slowdowns push vaccination down the priority list, and overall rates trail developed nations – all compounded by rising global distrust in vaccines.

“Vaccines are moving from a monopolistic competition market toward perfect competition,” said Mr Denis Cao, lead healthcare analyst at Sealand Securities. “During this transition period, the prices would keep falling – it’s hard to say when it will bottom out.”

Competition could intensify further. At least three new pneumococcal vaccines, five rabies vaccines, six shingles vaccines and seven flu vaccines are currently under review by Chinese regulators, according to its website.

Way out

Some companies have turned to exports to support future growth, and talked up plans to sell vaccines in South-east Asia, the Middle East and Latin America.

China exported US$212 million (S$275 million) worth of vaccines for human use in 2024, a 42 per cent growth from the previous year, according to data from the China Chamber of Commerce of Medicines & Health Products Importers & Exporters, but still far below the world’s top exporters.

Others highlight a shift to innovative vaccines. CanSino Biologics, after years of losses as its Covid-19 shot waned, has turned a small profit in 2025 thanks to its meningitis vaccine, which has no rivals in China.

The shot’s price has stayed the same since becoming available in 2022, and CanSino recently shipped the first batch to Indonesia, where it has been registered.

Still, a market consolidation will be inevitable, with smaller players likely to liquidate or be absorbed by bigger companies, Mr Zhao said.

“If you look at the world’s vaccine companies, there are only a handful of market leaders globally,” he said. “Do we really need that many companies? That’s not necessary.” BLOOMBERG