Small vaccine hidden market - Analysis of China’s vaccine market
Companies are vying to be recognized by the World Health Organization for vaccine manufacturers, but in reality, four multinational corporations monopolize 85% of the global vaccine market. They are GlaxoSmithKline, Aventis, Merck, and Wyeth pharmaceutical companies. Due to the SARS epidemic in 2003 and the avian influenza epidemic, the prospects of China's vaccine market have become increasingly clear. Domestic and international vaccine manufacturers face the potential of the world's largest vaccine market, naturally drawing the attention of multinational corporations towards the Chinese market. Multinational pharmaceutical companies are highly motivated to expand in China's vaccine market, but they also face stiff competition.
One expert noted that the key to success for multinational pharmaceutical enterprises entering the vaccine market depends on several factors: multinational pharmaceutical companies themselves, their collaboration with local pharmaceutical companies, public health policies, and who possesses more patience and vision. Currently, the first multinational company to enter China's vaccine market is the French company Aventis Pasteur. The first imported vaccine-packaging joint venture - Shenzhen Aventis Pasteur Biological Products Co., Ltd. - was established in China, introducing vaccines for hepatitis, pneumonia, and influenza to the Chinese market. Subsequently, GlaxoSmithKline entered the Chinese vaccine market, rapidly increasing its market share in recent years.
Throughout the vaccine market, today’s vaccine market competition has evolved from mere price competition to a focus on technological competition. Combination vaccines and therapeutic vaccines fully demonstrate the competitive strength of technology. Domestic vaccine companies face serious challenges. At present, China's domestic vaccine manufacturers include Beijing Tiantan Biological Products, Changchun High-tech, Shenzhen Hong Tai, Shanghai Health Institute, North China Pharmaceutical Group, animal husbandry shares, etc. Among them, only Tiantan Biological Products, Changchun High-tech, and animal husbandry shares are listed companies.
According to relevant staff at the Beijing Center for Disease Control, in 2004 alone, Beijing required 150 million doses of influenza vaccine. Calculated at the lowest price of 64 yuan per dose, the market value reached nearly one billion dollars. Although there is a price gap between domestic and imported vaccines, from the perspective of brand trust and improved living standards, many consumers still opt for imported vaccines. It was learned that all influenza vaccines purchased by the Beijing Center for Disease Control in 2005 were imported.
Of course, domestic pharmaceutical companies enjoy some advantages under the protection of state policies. Six biological products institutes (vaccine producers) approved by the Ministry of Health supply 70% of their production capacity according to plans, while 30% of their capacity produces vaccines for market competition. Multinational pharmaceutical companies compete through branding, while local pharmaceutical companies compete on price. Domestic vaccines are cheaper than those produced by multinational pharmaceutical companies, so the domestic vaccine market prices are dominated by local pharmaceutical companies.
However, due to technical reasons, most domestic vaccine production lags behind foreign pharmaceutical companies in terms of product stability and other indicators, failing to gain market recognition. Facing an enlarged domestic market demand, domestic companies often find themselves helpless. As a result, domestic pharmaceutical companies must ensure the stability of vaccine price changes while enhancing the technical content of vaccines to gain a competitive edge in the market.
China's vaccine market is still in the cultivation period, and it remains unclear who will ultimately dominate this extraordinary market. This is because, first, China's 1.3 billion population and over 15 million annual newborns create a vast potential vaccine market. Second, the lack of public awareness and knowledge about vaccines, along with public health policy restrictions, limits the development of this market. Third, before entering China, multinational pharmaceutical companies usually have long-term plans, such as shifting production centers to China. Fixed asset investments are relatively high, resulting in losses in the early years. For instance, after a successful merger, GlaxoSmithKline became the largest multinational pharmaceutical enterprise in China but could not fully utilize its production base. So far, GlaxoSmithKline (Chongqing) Co., Ltd., which is over 11 years old, has only utilized 20% of its production capacity, leading to underemployment and failure to reach the intended return on investment, resulting in losses. The industry expects that multinational pharmaceutical companies need at least 10 years to profit and develop in China.
Fourth, understanding of pharmaceutical knowledge and the Chinese vaccine market is not very high. For example, GlaxoSmithKline's vaccine market strategy in China focuses on investment and nurturing, with the earnings period yet to come. In the upcoming period, the vaccine market will witness fierce competition. We will see.
(Editor / Meng Yang)