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

Drop in demand and surge in supply trigger intense competition within the industry

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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 citywide 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 - homegrown alternatives are instead saddling Chinese vaccine makers with heavy losses.