What is Merck’s move to expand the age of HPV nine-valent vaccine

the State Food and Drug Administration announced that the applicable age of Merck’s HPV nine-valent vaccine (full name: nine-valent human papillomavirus vaccine) has been expanded from 16 to 26 years old to 9 to 45 years old.

The news quickly swiped on major social platforms.

At least on the surface, girls who have not “goed ashore” (meaning that they have completed the full vaccination) near the age of 26 can breathe a sigh of relief.

The HPV vaccine, also known as the cervical cancer vaccine, is currently the only vaccine that can prevent cancer. The nine-valent vaccine has the widest protection range, but the “success rate” for vaccination appointments is extremely low, which has become a heart disease that makes girls angry and anxious.

“My uterus is now marked with an age tag? Isn’t it worthy of being over 26 years old?” A girl who has not yet “goed ashore” and is in deep anxiety complained to Huxiu. There are also many girls who would rather pay twice the original price in order to “go ashore” before the age of 26.

The resulting spikes, group purchases, bundled sales, and “scalper” reselling have all become evidence of this mad rush for vaccines.

The root cause is related to the 26-year-old suitable vaccination age limit for the HPV nine-valent vaccine.

Back then, because of the rush to reform the drug review system, the entry of the HPV nine-valent vaccine into the Chinese market was called “quick speed”. On April 20, 2018, the company submitted the application, and it was conditionally approved for marketing on the 28th. It took only 8 days, making it the fastest drug on the market.

However, what people did not expect was that it took 4 years and 4 months to expand the scope of the applicable population to the “9 to 45 years old” that is synchronized with the international community. Why is the age expansion so late? Where does the driving force behind this expansion come from?

Why just age up?

The suitable range of HPV nine-valent vaccine vaccination is from 16 to 26 years old. This age setting was originally from the drug administration department.

According to a public technical review report, the product was able to obtain conditional approval for marketing within 8 days, mainly based on overseas clinical data.

Before the application for listing in China, Merck had carried out 7 clinical studies in non-mainland China, and 12,583 women aged 9 to 26 were vaccinated with the nine-valent vaccine. There were 624 women aged 16 to 26 and 198 women aged 9 to 15 in the East Asian cohort, mainly from Hong Kong, Taiwan, Japan and South Korea.

The Chinese food and drug administration department believes that among the low-age East Asian population, especially the Chinese population, the sample size is small and the evidence is insufficient. At the same time, in consideration of “the sex life of women in China is later than that in Western countries” and health economics, the applicable population is tentatively set as 16 to 16 26 year old crowd.

At the same time, the drug regulatory authorities have also put forward a series of requirements for companies to continue research, including “the protective efficacy and immunogenicity should be investigated in larger-scale population clinical trials, and more systematic safety observations should be carried out”, etc. . This is also the basis for expanding the applicable population.

According to Wu Tao, the chief physician of the Department of Gynecologic Oncology at Shaanxi Cancer Hospital, in an interview with Sino-Singapore Jingwei at the beginning of the year, Merck has launched a Phase III trial of age-expansion in China in the second year of listing (2019). However, the observation period will be five years, and it was originally expected to be extended to 45 years at the earliest in 2024.

In addition to the necessary trial procedures that take several years, in fact, in the pharmaceutical market, the scope of indications, changes in drug delivery methods, etc., have never been purely scientific issues.

For example, in April this year, the World Health Organization (SAGE) assessed that “a single dose of HPV vaccine can provide reliable protection, which is equivalent to the effect of a two-dose or three-dose regimen”. This news caused the market value of Zhifei Bio, Wantai Bio, and Watson Bio in the A-share market to evaporate nearly 50 billion yuan on the same day. Merck also urgently came forward to clarify, pointing out that SAGE cited literature observation time is too short, and said that relevant research is ongoing.

There is no doubt that reducing the number of inoculation doses will change the performance growth logic of related companies, and will also affect market growth. To change, in addition to more research, it is inevitable that all parties in the market will have a difficult game and contest.

Similarly, the setting of the applicable age of HPV vaccine and the perennial shortage of supply should be the result of the game and balance of commercial interests.

Merck is currently the only supplier of HPV nine-valent vaccine in the world, supplying more than 70 countries and regions around the world. The market performance is undoubtedly an important consideration.

For most multinational pharmaceutical companies, although the Chinese market is an imaginative emerging market, its share is far less than that of Europe and the United States. Taking Merck as an example, the company’s revenue in China in 2018 was about 1 billion US dollars. Later, driven by HPV vaccines, K drugs and other products, it grew rapidly, and it increased to 4.262 billion US dollars in 2021, which has just reached the global revenue. 10%.

On this basis, the amount of nine-valent vaccines that China received in the early days was indeed very small. According to the annual report of Zhifei Bio, the exclusive agent of Merck in China, from 2018 to 2020, the batches of HPV nine-valent vaccines were 1.2161 million, 3.324 million and 5.066 million respectively.

This logic also applies to the push for clinical trials. Clinical trials are required. According to vaccine expert Tao Lina in an interview with Sino-Singapore Jingwei, in the third phase of the vaccine trial, the sample size is large, the investment is large, the observation time is short, and the sample size is small, the observation time will be long.

According to Frost & Sullivan data, China’s HPV vaccine market size in 2020 is 13.56 billion yuan, with a compound annual growth rate of 143.4% between 2017 and 2020, and is expected to approach 70 billion yuan by 2030. The development speed of the Chinese market is also beyond Merck’s initial imagination. If it is said that the research launched by MSD in 2019 requires a 5-year observation period, but now it is actually “early” to expand the age, the reason for “early” should be related to Merck’s increased emphasis on the Chinese market and increased investment in trials.

“Aging” eases the pressure on Merck’s performance?

In the first half of 2022, Merck China’s revenue was US$2.468 billion, a year-on-year increase of 51%, and it performed exceptionally well among a number of multinational pharmaceutical companies that suffered from the severe setback in centralized drug procurement.

However, from the perspective of global market conditions, Merck’s performance pressure is not small.

On the one hand, Merck missed the new crown vaccine in the global anti-epidemic, and the new crown small molecule specific drug is gradually lagging behind Pfizer’s Paxlovid. On the other hand, the “quasi-drug king” K drug (PD-1 inhibitor) in the hands In the current track, the development of new indications has frequently suffered setbacks, and it is facing the problem that the patent is about to expire in 2023.

In short, they urgently need new potential products. Because of this, Merck has also frequently deployed in popular fields such as ADC and nucleic acid drugs in recent years.

In addition to the fierce competition between chemical drugs and biopharmaceuticals, the monopoly of the vaccine business, especially the self-funded second-class vaccine business, is becoming more and more profitable.

According to Merck’s annual report, the sales of HPV vaccines, including the quadrivalent vaccine “Jia Daxiu” and the nine-valent vaccine “Jia Daxiu-9, rank second after K medicine, and the revenue in 2021 will reach 5.7 billion US dollars. A new high, with a year-on-year increase of 44%, far exceeding other products. After 2020, with the HPV vaccination rate in the United States stabilizing, the fast-growing “foreign” market, including China, will become more and more important.

Sales of Merck’s major pharmaceuticals and animal health products in 2021.

Source: Merck 2021 fourth quarter and full year financial reports.

It can be said that China’s HPV vaccine business has become an important “engine” for Merck.

The dazzling performance of the HPV vaccine in China was also frequently mentioned by Merck in its financial report. “China is an important market for Merck.” Merck China emphasized again when responding to Tiger Sniff.

On this basis, in the first half of 2022, the batches of nine-valent vaccines issued in China were close to 9.3 million, almost reaching the volume of the previous year, an increase of about 400% year-on-year, much higher than the increase in global production capacity; Vaccine supplies also increased by 90% year-on-year.

At the same time, Merck is also conducting a number of clinical studies on HPV vaccination and immunization procedures among women and men of different ages in China. Based on a large number of population-based real-world studies, it hopes to use scientific evidence to “help more people benefit as soon as possible .” on the HPV vaccine”.

This means that after the age expansion, the HPV nine-valent vaccine will also penetrate into the male population of the appropriate age . By then, the product will continue to be sold in China, and Merck’s revenue in the Chinese market will continue to increase.

This will also save Merck’s “old partner” Zhifei Bio in China.

In the first half of this year, Zhifei Bio began to increase its revenue but not profit. The batch issuance of HPV nine-valent vaccine surged by 379%, but Zhifei’s revenue only rose by less than 40%, and its net profit dropped by 30%. From a specific point of view, the gross profit margin of the company’s agency products has been compressed from 34.41% in 2019 to 28.28%.

Previously, due to the over-reliance on the HPV vaccine for performance growth and the reduction of holdings by actual controllers, the share price of Zhifei Bio was also falling. For the most part, the market value of more than 300 billion yuan has also evaporated by nearly 200 billion yuan.

After the age expansion of the nine-valent vaccine, this company is also facing new development opportunities, and can temporarily breathe a sigh of relief.

It’s Wantai’s turn, they can’t sleep

Behind the age expansion of the HPV nine-valent vaccine Jiadaxiu-9 at this time, there is also the pressure from the changes in the competitive environment of the Chinese vaccine market.

Vaccines are a relatively monopolistic market. Merck, GSK, Sanofi, and Pfizer are known as the “Four Kings” in the vaccine industry, holding most of the global market share.

But in China, they face strong competition from homegrown vaccines.

Take the HPV vaccine, for example. At present, there are only 5 HPV vaccines on the market in the world. In addition to GSK’s bivalent vaccine Cervarix, Merck’s quadrivalent and 9-valent vaccines Jiadaxiu/ Jiadaxiu-9 are two domestically produced in China – Wantai Bio and Watson Bio’s bivalent vaccine, Xin Ke Ning and Wo Ze Hui.

Compared with the price of 580 yuan/injection for imported products, domestic vaccines are only 200-400 yuan/injection. At the same time, the production capacity in China is also more abundant. Taking advantage of the general trend of free vaccinations for girls under 14 years old in many places in China, domestic vaccines have formed a siege trend against imported vaccines .

Since the approval of Wantai Bio’s Xinke Ning in 2019, the batch issuance of GSK bivalent vaccine has dropped significantly – it has dropped to 689,700 in 2020, a drop of more than 67% compared to the beginning of the market.

In 2021, GSK fought back, and the batch issuance of vaccines increased to 2.83 million, a year-on-year increase of 310%. As a result, the batch issuance of Xinkening increased to 10 million doses, a year-on-year increase of 306%. Overall supply has increased by 110%.

In 2022, Watson Bio’s Wo Zehui also joined the battle, contributing more than 880,000 doses in 2 months. It can be said that the addition of domestic vaccines, while greatly improving the availability of vaccines, is also intensifying market competition and putting pressure on multinational pharmaceutical companies.

Now the war is also burning towards the nine-valent vaccine market. According to Securities Times statistics, there are at least 16 domestic HPV vaccines under development. Among them, the nine-valent vaccines of Wantai Bio, Ruike Bio, Bowei Bio, and Recreation Guard have entered Phase III clinical trials. It is expected that more products will be approved in the next 2 to 6 years.

In this case, if Merck does not act in time, it will quickly fall into a passive position.

After the expansion of Merck’s nine-valent vaccine, the situation has reversed.

The 2 to 6 years when the domestic vaccine was not on the market has also become a “window period” for Merck to conquer the city.

According to Merck China’s response to Huxiu, Merck has invested US$1 billion in recent years to increase the production capacity of existing HPV vaccine production facilities and build new production facilities. Global supply has nearly doubled from 2017 to 2020 and is expected to double again from 2020 to 2023.

The company’s efforts to supply nine-valent vaccines to the Chinese market are also continuing to strengthen.

Under the general trend of “high-priced” vaccines replacing “low-priced” vaccines, Merck’s nine-valent HPV vaccine will rapidly penetrate into younger age groups and male groups.

This can not only continue to increase Merck’s revenue in China, but also shift the market competition for HPV vaccines from the competition for stock to the competition for incremental growth, leaving less and less market space.

In this way, not only will the domestic HPV nine-valent vaccine face greater competitive pressure after it is launched, but the bivalent vaccine that has already been launched will also be squeezed. If local companies cannot come up with the nine-valent vaccine as soon as possible, the space for the bivalent vaccine may also be compressed.

In this sense, there is not much time left for Wantai creatures.

In fact, in China, with the gradual shrinking of the biological drug and generic drug market under the pressure of centralized procurement, medical insurance negotiations and other policies, and the shift in the focus of health work from treating existing diseases to general health and disease prevention, vaccines, especially self-paying The weight of the second-class vaccine market has become increasingly heavier.

At the end of 2021, Zhang Yuntao, chief scientist and vice president of Sinopharm China Biotechnology, pointed out in an interview with Chinanews.com that the overall use level of the second-class vaccine as a turning point has exceeded that of the first-class vaccine, accounting for about 51% of the market.

According to Frost & Sullivan’s forecast, the total scale of China’s second-class vaccines will reach 250 billion yuan. In addition to Merck’s HPV vaccine, “star” products such as GSK shingles vaccine and Pfizer’s 13-valent pneumococcal polysaccharide conjugate vaccine are also facing hidden competition from domestic competitors.

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