Sinovac Warns Vaccine Revenue Windfall May Not Be Sustained

(Bloomberg) -- Chinese vaccine maker Sinovac Biotech Ltd saw sales in the first half of 2021 explode to more than 160 times what they were a year earlier, but cautioned future revenue could slip amid competition from other Covid-19 shots.

The Beijing-based company's sales surged to $11 billion in the first six months of 2021, compared to just $67.7 million in the same period of 2020, when Sinovac had just began early human testing of its Covid inoculation, called CoronaVac. The vaccine maker recorded $5.1 billion in profit for the period, compared with a loss of $12.6 million in the first half of 2020, it said in a press release on Friday.

While booster campaigns around the world will likely make Covid-19 shots a consistent source of revenue for vaccine developers in the years ahead, Sinovac said its recent performance is “not indicative of future sales trends since sales of CoronaVac are expected to decline as the Covid-19 pandemic abates and competitive pressure from other vaccines increases.”

The sales and profit windfalls were the result of Sinovac's inactivated vaccine becoming the inoculation of choice for China and much of the developing world, despite lingering doubts over its efficacy. More than 2.5 billion doses of the shot have been distributed globally this year, according to the company, making it one of the most-deployed Covid vaccinations in the world.

Still, some countries that relied predominantly on Chinese vaccines early on started ordering in shots from developers like Pfizer Inc. in the second half of the year amid concern the protection they afford may not be sufficient.

Sinovac and Sinopharm, the other major Covid shot provider in China, both rely on more traditional, inactivated vaccine technology, whereas Pfizer and U.S. drug maker Moderna Inc. utilize the newer messenger RNA tech in their inoculations. While the Chinese shots appear to protect against severe disease and death from Covid, the World Health Organization has recommended a third dose for people aged 60 or older who have already received two shots of either Sinovac or Sinopharm.

Omicron Factor

Sinovac's outlook could also be impacted by evidence its shot doesn't perform as well against the new coronavirus variant, omicron, that is becoming dominant in many countries.

Recent studies indicate inactivated vaccines may not produce enough protective antibodies against the more infectious and immunity-evading omicron, even after a booster shot. Sinovac has said previously that it's working on another inactivated vaccine against this particular variant.

Still, Sinovac and Sinopharm remain crucial to the vaccine supply for the WHO-backed Covax facility, which seeks to funnel shots to the developing world. Richer countries have dominated supply of the mRNA vaccines, while a shot made by AstraZeneca Plc and the University of Oxford intended for widespread distribution has encountered several manufacturing delays.

Listed in the U.S., Sinovac has been halted from trading since early 2019 amid a spat among its major shareholders over plans to take the company private.

With assistance from Bloomberg