“Vaccine King” Faces a Major Turning Point: Zhifei Bio and Merck & Co. Rework the Agreement, Canceling the Basic Procurement Amount

This article source: Times Weekly Reporter: Zhou Songqing, Han Xun

Against the backdrop of performance pressure, “Vaccine King” Zhifei Biological (300122.SZ) finally receives good news.

On the evening of April 2, Zhifei Biological announced that the company signed the “Amended and Restated Supply, Distribution, and Co-Promotion Agreement” with Merck & Co., Inc. (hereinafter referred to as “Merck”) on April 2. The original agreement, signed on January 21, 2023, will automatically terminate upon the effective date of the new agreement.

Times Weekly reporter noticed that in the latest agreement, there is no longer a stipulated basic purchase amount for the agreement products. Both parties will negotiate and confirm the expected procurement and supply plans based on market demand forecasts and actual vaccination situations, with the company rolling over procurement agreements accordingly. This means Zhifei Biological no longer faces the annual procurement pressure.

Source: TuChong

Relying on exclusive agency rights for Merck’s HPV vaccine (human papillomavirus vaccine) domestically, Zhifei Biological once led the domestic HPV vaccine field and was called the “Vaccine King” of A-shares by the market. In recent years, due to the上市 of domestically produced HPV vaccines, low vaccination willingness, and other factors, Zhifei Biological’s performance has faced enormous pressure, with an expected loss exceeding 10 billion yuan by 2025.

On the evening of April 2, Zhifei Biological told Times Weekly that the new cooperation model leverages Zhifei Biological’s deep terminal information integration capabilities. Both parties effectively grasp market dynamics, demonstrating the company’s and Merck’s joint commitment to responding to market changes, which also helps alleviate operational pressures and reduce risks for Zhifei Biological.

No Longer Stipulating Basic Purchase Amounts

Merck is a global pharmaceutical leader, a Fortune 500 company, with a total global revenue of $65 billion in 2025.

Zhifei Biological’s exclusive agency cooperation with Merck began in 2011. Initially, the cooperation involved the sales of Merck’s “Merckok (measles, mumps, and rubella combined vaccine)” and “NumoFa (23-valent pneumococcal polysaccharide vaccine)” in mainland China. Later, it expanded to include quadrivalent HPV vaccines, nine-valent HPV vaccines, and other collaborations.

From 2018 to 2023, Zhifei Biological’s procurement amounts from Merck were 3.07B yuan, 6.09B yuan, 16.56B yuan, 22.68B yuan, 34.81B yuan, and 26.38B yuan, respectively. Under this cooperation, Zhifei Biological’s performance also achieved rapid growth.

However, in recent years, influenced by factors such as the approval and上市 of domestic HPV vaccines by manufacturers like Wantai Biological (603392.SH), slowed demand after intensive early vaccination, and vaccine hesitancy spreading, the cooperation between Zhifei Biological and Merck has sharply declined. Since 2024, Zhifei Biological’s procurement of Merck products has significantly decreased, dropping to 2.18B yuan in 2024 and further to 2.179 billion yuan in 2025.

Now, Zhifei Biological and Merck are negotiating a new cooperation agreement. The new agreement aims to deepen collaboration, enhance market synergy, and reduce Zhifei Biological’s operational pressures.

The new agreement shows that, in this strategic cooperation adjustment, Zhifei Biological and Merck will select to procure and supply three products—nine-valent HPV vaccine (Gadacil 9), pentavalent rotavirus vaccine (LerDe), and 23-valent pneumococcal polysaccharide vaccine (NumoFa)—based on market demand and a dynamic assessment approach. Both parties are shifting from the previous “basic purchase amount” model to a “dynamic assessment” mechanism based on market needs, allowing for more flexible responses to market changes.

Zhifei Biological stated in the announcement that both parties will dynamically adjust procurement and supply volumes according to market demand, and the performance of the agreement will be disclosed periodically. The new agreement no longer stipulates a basic purchase amount, with a cooperation period until the end of 2028, extendable by two years.

Performance in 2025 Under Extreme Pressure

On January 12, Zhifei Biological’s 2025 performance forecast showed that the net profit attributable to the shareholders of the listed company would be a loss of 10.6 billion to 13.7 billion yuan, compared to a profit of 2 billion yuan in the same period of 2024; after deducting non-recurring gains and losses, net profit would be a loss of 10.5 billion to 13.5 billion yuan, compared to a profit of 1.99 billion yuan in 2024.

Regarding the reasons for the significant losses, Zhifei Biological explained that sales of main products did not meet expectations, putting performance under pressure; at the same time, to accurately reflect the company’s financial status, based on prudence, the company made impairment provisions for inventories with market demand changes, near expiration, or expired, where the net realizable value was lower than the book value; it also evaluated expected credit losses on accounts receivable and made provisions based on aging.

Zhifei Biological stated in the announcement that fulfilling this agreement will help enhance the company’s risk resistance. The company can adjust its operational strategies in a timely manner according to market changes, reducing risks associated with market uncertainty. It will not have a significant impact on this year’s operating performance, and the impact on future years will depend on the execution of the agreement and market conditions.

Times Weekly reporter learned from Zhifei Biological that to cope with current challenges, the company has adopted multiple measures to optimize operational strategies and control related risks. Specific measures include negotiating with partners to adjust procurement plans to ease upstream supply pressure; optimizing product promotion strategies based on market demand to improve inventory turnover; accelerating the launch of self-developed products and research efforts to further optimize revenue structure; and adjusting debt structures to promote the completion of existing debt swaps.

Zhifei Biological stated that the company is actively transforming towards independent innovation-driven development. Currently, five vaccines and metabolic drugs are in the registration stage, including the 15-valent pneumococcal conjugate vaccine, quadrivalent meningococcal vaccine, rabies vaccine in diploid cells, liraglutide injection, and Degui insulin injection, which are expected to achieve intensive commercialization within the next two years, bringing new growth points for the company’s independent product performance.