Economic Value Of China's Vaccine
The Chinese pharmaceutical market is the largest in the Asia Pacific and has seen steady growth in recent years. According to a report published on the 31 August 2020 by the Chinese Ministry of Industry and Technology (MIIT), the top 100 companies operating in China have achieved a total turnover of 930 billion yuan (about $140 billion). According to this report this turnover represents 35.6% of the entire sector. Therefore, the Chinese pharmaceutical market is valued at more than 2,600 billion yuan ($400 billion).
This growth, which has led China to become the second largest pharmaceutical market in the world, has been aided by central government reforms. These reforms were aimed at modernizing the hospital sector, implementing primary care services, and the widespread cover of health insurance to citizens, both in rural areas and cities.
In this context it is not difficult to imagine that China immediately started work to produce an effective vaccine against the spread of COVID-19. These actions to fight the health emergency are in line with what has already been done at the beginning of the spread of the pandemic. Namely, China organized a network of health aid aimed at foreign countries. Now, Beijing has already proposed a priority distribution of the vaccine for Russia, Brazil and the Philippines. These will cost between $30 and $60 per dose.
Foreign Minister Wany Yi has said that Latin American and Caribbean countries will receive loans from China. These loans will amount to up to $1 billion to purchase the necessary doses. Meanwhile, Pakistan and Indonesia, who are hosting the clinical trials, have agreed on special economic conditions. Therefore, Xi Jinping spoke of the vaccine as a global public good.
The Chinese pharmaceutical companies are competing for a portion of the coronavirus immunization market. Analysts say this market can amount to $40 billion in sales in the first year alone. The groups that are working on the project in China are Sinopharm, Sinovac Biotech and CanSino Biologic.
The vaccine produced by Sinopharm seems to be the most promising at this moment. There has already been widespread demand for its use on a large scale. Moreover, it has already been administered since July to hundreds of thousands of high-risk individuals.
Sinopharm (Sinopharm Group Co., Ltd.) is the main entity of the state-owned China National Pharmaceutical Group Co., Ltd., as well as one of the largest manufacturers and distributors of pharmaceutical and medical products in China. It is listed in Hong Kong and the group employs over 98,000 employees. Sinopharm has achieved a turnover of around $70 billion in 2019 and during the first six months of 2020 the turnover was $30 billion.
Sinopharm has said it has the capacity to produce more than 1 billion doses of the vaccine in 2021.
Sinovac Biotech Ltd. And Cansino Biologics Inc., which have successfully developed the Coronavac and Convidicea vaccine respectively, are two major Chinese pharmaceutical groups.
Sinovac Biotech Ltd. was first listed on Nasdaq, and then subsequently listed in Hong Kong. The company is based in Beijing and employs around 900 employees. It closed 2019 with a turnover of $250 million, while in the first six months of 2020 revenues were approximately $67 million.
Cansino Biologics is based in Tianjin and its business is mainly focuses on the development, production, and marketing of vaccines in China. The group employs around 500 employees and is still considered to be in a start-up phase with strong exposure to research and development activities.
While it is true that the pandemic has accelerated research and investment in the pharmaceutical sector, the opportunities and consequent challenges that the market must take into account are equally important.
The pharmaceutical sector is highly strategic in Italy-China trade relations. In 2019 the export of pharmaceutical products from Italy to foreign markets was worth €29.5 billion. In the first half of 2020, the export of the pharmaceutical market from Italy represented about 8.1% of the total volume of Italian exports. The exports of pharmaceuticals from Italy to China in 2019 increased by 20%. This made the growth in the pharmaceutical sector the strongest growth among all trade sectors with a worth of over €1 billion of medicine.
Research on the vaccine and the fight against the pandemic are assured to increase the value of investments and health trade between China and the rest of the world. Through the Belt Road project, Beijing has built economic relationships with Africa, Southeast Asia and Latin America. The vaccines and cooperation through on global diplomacy will travel these routes.