China Securities Co., Ltd.: Investment Outlook for the Vaccine Industry in 2026

China Securities Co., Ltd. released a research report stating that the vaccine industry should pay attention to improvements in product sales and advancements in innovative pipelines. Some products have performed well in sales, and the trend of increased sales volume is expected to continue. In the first three quarters, the inventory levels in some product channels continued to improve, coupled with a good competitive landscape, companies are continuing to drive terminal sales to maintain a good trend in sales volume. It is expected that in Q4 2025 and 2026, heavyweight vaccine varieties with significant market space and good competitive landscape will continue to maintain a sales growth trend. Key points from China Securities Co., Ltd. are as follows: Vaccines: Operations continue to be under pressure, expecting improvements in sales and contributions from new products. Industry performance: Under pressure since 2024 after years of development. The vaccine industry in China has been under pressure since 2024 after years of development. The Chinese vaccine industry has gone through many years of development, initially focused on immunization planning vaccines. Prior to 2019, the industry experienced several negative incidents that affected its development. With the continuous strengthening of vaccine industry regulations by the government, the adverse factors affecting the industry gradually cleared out, combined with the launch and gradual increase in production of domestic heavyweight vaccine products, the non-immunization planning market has gradually become an important factor driving the development of the vaccine industry. In 2023, attention to the vaccine industry decreased, and some companies continued to increase their operating performance by relying on newly launched or heavyweight products. In 2024, influenced by the market's macro environment, vaccine sales channels faced short-term pressure, compounded by intensified market competition for some varieties, resulting in a loosening price system and weaker performance of the vaccine industry compared to the overall pharmaceutical industry. From January to October 2025, the Shenzhen Securities Vaccine Index fell by 5.4%, underperforming the Shenzhen Pharmaceutical Index (+18.3%) and the Shanghai and Shenzhen 300 Index (+16.6%). In the first three quarters and Q3 2025, the vaccine sector's revenue and profit significantly declined year-on-year: In the first three quarters of 2025, the vaccine sector's revenue decreased by 52.5% year-on-year, the net profit attributable to the parent company decreased by 121.6% year-on-year, and the net profit attributable to the parent company excluding non-recurring items decreased by 132.5% year-on-year; Among them, in Q3 2025, the vaccine sector's operating income decreased by 27.5% year-on-year, the net profit attributable to the parent company decreased by 196.7% year-on-year, and the net profit attributable to the parent company excluding non-recurring items decreased by 245.3% year-on-year. Product sales continue to be under pressure, and industry competition is fierce. The vaccine sector's performance showed a downward trend in the first three quarters of 2025, mainly due to: 1) Changes in consumer demand due to market macro environment, leading to pressure on vaccine terminal sales; 2) Competition intensifying for some products, such as 2-valent HPV vaccine, PCV13, rabies vaccine, etc. The decline in profit was faster than the decline in revenue, mainly due to: 1) The decline in revenue coupled with relatively fixed expenses leading to an increase in expense ratio; some companies increased their research and development investment, leading to a year-on-year increase in research and development expenses. 2) For some products, due to fierce competition and participation in government procurement, the decline in prices exceeded expectations. Declines in sales, price adjustments, and changes in revenue structure affect gross profit margins, with sales and management expense ratios increasing year-on-year. In the first three quarters of 2025, the average gross profit margin in the vaccine industry was 65.8% (-7.4 percentage points); Sales expense ratio, management expense ratio, research and development expense ratio, and financial expense ratio were 30.3% (+5.0 percentage points), 12.4% (+3.0 percentage points), 16.7% (unchanged year-on-year), and -0.5% (+0.5 percentage points), respectively; the sales net profit margin decreased year-on-year to 3.1% (-17.1 percentage points). The decline in the industry's gross profit margin in the first three quarters was mainly due to: 1) Decline in vaccine product sales volume leading to increased cost allocation; 2) Price reductions for some products; 3) Some products with low gross profit margins affecting the overall gross profit margin due to increased revenue share. The increase in the sales expense ratio was mainly due to companies increasing sales promotion efforts and increased investment; the increase in the management expense ratio was mainly due to increased depreciation and amortization, inventory write-offs, and other factors. The industry's accounts receivable turnover days in the first three quarters were 381 days, an increase of 47.5 days year-on-year, reflecting certain pressure on enterprise receivables. Intense competition in domestic vaccine research and development, optimistic about the future landscape and development of innovative varieties Domestic vaccine companies show a significant homogenization trend following overseas models. The development of the domestic vaccine market generally follows the global market trend, primarily through domestic vaccine manufacturers researching and developing heavyweight pipeline products that are competitive globally. Companies such as Beijing Wantai Biological Pharmacy Enterprise, Walvax Biotechnology, Shenzhen Kangtai Biological Products, and Changchun Bcht Biotechnology have introduced various innovative vaccine products. Additionally, several vaccine companies have initiated research and development on second-class vaccine varieties that have already been marketed, including HPV vaccines, pneumococcal vaccines, meningococcal vaccines, influenza vaccines, shingles vaccines, and RSV vaccines, showcasing a clear trend of homogenization. This trend is expected to intensify competition in the market. Domestic innovative vaccine pipelines: Upgrading existing products or meeting unmet needs. Currently, the domestic pipeline for vaccine research and development is relatively concentrated with a clear homogenization trend. In response to this situation, companies have initiated research and development to upgrade existing products, such as higher-priced pneumococcal vaccines, HPV vaccines, shingles vaccines, RSV vaccines, and other innovative varieties. Furthermore, some companies are focusing on meeting unmet needs by developing more innovative product lines, such as Candida vaccines, norovirus vaccines, and Helicobacter pylori vaccines. Therapeutic cancer vaccines: Expanding indications for vaccines becomes a hot research area Therapeutic cancer vaccines: Expanding indications for vaccines is currently a hot research area. In recent years, immunotherapy has become a hot research field in cancer treatment. Several novel immunotherapies, including immune checkpoint inhibitors (ICIs), oncolytic viruses, and CAR-T cell therapy, have been approved for clinical use. Researchers are also exploring new immunotherapy approaches, such as therapeutic cancer vaccines. Therapeutic cancer vaccines mainly use tumor cells or tumor antigen substances to activate the patient's immune system, inducing specific cellular and humoral immune responses, thereby enhancing the body's ability to fight cancer, preventing tumor growth, metastasis, and relapse, and ultimately aiming to eradicate or control tumors. AI technology application helps accelerate cancer vaccine development. The application of artificial intelligence (AI) has a significant impact on cancer treatment and research in the field of oncology. Through data-driven pattern recognition, AI has been shown to help detect mutations and decipher complex genomic features. The integration of modern immunology and data science has also introduced innovative analytical methods for vaccine development. AI can assist with feature extraction and model training to predict patient-specific cancer antigens. Through complex algorithms, artificial intelligence can optimize and refine these antigens, guide vaccine formulations, and support the design of clinical trials, potentially leading to more personalized vaccination strategies. Overseas mRNA vaccine giants have positioned themselves early in the field of cancer vaccines. Currently, several overseas companies have positioned themselves in the field of cancer vaccine research and development. Companies such as Moderna and BioNTech, overseas mRNA vaccine giants, use mRNA technology to design cancer antigens and develop cancer mRNA vaccines using their proprietary delivery vectors. Several pipelines have entered phases II-III clinical trials, covering indications such as melanoma, lung cancer, and skin cancer. The development of domestic cancer vaccines is in its early stages and the pipeline is becoming more diverse. In comparison to overseas efforts, the development of cancer vaccines in China is still in its early stages, with many companies at the clinical phase I level. At the technical level, the domestic cancer vaccine pipeline primarily focuses on mRNA technology, with many pipelines targeting HPV-related tumors as well as various solid tumors. Cancer mRNA vaccines can target a variety of antigen targets, and there are differences in antigen screening, sequence design, delivery vectors, and other areas. It is hoped that through differentiated technological approaches, domestic companies can achieve clinical breakthroughs. Innovative vaccine indications continue to expand, and future progress is worth noting Candida vaccines: An effective tool for controlling drug-resistant bacterial infections, with Chengdu Olymvax Biopharmaceuticals Inc. at the III clinical stage. Candida albicans is a Gram-positive bacterium that can cause serious diseases, including skin and soft tissue infections, bloodstream infections, joint infections, pneumonia, and toxic shock syndrome. The global death toll associated with Methicillin-resistant Staphylococcus aureus (MRSA) infections attributed to Candida albicans increased from 261,000 to 550,000 cases and from 57,200 to 130,000 attributable deaths from 1990 to 2021. The WHO estimates that the introduction of a vaccine to prevent Candida albicans infections could potentially reduce annual medical expenses by $57.819 billion and decrease social productivity losses by $15.313 billion each year, demonstrating significant socio-economic benefits. Chengdu Olymvax Biopharmaceuticals Inc.'s Candida albicans vaccine has completed all participants in the III clinical stage, and further progress is anticipated. In July 2023, the journal "Vaccine" published a research paper on the Phase II clinical trial of the recombinant Candida albicans vaccine developed by Chengdu Olymvax Biopharmaceuticals Inc. in collaboration with the Chinese People's Liberation Army Army Medical University. The results of the Phase II clinical trial indicated that the company's recombinant Candida albicans vaccine was safe when administered to the target population aged 18-70 undergoing orthopedic surgery in China; specific antibody levels increased on the 7th day after the initial dose and peaked between 10-14 days, demonstrating good immunogenicity. The Candida albicans vaccine completed the enrollment of 6,000 participants in the III clinical stage in May 2025 and is expected to release complete data on the III clinical trial in the future. The second indication selected for subsequent trials is pressure ulcers (bedsores), and after communication with the CDE, the IND application process is planned to be completed, with further progress expected. PBPV: Achieving broad serotype coverage, CanSino Biologics Inc. PBPV shows positive results at the I clinical stage. CanSino Biologics Inc. has independently developed PBPV (Pneumococcal Protein Vaccine) using the pneumococcal surface protein A (PspA, a highly conserved protein expressed by nearly all pneumococci) as an antigen. Compared to existing pneumococcal vaccines, PBPV has a higher serum coverage rate (covering at least 98% of pneumococcal strains), effectively preventing the generation of "serotype replacement." Furthermore, the production process for this product is simpler, with greater ease of scale-up and quality control. PBPV can also induce T-cell-dependent immune responses, providing effective immune responses for both infants and the elderly. CanSino Biologics Inc. has conducted Phase I and Phase Ib clinical studies on PBPV, with results showing its safety and ability to induce significant binding antibodies and functional bactericidal antibodies against cross-family/subtype pneumococci in adults and the elderly. This further validates the broad-spectrum nature and potential public health value of this candidate vaccine. Based on the preliminary results of the Phase I clinical trial, the company will evaluate and plan the next stage of PBPV development. Six-valent norovirus vaccine: Currently the most expensive pipeline under research globally, Chengdu Kanghua Biological Products achieves external authorization. Chengdu Kanghua Biological Products has independently developed a six-valent norovirus candidate vaccine based on virus-like particles (VLPs), covering GI.1, GII.2, GII.3, GII.4, GII.6, and GII.17 genotypes, adjuvanted with aluminum hydroxide. Preclinical studies have shown that vaccination with 2-3 doses of Hexa-VLP can induce effective and long-lasting blocking antibody responses, especially against emerging GII.P16-GII.2 and GII.17 genotypes. In January 2024, Chengdu Kanghua Biological Products signed an exclusive licensing agreement with HilleVax for the recombinant six-valent norovirus vaccine and its derivatives in regions outside China (including Hong Kong and Taiwan) for research, production, and commercialization, with a transaction amount of $53 million and milestone payments of up to $255.5 million for development and sales milestones, as well as royalties based on actual annual net sales percentage in the low single digits. This pipeline was granted a clinical trial license by the US FDA in September 2023, and is expected to start clinical trials in the United States by the partnering company. Shenzhen Kangtai Biological Products focuses on pneumonia Klebsiella vaccine development, filling a global research gap. Klebsiella pneumoniae is one of the most clinically relevant bacteria due to its high resistance and virulence, especially carbapenem-resistant Klebsiella pneumoniae (CRKP) strains, which are resistant to almost all frontline antibiotics. The World Health Organization has classified carbapenem-resistant Klebsiella pneumoniae as a priority key pathogen in its "2024 Priority Pathogen List" report. In August 2025, Shenzhen Kangtai Biological Products signed a technical transfer agreement with Professor Quanming Zou's team at the Fourth Military Medical University for the development of a pneumonia Klebsiella vaccine, with a conversion amount of $530 million paid in milestone payments. The vaccine has completed pharmacological studies and initial safety assessments, consistently achieving a protection rate of over 80% in pneumonia models infected with clinical strains of Klebsiella pneumoniae, demonstrating good efficacy and broad-spectrum coverage. Future policy trends: Focus on commercial insurance, medical and health integration, and industry mergers and acquisitions policies The development of commercial insurance is expected to bring incremental growth to the payment side. In June 2025, the Central Committee Office of the Communist Party of China and the State Council Office released the "Opinions on Further Ensuring and Improving People's Livelihoods and Resolving Urgent Public Concerns," which had been previously issued. The "Opinions" propose to "improve the adjustment mechanism of the basic medical insurance drug list and formulate and implement an innovative drug list for commercial health insurance to better meet the multi-level medication security needs of the people." Vaccines are the first to enter the innovative drug list for commercial insurance, opening a new payment channel. In August 2025, the National Medical Insurance Administration released the initial review list of innovative drugs for commercial insurance, with the quadrivalent influenza virus subunit vaccine by Zhonghui Bio being the only vaccine product that passed the formal review. This marks the first time that vaccines have entered the commercial insurance list, indicating a breakthrough for preventive biological products in the medical insurance payment system. The inclusion of vaccines in the commercial insurance list can help reduce the economic burden on the public, unlock medical insurance personal account balances, and open up a new payment channel for high-value innovative vaccines. The list has passed the formal review and will undergo expert evaluations, negotiation bidding/price negotiations, and other processes in the future. Medical and health integration policies are starting to be implemented, moving from concepts to measures. In China, faced with sudden public health emergencies and an aging population, the strategic importance and urgency of medical and health integration have become increasingly apparent. Medical and health integration aims to eliminate the barriers between the public health and medical service systems, integrating and sharing prevention and medical resources to construct a comprehensive, three-dimensional health service system. Since the concept was first introduced in 2018, the country has placed great emphasis on medical and health integration and has issued a series of related policies. From 2025 until now, the National Health Commission and the Disease Prevention and Control Bureau have successively released notifications on the list of pilot units for medical and health collaborative and medical and health integrated prevention and control, and the "2025 version of the three-level hospital review standards." These documents reinforce the role of medical institutions in vaccine administration services, promote the organic integration of vaccine administration services with clinical medical services through pilot programs on medical and health collaboration, and lay a systemic foundation for improving vaccination coverage and service quality. Policies related to industry mergers and acquisitions are starting to be implemented, with a focus on the pharmaceutical sector. In recent years, a series of national and regional top-level designs and local supporting policies have been issued around industry mergers and acquisitions. This has formed a policy system of "central guidance + local implementation," supporting initiatives to strengthen and upgrade industrial chains in the technology sector, promote the upgrading of traditional industries, and enhance industry chain coordination. The approval process for merger and reorganization transactions has been simplified, allowing for the use of innovative payment tools, enhancing regulatory inclusiveness. According to various local policies, sectors such as biopharmaceuticals, electronic technology, and others have become key industries for encouraging mergers and acquisitions, which will help achieve consolidation in the vaccine industry, increase industry concentration, reduce disorderly competition, and promote the industry's healthy development. Vaccine exportation: Focus on product sales and technology licensing to drive internationalization The internationalization of the vaccine industry involves multiple approaches, with product export as the primary method. The process of companies entering the international market involves utilizing their own products and resources, such as technology, funding, brand, or management experience, through various means. Currently, the export of vaccine products is the primary method for domestic vaccine companies to enter the international market, with relatively small export amounts and quantities. With companies accumulating rich internationalization experience and resources during the COVID-19 pandemic, emphasis on internationalization has increased. Additionally, in August 2022, following the upgrade of the vaccine national regulatory system to meet WHO standards, China aligned its vaccine system further with international standards, potentially accelerating product exports. Moreover, the future internationalization model is expected to be more diverse, transitioning from supplying finished products to local production, as well as expanding through cooperation, development, and licensed imports. Product exports are expected to accelerate in the future, with internationalization models becoming more diverse. Due to limitations such as the PQ certification and policy restrictions, the current internationalization strategies of Chinese companies primarily focus on exporting finished vaccines. However, with companies accumulating extensive international experience and resources during the COVID-19 pandemic, their emphasis on internationalization has increased. In addition, since WHO announced in August 2022 that China had passed the NRA assessment for vaccine national regulatory systems, aligning the country with international standards, product exports are expected to accelerate in the future. Moreover, the future internationalization model is expected to be more diverse, transitioning from supplying finished products to local production, as well as expanding through collaboration, development, and licensed imports. Vaccine Industry Outlook: Focus on improvements in product sales