The recent deal between China’s leading vaccine company, Zhifei, and British drugmaker GSK marks a significant move in Western pharmaceutical firms’ efforts to penetrate China’s pharmaceutical market. Valued at 2.5 billion pounds ($3.05 billion), this agreement grants Zhifei exclusive distribution rights for GSK’s top-selling shingles vaccine, Shingrix, in the second-largest pharmaceutical market globally.
GSK’s aim to achieve over 4 billion pounds ($4.88 billion) in sales by 2026 aligns with this strategic deal. This partnership will significantly expand the availability of Shingrix, currently GSK’s most successful product, from 9,500 to over 30,000 locations across China.
Zhifei’s commitment to purchase Shingrix volumes worth 2.5 billion pounds from GSK over the initial three years further solidifies the agreement. The news of the deal has propelled Zhifei’s shares by 20%, signifying investor confidence in this collaboration.
The vaccine, Shingrix, generated 1.71 billion pounds in sales during the first half of this year, indicating a 20% increase from the previous year. JPMorgan analysts anticipate this move to de-risk Shingrix sales in China for the next three years, possibly enhancing GSK’s 2026 consensus Core EPS forecasts by up to 6%.
Moreover, the agreement includes GSK obtaining the “right of first refusal” for the exclusive partnership in co-developing an RSV vaccine for older adults in China. GSK launched its RSV vaccine, Arexvy, in the United States following regulatory approval in May, showing promising early prescription data, potentially surpassing market expectations for 2023 sales.
As GSK anticipates the end of this decade, marked by patent expiries and decreasing revenue from existing bestsellers, they are counting on Arexvy to emerge as their next blockbuster medicine. The deal with Zhifei and the successful launch of Arexvy in the United States signals a strategic pathway for GSK’s future growth in the pharmaceutical market.