Government H5N1 vaccine orders drive jump in sales at Sinovac

At the start of 2014 the Chinese vaccine sector was rocked by the failure of three leading suppliers to obtain good manufacturing practice (GMP) certification. Sinovac Biotech ($SVA) escaped unscathed from the rule tightening and this week posted a 17% jump in fourth-quarter sales.

A live poultry market in Qinghai Province--Courtesy of Padmanaba01, Creative Commons BY-SA 2.0

Government stockpiling of Sinovac's H5N1 vaccine underpinned the growth, which was achieved despite poor performance in other areas. Excluding the H5N1 vaccine, Panflu, sales actually fell almost 20%. Sinovac attributed the drop to the timing of vaccination campaigns and orders, as well as a one-time sale of hepatitis A vaccines that boosted revenues one year ago. Despite the end-of-year wobble, Sinovac's sales were up almost 50% in 2013. Even after stripping out H5N1 vaccine sales, revenue grew 26%.

The emergence of government-funded immunization campaigns--such as a hepatitis A initiative--have added sales to Chinese vaccine manufacturers over the past decade. Sinovac has benefited from the government and private sector focus on hepatitis, with its vaccines against the viruses accounting for more than two-thirds of its sales in 2013. A hepatitis A vaccine was the top seller, generating more than $26 million in 2013, while a combined A and B jab brought in $20 million.

Hepatitis B vaccine manufacturers were hit hard by the tightening of GMPs, with three leading firms failing to get their plants up to standard before the deadline. Sinovac's fourth quarter ended as the ban on production at the hepatitis B vaccine manufacturers came into force, so it is unclear whether its combined A and B jab will benefit from the clampdown.

- read the press release
- here's the results call transcript

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