While it wasn’t implicated in the illegal vaccine sales ring that rocked China earlier this year, Beijing-based Sinovac has surely felt the pain. In second-quarter results, the China-focused vaccine maker reported sales of $1.4 million versus $18.5 million during the same period last year.
It was the second straight quarter featuring a serious dropoff for the company after its sales slipped 50% in the first quarter, excluding H5N1 vaccine revenue. The cause? An overhaul of vaccine sales rules by Chinese regulators in response to an $88 million illegal vaccine sales ring uncovered earlier this year.
Sinovac’s latest struggles amounted to a $2.4 million loss for the second quarter, compared to a $15.2 million profit during the period last year. The company will seek commercial loans to pay for product commercializations and operations, according to the earnings release.
Back in March, authorities discovered an illegal vaccine scheme led by a mother and daughter in Shandong that had been in operation for 5 years. The group was buying and selling vaccines outside of official channels and its exposure led to a nationwide crackdown on fake vaccines and a pledge to overhaul vaccine distribution.
“This impacted nationwide sales of private-pay market vaccines as vaccine companies halted vaccine delivery to wait for the interpretation of new regulation by the Chinese government,” Sinovac CEO Weidong Yin said in a statement.
But Sinovac execs are forecasting a “much stronger” second half, Yin said. In mid-June, regulators issued an interpretation of new regulations that allowed shipments to resume.
Big Pharmas with vaccine operations in China also were affected, with Sanofi ($SNY) execs saying last month that the company could take until the end of the year to overhaul its logistics system in response to the changes. GlaxoSmithKline ($GSK), which won the China FDA's first HPV vaccine approval in July, said it supports the moves.
Mostly focused on sales in China, Sinovac provides vaccines against hepatitis A and B, flu, mumps and Enterovirus 71, which causes hand, foot and mouth disease.
- here's the release
Sinovac hit by new rules on vaccine sales in China
China plans vaccine distribution reforms after illegal sales scandal
China approves Sinovac's vaccine for hand, foot and mouth disease
Sanofi says China vaccine rules led to logistics overhaul
GSK wins China FDA's first HPV approval with Cervarix vaccine