Following China vaccine sales overhaul, Sinovac posts dire Q2 results

China

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.

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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

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