China is one of the world’s most populous countries, and the recent uplifting of its one-child policy has consequently shifted the demographic of the country, making
a lucrative market for healthcare manufacturers. To strengthen the healthcare system for newborns and children to the age of 14, the government has attempted to make the most common vaccines like DTP (Diphtheria, tetanus, pertussis), MMR (Measles, Mumps, and Rubella), hepatitis A and B, meningococcal and polio vaccines compulsory and readily accessible. Through the Expanded Program on Immunization (EPI), these vaccines have achieved efficient coverage throughout the nation.
How is the market structure?
According to the EPI, category one vaccines are purchased by the government and provided to the public at no cost, whereas category two vaccines are voluntary for which citizens would usually have to pay out of their own pockets. The government does not regulate the private sector on market prices; hence category two vaccines, including vaccines for
influenza and rabies, remained relatively more expensive. When it comes to the supply side, the stringent vaccine manufacturing laws and regulations have hindered foreign manufacturers from participating in the market.
Vaccine imports, however, have surged in recent years, while most suppliers remained predominantly domestic.
What happened before the bottom-up reform?
Unfortunately, there have been multiple incidents in the last decade where substandard, counterfeit, or expired vaccines were distributed to the public, leading to infant fatalities, side effects among children, and public outrage for the quality assurance of vaccine doses. Consequently, some parents were skeptical about letting their children be inoculated, while many others resorted to
medical tourism abroad. In response to public criticisms, the Chinese government has reformed the measures to monitor and control vaccine supply chains. One of the main manufacturers involved in the scandals, Changsheng, was fined a record 1.3 billion U.S. dollars by the authorities, while dozens of officials were disciplined, and some executives arrested. In December 2019, the Vaccine Administration Law came into force, bringing stricter controls and tougher sanction measures into the Chinese vaccine industry.
The COVID-19 pandemic
As the first country impacted by the COVID-19 pandemic, China was one of the pioneers in the virological research on SARS-CoV-2. Several Chinese companies have successfully developed COVID-19 vaccine products, mostly using traditional inactivated vaccine technology. Although less effective than mRNA vaccines such as Comirnaty and Spikevax, vaccines produced by Sinovac, CanSino, and the Chinese pharmaceutical giant Sinopharm were not only widely adopted domestically, but also
exported worldwide, mainly to developing countries. This strong global demand greatly enhanced the performance of China's major vaccine manufacturers, with Sinovac reporting an increase of over 22,000 percent in
its annual net income between 2019 and 2021.
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