Sinovac is Chinese biopharmaceutical company which produces, among others, a hepatitis A and B vaccine and is currently preparing to commercialize the first vaccine for hand, foot and mouth disease.
As in the United States, the government plays a massive role in pharmaceutical space. Yang explained the role of the Chinese government on Sinovac’s business.
“When we develop a vaccine, they approve it. And when we sell the vaccine, the government is actually the main organization that has the sales channel. Basically, our vaccines are sold to the government for disease control.”
Yang went on to explain that the Chinese government has been very supportive in regards to development and recently gave Sinovac a major grant.
The vaccine for hand, foot and mouth disease has the ability to be the largest revenue driver for Sinovac, according to Yang. Most of the severe cases are reported in children under five years old. In China alone, this is a population of 80 million.
“There are international market opportunities as well,” said Yang. Singapore, Cambodia, Vietnam and Korea also have cases of hand, foot and mouth disease.
Investors will not have to wait long to hear how Sinovac can proceed with the vaccine. “Last year we filed the final registration for the Chinese CFDA. Our facility is already completed and all the evaluations are being conducted,” said Yang. “We are expecting approval by the end of the year, or to be safe, we will probably look to commercialize the vaccine next year.”
The vaccination will not be the number one sales provider in year one, but will take several years to peak. The hepatitis A and B vaccine took between five and six years to reach maturity and Yang commented that, “Hopefully we can get the EV71 vaccine [the hand, foot and mouth vaccine] to reach the peak year in less than five to six years.”
The two analysts covering Sinovac are bullish on the company; both have buy ratings. Regardless, shares are down 7.7 percent since the company filed registration with the CFDA at the end of January. Shares closed at $5.75 Thursday.
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