Rabies vaccine leader Chengda Bio (688739.SH) recently disclosed its performance report. In 2024, the company achieved operating income of 1.676 billion yuan, a year-on-year decline of 4.22%; and achieved a net profit attributable to the parent of 334 million yuan, a year-on-year decrease of 28.4%.

This is the fourth consecutive year that Chengda Bio's net profit has declined since its listing on the Science and Technology Innovation Board in 2021. Although the company has dominated the domestic human rabies vaccine market for 16 consecutive years since 2008, as more challengers have entered the market, its market share has fallen from more than 70% at its peak to less than 40% in 2024.

In recent years, Chengda Bio has tried to find a second growth line, but with little success. The Japanese encephalitis inactivated vaccine launched in 2008 has accounted for less than 10% of the company's revenue so far, and the quadrivalent influenza virus split vaccine that is applying for drug registration has not yet been officially launched, but it is facing an industry "price war".

Chengda Bio also faces the uncertainty of the change of controlling rights. On March 2, Chengda Bio announced that its actual controller had changed from Liaoning State-owned Assets Supervision and Administration Commission to no actual controller.

Regarding the company's performance, operating conditions and progress of the change of controlling rights, Jiemian News tried to interview Chengda Bio. The company replied that the disclosure time of the 2024 annual report is set for April 23, 2025. Regarding the relevant content of the 2024 annual report and the expected future direction, according to relevant regulations, the undisclosed content cannot be communicated further for the time being.

It cannot be ignored that investors have been somewhat "disappointed" with Chengda Bio's performance since its listing. Chengda Bio's latest stock price on February 28, 2025 is 28.38 yuan/share, which has fallen 74.2% from its IPO issue price of 110 yuan/share.

The market share of flagship products continues to decline

Chengda Bio's human rabies vaccine was launched in 2005 and is still its main source of income. From 2020 to 2023, Chengda Bio's revenue from human rabies vaccines was 1.924 billion yuan, 2.087 billion yuan, 1.765 billion yuan, and 1.643 billion yuan, respectively, accounting for 96.42%, 99.94%, 97.25%, and 93.86% of total revenue, respectively.

Chengda Bio has ranked first in the domestic human rabies vaccine market for 16 consecutive years since 2008. In 2018, Changsheng Bio was involved in the "rabies vaccine fraud case", and Chengda Bio took the opportunity to break out.

Chengda Bio's prospectus shows that the proportion of the company's human rabies vaccine batch issuance has soared from 43.95% in 2018 to 73.08%. In 2019, the company also accounted for the largest share of 15.5% of the world with 31.9 million units sold, surpassing foreign vaccine manufacturers such as Sanofi and ranking first in the world.

However, the market competition pattern has changed now, and more than 10 domestic vaccine manufacturers have obtained approval for human rabies vaccines from the China National Institute for Food and Drug Control. According to Frost & Sullivan, as of January 2025, China has 23 rabies vaccines on the market for human use; there are 19 rabies vaccines under clinical development.

Chengda Bio's market share is being "eroded". In 2020, the batch issuance volume of Chengda Bio's human rabies vaccine products dropped to 9.1221 million doses, accounting for 52.01% of the market. According to statistics from Zhushi Consulting, in 2021, the batch issuance volume of Chengda Bio's related products was about 39.9 million doses, accounting for 50.83% of the market. According to data from the China National Institute for Inspection and Quarantine, in 2022 and 2023, the batches of Chengda Bio's related products were issued 227 and 256 batches respectively, accounting for 24.89% and 36.42% of the market. According to statistics from Southwest Securities, in 2024, Chengda Bio's human rabies vaccine was issued 282 batches, accounting for 36.29% of the market.

At present, Chengda Bio's human rabies vaccine still ranks first in the market, but its market share is declining. From 2021 to 2023, the company's sales of related products were 32.3138 million, 27.104 million, and 24.4711 million, respectively, down 14.58%, 16.12%, and 9.71% year-on-year, respectively. In 2023, the inventory increased by 14.42%.

As competition intensifies, rabies vaccine companies begin to "trade price for volume." On August 28 last year, Hualan Vaccine (301207.SZ) reduced the purchase settlement price of its freeze-dried human rabies vaccine injection in Wuhan to 127 yuan, and in other regions to 129 yuan, a decrease of 38%.

Chengda Bio's prospectus shows that from 2018 to 2020, the unit prices of the company's freeze-dried human rabies vaccine products were 184.36 yuan/person, 198.33 yuan/person, and 215.6 yuan/person, respectively. Interface News checked the "Yiumiao" applet and saw that the current unit price of Chengda Bio's related rabies vaccine is between 70 yuan and 130 yuan. Southwest Securities' research report shows that the unit price of Chengda Bio's human rabies vaccine with a dosage of 0.5ml is 72 yuan/piece.

People in the vaccine industry told Jiemian News that this strategy of winning by lowering prices may be that companies are eager to bid at low prices through price wars in an attempt to seize market share; "But price cuts do not necessarily lead to sales growth. This is the case with influenza vaccines in the past two years. If you want to grab the market through price wars, the result will eventually backfire on you."

From 2021 to 2023, the gross profit margin of Chengda Bio's human rabies vaccine products dropped from 89.85% to 87.03% and 83.15%. Chengda Bio explained its performance decline in 2024, saying that the main reason was the fierce competition in the domestic human rabies vaccine market, which led to a decline in sales revenue.

The second growth curve is hard to find

"Finding new blockbuster varieties with broad space and good competitive landscape is an important development direction for current vaccine manufacturers." Pharmaceutical industry analysts pointed out that the vaccine industry is a typical product-driven industry, and the operating performance of vaccine manufacturers is driven by factors such as the research and development, listing, and upgrading of blockbuster products; in recent years, my country's vaccine industry has developed rapidly, and past blockbuster varieties are facing the digestion of the stock market and the crowded competitive landscape.

For many years, Chengda Bio has been trying to find its second growth line. Another commercialized vaccine product of the company is the Japanese encephalitis inactivated vaccine, which was launched in 2008. This product has been unable to support the performance growth after the narrowing of its rabies vaccine revenue. From 2018 to 2023, Chengda Bio's revenue from Japanese encephalitis vaccine products was 104 million yuan, 86.2714 million yuan, 39.6711 million yuan, 1.1814 million yuan, 49.9759 million yuan, and 107 million yuan, respectively, accounting for 7.49%, 5.14%, 1.99%, 0.06%, 2.75%, and 6.14% of the company's revenue, respectively.

At present, Chengda Bio is also developing vaccine varieties with greater market demand. At present, the company's main products under development include freeze-dried human rabies vaccine (human diploid cells), quadrivalent/trivalent influenza vaccine, 15-valent HPV vaccine, 13-valent and 20-valent pneumonia vaccine, recombinant herpes zoster vaccine, group B meningococcal vaccine, multivalent hand, foot and mouth vaccine, rabies monoclonal antibody, etc. Among them, the domestic production drug registration and marketing authorization applications for freeze-dried human rabies vaccine and quadrivalent influenza virus split vaccine have been accepted by the National Medical Products Administration in September 2024 and January 2025 respectively.

The influenza vaccine market is a new target for Chengda Bio. In recent years, the influenza vaccine market has grown rapidly. After the first quadrivalent influenza vaccine in my country was approved in 2018, its total number of batches issued increased from 9.7 million doses in 2019 to 55.6 million doses in 2023, with a compound annual growth rate of 54.7%. According to Frost & Sullivan data, my country's influenza vaccine market increased from 2 billion yuan in 2019 to 8.8 billion yuan in 2023, with a compound annual growth rate of 45.1%, and is expected to further increase to 19.8 billion yuan in 2032.

However, the influenza vaccine market is more "involuted". Quadrivalent influenza vaccine is the main force of influenza vaccine in my country, accounting for about 75% of the batches issued in 2023. As of now, there are 19 influenza vaccines approved for marketing in China, including 9 quadrivalent vaccines (8 split vaccines and 1 subunit vaccine). Another 16 are in the clinical development stage, including 12 quadrivalent vaccines (including 10 split vaccines and 2 subunit vaccines).

In 2024, 303 batches of influenza vaccines were approved for issuance in my country, a year-on-year decrease of 11%; among them, 166 batches of quadrivalent influenza vaccines were approved for issuance, a year-on-year decrease of 36%.

With the narrowing market, influenza vaccines fell into a "price war" in 2024. In May, the bid price of the quadrivalent influenza virus split vaccine of Sinopharm Changchun, Shanghai and Wuhan Institutes dropped from 128 yuan/piece to 88 yuan/piece. In June, the price of Beijing Kexing's products was reduced to 88 yuan/piece and 78 yuan/bottle; the price of Hualan Vaccine's quadrivalent influenza virus split vaccine was reduced to 88 yuan/piece and 85 yuan/bottle, a reduction of more than 40%; the price of Jindik (688670.SH)'s products was also reduced to 88 yuan/piece and 85 yuan/bottle.

Even if its quadrivalent influenza vaccine is successfully approved for listing, the price pressure and market competition faced by Chengda Bio are obvious.

The domestic market is "difficult to defend", and Chengda Bio is also trying to go overseas to generate revenue. Haitong International Securities Research Report believes that the overseas revenue of my country's vaccine companies is still relatively low, but more and more companies are actively deploying overseas markets; "We believe that China's vaccine products have obvious cost-effectiveness advantages and will have stronger competitiveness in emerging market countries dominated by middle-income countries."

However, Chengda Bio's overseas success is limited. According to reports, the company is the largest exporter of human rabies vaccines in China, and through overseas distributors, it covers countries and regions along the "Belt and Road" such as Thailand, India, Egypt and the Philippines. From 2021 to 2023, Chengda Bio's overseas revenues were 142 million yuan, 137 million yuan and 131 million yuan, respectively, accounting for 6.8%, 7.55% and 7.49% of its revenue, respectively.

The cost of going overseas is not low, and Chengda Bio's overseas gross profit margin is much lower than that in China. From 2021 to 2023, the company's overseas gross profit margins were 65.18%, 42.18% and 34.41%, respectively, while the domestic gross profit margins were 91.65%, 90.79% and 87.64% during the same period.

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