“Vaccine King” Sees a Major Turning Point: Zhifei Biologics Reworks Its Agreement with Merck, Cancelling the Basic Procurement Amount

Against the backdrop of pressured performance, Zhifei Bio (“Vaccine King”) (300122.SZ) has finally received good news.

On the evening of April 2, Zhifei Bio issued an announcement stating that the company and Merck & Co., Inc. (“Merck & Co.”) signed the “Amended and Restated Supply, Distribution and Co-Promotion Agreement” on April 2. The original agreement, the “Supply, Distribution and Co-Promotion Agreement” signed on January 21, 2023, would automatically terminate as of the effective date of the new agreement.

A Time Weekly reporter noted that in the latest agreement, there is no longer any provision for the baseline purchase amount of the contract products. Instead, the two parties will negotiate and confirm the expected purchase and supply plans based on market-expected demand and the actual vaccination situation, and the company will make rolling purchases of the contract products accordingly. For Zhifei Bio, this means it no longer faces year-by-year purchase pressure that must be met.

Source: Photo by Figure

With Merck & Co.’s HPV vaccine (human papillomavirus vaccine) as its exclusive agency in China, Zhifei Bio once led the HPV vaccine market in China by a wide margin and was dubbed the A-share “Vaccine King” by the market. In recent years, due to factors including the gradual launch of domestically developed HPV vaccines and low vaccination willingness, Zhifei Bio’s performance has faced tremendous pressure. In 2025, it is expected to incur losses exceeding 10 billion yuan.

On the evening of April 2, Zhifei Bio told a Time Weekly reporter that the new cooperation model relies on Zhifei Bio’s deep-end information integration capabilities. The two parties effectively capture market dynamics, demonstrating the company’s determination to jointly respond to changes in the market with Merck & Co. It will also help ease Zhifei Bio’s operating pressure and reduce risks.

No longer stipulating a baseline purchase amount

Merck & Co. is a global pharmaceutical industry leader and a Fortune Global 500 company. In 2025, its global total revenue is USD 65 billion.

Zhifei Bio’s exclusive agency cooperation with Merck & Co. began in 2011. Initially, the companies cooperated to sell Merck & Co.-branded “Mer-Kang (measles-rubella-mumps combined vaccine)” and “Nemo-fah (23-valent pneumococcal polysaccharide vaccine)” in the Chinese mainland market. Later, the cooperation was expanded to quadrivalent HPV vaccines, nine-valent HPV vaccines, and other products.

From 2018 to 2023, Zhifei Bio’s procurement amounts from Merck & Co. were 3.07B yuan, 6.09B yuan, 16.56B yuan, 22.68B yuan, 34.81B yuan, and 26.38B yuan, respectively. Under the two parties’ cooperation, Zhifei Bio’s performance also achieved rapid growth.

However, in recent years, affected by multiple factors stacked together—including HPV vaccines from domestic manufacturers such as Wantai Bio (603392.SH) gaining approvals for launch, demand from age-eligible groups slowing after earlier intensive vaccination, and the spread of vaccine hesitancy—Zhifei Bio’s cooperation situation with Merck & Co. took a sharp turn for the worse. Since 2024, Zhifei Bio’s procurement of Merck & Co. products has begun to drop significantly. Its procurement amount fell to 2.18B yuan in 2024 and to 2.179 billion yuan in 2025.

Now, Zhifei Bio and Merck & Co. have negotiated and signed a new cooperation agreement. The new agreement is intended to deepen their cooperation, enhance market-synergy capabilities to respond together, and ease Zhifei Bio’s operating pressure.

The new agreement shows that, under this strategic cooperation agreement adjustment, Zhifei Bio and Merck & Co. will purchase and supply three contract products—nine-valent HPV vaccine (Gardasil 9), five-valent rotavirus vaccine (RotaTeq), and 23-valent pneumococcal polysaccharide vaccine (Nemo-fah)—using a dynamically assessed approach based on market demand. From the previous “baseline purchase amount” model, the two parties have fully shifted to a “dynamic assessment” mechanism based on market demand, to respond more flexibly together to market changes.

In the announcement, Zhifei Bio stated that based on market demand, the two parties will dynamically adjust the quantities of procurement and supply. The performance of the agreement will be disclosed on a regular basis. The new agreement no longer stipulates any baseline purchase amount, and the cooperation term runs until the end of 2028 with an option to extend it by two years.

Performance under extreme pressure in 2025

On January 12, Zhifei Bio’s 2025 performance forecast showed that the company expected net profit attributable to shareholders of the listed company to be a loss of 10.6 billion yuan to a loss of 13.7 billion yuan. The same period in 2024 was a profit of 2.0 billion yuan. After excluding non-recurring profit and loss, net profit was expected to be a loss of 10.5 billion yuan to a loss of 13.5 billion yuan, while the same period in 2024 was a profit of 1.99 billion yuan.

As for the reasons for the large loss, Zhifei Bio explained that because sales of its major products were below expectations, performance faced year-on-year pressure. At the same time, in order to truly reflect the company’s financial position and in accordance with the principle of prudence, the company made impairment provisions for inventories whose realizable net values were lower than the carrying values of the inventories on the books, resulting from changes in market demand, near-expiration period and expiration period. It also assessed expected credit losses for accounts receivable, and based on the aging of the receivables, it made provisions for credit impairment losses for accounts receivable.

In its announcement, Zhifei Bio said that the fulfillment of this agreement is beneficial for enhancing the company’s ability to withstand risks. The company can adjust its operating strategy in a timely manner based on changes in the market, thereby reducing related risks arising from market uncertainty. It will not have a material impact on the company’s operating performance for the current year. The impact on the company’s operating performance in future years will depend on the fulfillment of the agreement and market conditions.

A Time Weekly reporter learned from Zhifei Bio that, to cope with the current challenges, Zhifei Bio has optimized its operating strategy through multiple measures and controlled related risks. Specific measures include negotiating with its cooperation partners to adjust procurement plans to ease upstream arrival pressure; optimizing product promotion strategies based on market demand to improve inventory turnover efficiency; accelerating the commercialization timeline and research/technical breakthrough efforts for self-developed products to further optimize the revenue structure; and adjusting its debt structure to complete the substitution of existing debt.

Zhifei Bio stated that the company is continuously transforming driven by independent innovation. At present, there are five vaccine and metabolite-type drug products in the上市注册 stage, including the 15-valent pneumococcal conjugate vaccine, the quadrivalent meningococcal conjugate vaccine, the human diploid cell rabies vaccine, a liraglutide injection, and a degludec insulin injection. These are expected to achieve intensive commercialization in the next two years, bringing the company a brand-new performance growth driver from its own products.

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