China’s largest vaccines company, Zhifei, has agreed to pay British drugmaker GSK (GlaxoSmithKline) £2.5 billion ($3.05 billion) for the exclusive rights to distribute GSK’s shingles vaccine in China. This deal is part of GSK’s efforts to double the sales of its top-selling medicine, Shingrix, to over £4 billion ($4.88 billion) by 2026.
Western pharmaceutical companies have been making moves to capture a larger share of China’s pharmaceutical market, and this announcement follows recent moves by companies like AstraZeneca.
The agreement will significantly increase the availability of Shingrix in China, with the vaccine being distributed across more than 30,000 locations, up from the current 9,500. This is crucial, as in China, vaccines can only be accessed at designated locations and not at hospitals or doctors’ offices.
GSK’s Chief Commercial Officer, Luke Miels, praised Zhifei’s track record in driving access to medicines in China. He also stated that the deal will free up resources for GSK to focus on research and development and the development of drugs in its pipeline.
The deal will commence on January 1 and is expected to have a positive impact on GSK’s earnings. JPMorgan analysts predict that the agreement will de-risk GSK’s Shingrix sales in China for the next three years and potentially lead to a 6% upgrade in 2026 consensus Core EPS forecasts.
Additionally, GSK has been granted the right of first refusal by Zhifei for any co-development of a respiratory syncytial virus (RSV) vaccine for older adults in China. GSK recently launched its RSV vaccine, called Arexvy, in the United States, with early prescription data showing a strong start.
Arexvy is seen as GSK’s next blockbuster medicine, as the company aims to ensure growth amid patent expiries and declining revenue from its current bestsellers.
Shares of Zhifei surged 20% following the announcement, while GSK’s shares increased 1.2% near their session high.
The agreement highlights the growing importance and potential of the Chinese pharmaceutical market for global pharmaceutical companies.