The National Development and Reform Commission quietly adjusted the price of fourteen vaccines

The recent announcement by the National Development and Reform Commission regarding the pricing of 14 national immunization vaccines has sparked significant discussion within the pharmaceutical industry. While many concerns have focused on the basic drug system, the commission quietly released a notice titled "Notice on the Formulation of 14 National Immunization Program Vaccine Prices for Recombinant Hepatitis B Vaccines." This document outlines adjustments to the ex-factory prices of several key vaccines included in the national immunization program. According to the notice, vaccines such as the recombinant hepatitis B vaccine, oral polio vaccine, combined DTP (diphtheria, tetanus, pertussis) vaccine, measles attenuated live vaccine, MMR (measles, mumps, rubella) vaccine, and the Japanese encephalitis live attenuated vaccine have all seen price reductions. The extent of these cuts varies, with some vaccines experiencing notable decreases, particularly those produced by major manufacturers. Industry insiders suggest that this move could significantly impact companies producing these vaccines. For instance, Tiantan Biological, one of the leading players in the national immunization vaccine market, may face considerable challenges. After the SARS outbreak in 2003, the vaccine market grew at an annual rate of around 15%, with Tiantan Biological capturing over 50% of the domestic market. Its sales consistently outperformed the industry average. In addition to Tiantan, other major producers like Liaoning Chengda and Hualan Biological are also expected to feel the effects of the price cuts, though the impact is likely to be smaller. As a subsidiary of China Biotechnology Group, Tiantan Biological plays a crucial role in supplying vaccines for the national immunization program. Its business is primarily divided into two segments: vaccines and blood products. From 2003 to 2007, the company's vaccine segment grew at a compound annual growth rate of 17.66%, while the blood products segment grew at 13.55%. Experts from Haitong Securities noted that although the company has undergone structural changes, planned immunization vaccines remain a key profit driver for Tiantan Biological. Despite increased government investment in vaccination programs, which aims to expand coverage, the price reductions could still negatively affect gross profit margins. Tiantan Biological recently announced that due to the price adjustments, its revenue would decrease by more than 100 million yuan. The notice affected several of its key products, including the MMR vaccine and the measles-rubella combination vaccine, which saw substantial price drops. Meanwhile, the prices of some other vaccines, such as the oral polio sugar pill and group A meningococcal polysaccharide vaccine, were increased. The rest of the products experienced price changes within a 20% range. With the 2009 immunization product bidding process largely completed, the immediate impact on the company’s current performance is expected to be limited. However, the long-term implications of the price adjustments remain a concern for investors and industry stakeholders alike.

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