This post was originally published in the December 2015 issue of our healthcare newsletter China Healthcare Deals+Strategies.
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Development of China’s Immunization Programs
SSCO discusses key trends in the Chinese vaccines industry with a leading expert who coordinates several government sponsored anti-viral research projects under the 12th Five Year Plan.
What does the Chinese immunization system look like?
ZW: China has a relatively comprehensive Nation Immunization Program
(NIP). Essential vaccines referred to as Class 1 are mandatory for all children and are paid by the government. Class 2 vaccines are recommended but voluntary and paid by the patient. The NIP is implemented by the Center for Disease Control and Prevention at the provincial level.
What is the role of vaccination in Chinese healthcare policy?
ZW: Expanding the NIP has been a key healthcare policy objective over the past decades. In addition to preventing disease in a cost efficient way, vaccination has several complementary benefits such as providing cover for China’s migrant population which has poor access to health insurance. Prevention as an approach also has a long history in China.
Are we likely to see additional investments in the NIP over the coming years?
ZW: The decision to expand the NIP is based on a methodological healthcare economics approach. My view is that none of the vaccines currently in the market are likely to be made mandatory in the medium term. But there are several vaccines under development that are likely to be added once they are approved.
Which vaccines under development are candidates for inclusion on the list of Class 1 vaccines?
ZW: Introducing new vaccines is a priority. Multi-resistant Tuberculosis and EV71, a type of mouth and foot disease, are the strongest candidates to be added to the Class 1 list.
What other factors need to be met for a new vaccine to be given Class 1 status?
ZW: For a vaccine to have a real chance of being added two basic criteria need to be met. First domestic manufacturing will be required to ensure a low cost.
Secondly manufacturing capacity must be sufficient to meet the demand from the 16+ million Chinese children born each year. The implication is that you will typically need a minimum of two companies with domestic production capacity in order for the vaccine to be added to the
Class 1 list.
What are the industrial policy objectives in the vaccines industry?
ZW: Developing China’s biotech industry is a clearly stated policy objective. This will allow for lower cost drugs while at the same time contributing to growth and employment. At the same time, there are too many small companies active in the industry today. Hopefully we will see a consolidation of the industry over the next decade.
Strengthening the domestic economy is by no means the only policy objective. Supporting the local industry will have a high return on investment in that it will contribute to lowering the total cost of vaccines.
A parallel can be seen in the work of the Gates Foundation which works with vaccine manufacturers all over the world, including Chinese ones, in order to make cheaper vaccines available in poorer countries. A more developed Chinese vaccine industry will contribute significantly to this goal.
What are the main opportunities for foreign vaccine companies?
ZW: China is open to foreign companies as they can contribute to healthcare and industry policy objectives. The Class 1 vaccines market is likely to present less of an opportunity and most likely requires a partnership model in order for foreign companies to be successful.
The Class 2 market, where parents pay for the vaccinations, is very attractive. Many Chinese parents are concerned about the quality and safety of domestic products. The fact that China has a growing number of parents who are aware of the option to choose vaccines as well as the ability to pay for them means that the market is growing. The growth of private OB/pediatric services in China is contributing to this trend.