Zhifei Biologicals, holding a massive inventory, will no longer purchase HPV vaccines in large quantities.

Ask AI · How can the new procurement agreement help Zhaofeng Bio address market bottlenecks?

Jiemian News Reporter | Li Kewen

Jiemian News Editor | Xie Xin

On the evening of April 2nd, Zhaofeng Bio announced that it had renegotiated a vaccine promotion agreement with Merck, including the HPV vaccine. The new agreement no longer stipulates a basic procurement amount for the vaccine; instead, Zhaofeng Bio and Merck will negotiate and confirm expected procurement and supply plans based on market demand forecasts and actual vaccination situations, and will implement rolling procurement agreements for vaccines accordingly.

On April 3rd, Merck China told Jiemian News that the delivery plan based on market demand expectations will provide more flexibility for both parties, jointly ensuring stable supply of vaccine products and responding swiftly and efficiently. Currently, Merck’s HPV vaccine maintains stable supply in the Chinese market. China remains a core market for Merck’s HPV vaccine business. There is still widespread immunization demand among eligible Chinese women and men.

Merck China stated that since partnering in 2011, Merck China and Zhaofeng Bio have fully leveraged their respective advantages to continuously improve the accessibility of innovative vaccines in China, including HPV vaccines and rotavirus vaccines. The two sides will further deepen cooperation and communication and work together with ecosystem partners.

On the same day, Jiemian News contacted Zhaofeng Bio, but had not received a reply by the time of publication.

Among these, the largest procurement amount has always been for the nine-valent HPV vaccine Gardasil 9, with a scale reaching hundreds of billions of yuan; the procurement amounts for the five-valent rotavirus vaccine EruDe and the 23-valent pneumococcal polysaccharide vaccine NumoF are only in the billions of yuan.

The initial agreed basic procurement amount for vaccines

According to the initial agreement, from the second half of 2023 to 2026, Zhaofeng Bio’s basic procurement amounts for HPV vaccines are 8B yuan, 21.41B yuan, 32.63B yuan, and 26.03B yuan, respectively.

But actual procurement demand quickly cooled down. In 2023 and 2024, Zhaofeng Bio’s actual procurement amounts were 17.89B yuan and 34.81B yuan, respectively. However, by 2025, Zhaofeng Bio was no longer willing to purchase in large quantities, and actual procurement dropped to 26.38B yuan.

Zhaofeng Bio’s actual procurement amounts over the past three years

The pressure comes from inventory and channel receivables. Zhaofeng Bio still holds a considerable amount of stock, and much of it may be held in channels without converting into actual sales. As of the third quarter of 2025, Zhaofeng Bio’s accounts receivable and inventory combined accounted for 91.55% of current assets. Among them, inventory was 20.25 billion yuan, accounting for 56% of current assets; accounts receivable were 2.18B yuan, accounting for 35.48%.

HPV vaccines in China have passed the rapid growth phase. Jiemian News previously reported that from the “hard-to-get” viral vaccine to slow sales, HPV vaccines in China have taken less than ten years in total. The fundamental reason is that its vaccination rate has encountered a phased bottleneck.

2022 to 2023 marked a turning point in the supply and demand relationship of the Chinese HPV vaccine market. An industry insider told Jiemian News that the market had been greatly overdrawn in recent years, and now it’s at a bottleneck: “Almost everyone who wants to get vaccinated has already done so,” and the remaining eligible women are limited by economic and other reasons, with both incremental and stock markets shrinking rapidly.

Price has always been a barrier to further lowering vaccination rates. A study covering 21 cities and rural areas found that 68% of women willing to pay about 500 RMB for the HPV vaccine, while only 6% were willing to pay over 2,000 RMB for imported vaccines.

The inclusion of HPV vaccines into the national immunization program in 2025 also changed market expectations. Jiemian News previously reported that in September 2025, HPV vaccines were incorporated into the national immunization plan, breaking a twenty-year deadlock. Based on past experience, once included in the national immunization plan, the vaccination rate for related vaccines usually sees a significant increase. Therefore, for Zhaofeng Bio, continuing to purchase large quantities at the previous pace has become increasingly risky.

The same market situation applies to Merck. HPV vaccines are not ordinary consumer products; once they shift from the self-paid market to the immunization program, the previous sales logic relying on high prices, self-payment, and rapid volume growth becomes unsustainable. In 2025, Merck’s Gardasil series vaccines generated sales of $8B, down nearly 40% year-over-year; in 2023 and 2024, sales of this product line were over $8.5 billion each.

With demand weakening, Merck has also begun adjusting capacity. On March 5th, Jiemian News learned from Merck that due to declining global demand for HPV vaccines, the company decided to optimize capacity, and the HPV vaccine production line at its Durham facility will cease production, affecting about 150 employees.

At that time, Merck told Jiemian News that the company has always been continuously evaluating operational conditions and business changes, making necessary adjustments to ensure that its manufacturing network can supply drugs and vaccines stably and compliantly. Additionally, Merck’s HPV vaccines in China still maintain stable supply.