Big pharma faces headwinds in China as vaccine sales decline

Jenna Philpott

Wed, Mar 26, 2025, 8:06 AM 7 min read

Multinational pharmaceutical companies (MNCs) operating in China’s vaccine market face growing challenges as regulatory scrutiny, intensifying domestic competition, and shifting consumer behaviours disrupt what was once a booming sector.

For years, China has been a major growth driver for premium, privately paid vaccines, with international players such as MSD and GSK capitalising on strong demand from the country’s expanding middle class. However, several different events culminated in an abrupt reversal in fortunes last year. GSK’s restructuring of its distribution deal for its shingles vaccine Shingrix in December 2024, and MSD’s decision to pause sales of its blockbuster human papillomavirus (HPV) vaccine Gardasil until mid-2025, signal mounting pressures.

A combination of factors have led to a significant drop in vaccine sales, including China’s sweeping anti-corruption crackdown on the healthcare sector, price competition from domestic manufacturers, and a cooling economic environment. In response, foreign vaccine makers are being forced to rethink their strategies in a market where regulatory unpredictability and a nation’s self-sufficiency ambitions are increasingly shaping the competitive landscape.

“With the large volumes and prices at a fraction of those of multinational products, domestic vaccine companies have completely changed the competitive situation,” says Justin Wang, a consultant at L.E.K. Consulting based in Shanghai, China. “It will be very challenging for MNCs to compete on the current price premium in a severe ‘oversupply’ situation,” he adds.

In its Q2 2024 earnings, MSD announced that sales for Gardasil were 17% lower (18% in exchange) compared to the previous year. At the time, the company attributed this to broader market headwinds rather than company-specific issues, citing price competition from local manufacturers and China’s ongoing anti-corruption crackdown on both hospitals and the health sector. MSD also said it would pause Gardasil sales in China until at least mid-2025.

Another reason that was mentioned was weak discretionary spending. Because Gardasil is not part of China’s national immunisation programme, consumers must pay out of pocket to receive the vaccine.

GSK has also felt the impact. In December 2024, GSK’s Chinese distribution deal for Shingrix with Chongqing Zhifei Biological Products was significantly restructured. Originally, Zhifei had committed to purchasing at least CN¥20.6 bn ($2.83bn) worth of Shingrix between 2024 and 2026. However, in December 2024, the companies extended the contract to 11 years, but reduced annual volumes, with Zhifei now set to purchase CN¥21.6 bn ($2.97bn) worth of the vaccine over six years.