The vaccine got cold, and many CXOs couldn't sit still

Demand for COVID-19 vaccines also continues to decline, with Pfizer's third-quarter revenue down 6% in 2022, including a 66% plunge in COVID-19 vaccine revenue; mRNA vaccine leader Moderna had revenue of $3.364 billion in the third quarter, down 32.4% year on year, and net profit of $1.043 billion, down 68.7% year on year, among which 2022Q3 product revenue (COVID-19 vaccine sales) decreased 35% year on year. In addition, Astrazeneca and Johnson & Johnson's COVID-19 vaccines have declined to varying degrees.

According to the third quarter report of the domestic vaccine company Kangsinuo, the revenue fell by 77% and the net profit fell by 135%. From January to September of 2022, Kangsinuo made a total of 526 million yuan of asset impairment provisions for the inventory of assets related to the novel coronavirus vaccine. Conchino in the financial report helpless said: "Since 2022, great changes have taken place in the market environment of COVID-19 vaccine at home and abroad. The demand for COVID-19 vaccine has shown a sharp decline compared with that in 2021. The growth rate of global COVID-19 vaccine has slowed down, and supply in some regions has exceeded demand. Some developing countries have even announced that they will no longer accept donations of COVID-19 vaccines. At the same time, market competition is intensifying as more COVID-19 vaccine products are being urgently used and marketed, including new generation vaccines and multivalent vaccines against circulating and mutated strains. Safety, efficacy, accessibility, durability and pricing are all core factors of competition in the industry."

CDMO companies, which have made huge profits from vaccine production in the past two years, are starting to shrink their battle lines.

In October, vaccine developer Novavax lost $185 million to manufacturing partner Fujifilm CDMO after Novavax canceled an order for its COVID-19 vaccine, idled Fujifilm's CDMO production line, fiercepharma reports. Novavax finally licensed its coronavirus vaccine in the United States in July, but vaccination rates have been low. Novavax's total revenue for the second quarter of 2022 was $186 million, compared to $298 million for the same period in 2021, a significant decrease.

The lack of sales of COVID-19 vaccines has put pressure on downstream CDMO service companies.

At the end of September, OxfordBiomedica, the leading GCTCDMO company, announced that it would cut jobs and sell its factory in Oxford, UK, in a bid to cut costs and keep the company afloat. The company reported revenue of ￡64 million in the first half of 2022, down 21% from the same period last year, mainly due to double-digit revenue growth in its core business (excluding COVID-19 vaccine manufacturing), which was driven by a reduction in COVID-19 vaccine manufacturing.

Shares in OxfordBiomedica have fallen nearly 70 percent in the past year and it now has a market value of just $386 million.

Not only are smes under pressure, but global CDMO giants are also on edge.

In October, Catalent announced plans to add 500 to 600 jobs in Bloomington, Indiana, one of its COVID-19 vaccine manufacturing sites for Moderna and Johnson & Johnson.

A year later, the wind changed dramatically.

Catalent is cutting about 600 jobs (including 405 in Bloomington) and suspending construction of a vaccine production site in Oxford, England, that the company bought about eight months ago, according to recent media reports.

Catalent posted revenue of $4 billion in fiscal 2021, up 29% from a year earlier, thanks largely to its COVID-19 vaccine business. But the results that just came out (July-September 2022) show revenues of $1.02 billion, up only 4% year on year at constant exchange rates, and EBITDA from operations of $134 million, down 34% year on year; Quarterly operating revenue fell 2% in Q3. The biologics division reported revenue of $523 million, down 2 percent. The company's coronavirus vaccine business has slumped, largely due to a "takeorpay" agreement, in which customers pay but don't recognize revenue until the product is delivered.

In addition, Catalent lowered its 2023 guidance by $4.885 billion from a peak of $5.225 billion, as the coronavirus downturn impacted apparent results. "Catalent added capacity during the Covid-19 pandemic and is scaling back some of that expansion, primarily in order to match the size and structure of the company's organization to current demand in order to become more efficient and cost effective," Catalent said in a statement.

The COVID-19 pandemic is also affecting CROs.

Labcorp, the world's leading CRO, saw its overall performance decline due to the decline in PCR and antibody detection of COVID-19 as well as some macro factors. In the first three quarters of 2022, its revenue grew by -7.5% year-on-year. Net profit growth year-on-year was -34.0%. The company's outlook for the full year is that the business related to COVID-19 will decline significantly.

However, the CXO business is still very popular in China. In the first three quarters of 2022, Wuxi Apptec (revenue: 28.395 billion yuan, +72%), Tiger Pharma (revenue: 5.406 billion yuan, +59%), Kellein (revenue: 7.812 billion yuan, +167%), and Broadtek (revenue: 5.218 billion yuan, +157%) may not have much exposure to COVID-19 vaccine business.

But the chill is already being felt abroad. In addition to the above job cuts, there is even a direct spin-off of CDmos. iBio, Inc., an AI-driven innovator in precision antibody immunotherapy, announced that it is seeking to divest its spin-off CDMO business (iBioCDMO, LLC) and cGMP biologics manufacturing facilities, invest in its immuno-oncology asset pipeline and AI-based drug discovery platform, To complete its transformation into an antibody discovery and development company.

summarize

Foreign CXO companies have already felt the chill in advance, and we need to keep an eye on the future order trend of domestic CXO companies. In recent days, China's epidemic prevention and control has been improved, the speed of the approval of the novel coronavirus vaccine has been significantly accelerated, and some companies are also expanding their production capacity. Whether it can match demand in the future is worth thinking about.