South Korea’s main vaccine producer said it could not supply Covid jabs to China because of Beijing’s “national pride” and insisted on using domestic vaccines, despite the country’s worst outbreak of the pandemic.
In a Financial Times interview, Jaeyong Ahn, chief executive of SK Bioscience, said it was “unrealistic” to supply a Covid vaccine to China in the near future.
“China is currently in the middle of a pandemic. It’s a matter of speed, but it won’t be easy for us to provide a vaccine there unless there is a dramatic discussion,” he said, adding “approx. [China’s] national pride and righteousness as well as science”.
He said SK, which produces Covid vaccines for AstraZeneca and Novavax, is monitoring whether any variants emerge from the country.
The World Health Organization has accused China of under-representing the severity of the outbreak and the actual death toll. Beijing has yet to approve the use of foreign-made vaccines, saying it has a “substantial” supply of domestically produced jabs.
SK Bioscience developed its own Covid vaccine last year and received domestic approval in June for its use. It is currently awaiting approval from the WHO and the European Union, which is expected to be received in the first half of this year.
The company, one of the world’s leading contract manufacturers, has produced many vaccines for global customers. It wants to accelerate its overseas expansion as it grows rapidly during the pandemic, with sales quintupling between 2019 and 2021 to Won929bn ($732m).
It is currently in acquisition talks with several foreign companies, Ahn said, as it tries to support growth in the post-pandemic era by developing new vaccines and developing cell and gene therapies.
“We’re seeing the best M&A environment in 14 years in terms of valuations, despite deteriorating funding conditions,” he said. “We have financial strength and investing well is the most important agenda [item] to add value to our company.”
SK’s share price fell 67 percent last year amid concerns about its post-pandemic growth prospects. The decline was partly due to global biotech losses after the sector’s shares surged to record highs in 2021 amid the coronavirus outbreak.
Its operating profit has more than halved to Won106bn in the first nine months of 2022 compared to Won220bn a year earlier, with sales down 34 percent year-on-year at Won316bn, as vaccination programs mature in many parts of the developed world.
With a cash pile of Won1.5tn, SK is hunting for a vaccine company with technology that can overcome the weaknesses of mRNA, such as the need to store it at low temperatures. It is also looking for biotech companies that can help develop anticancer cell and gene therapy (CGT) this year, a fast-growing and lucrative field.
“mRNA is a must-have technology as we prepare for the next pandemic. We aim to strike at least one deal in the area of mRNA and CGT this year,” said Ahn.
SK wants to acquire an American biotech company to secure production facilities in the US, as President Joe Biden pushes back on the strategically important industry. The company recently created a US subsidiary to gain a foothold in the world’s largest pharmaceutical market.
“The US executive order presents us with opportunities and risks,” Ahn said. “If we use the money well, it can increase our growth momentum.”
The company, which has experienced weak domestic demand for its Covid vaccine, hopes to export to low- to middle-income countries in Africa, Southeast Asia and South America. The plan will incentivize the deal by offering technology transfer and building production facilities through local joint ventures.