Analysis of Price Reduction in Centralized Procurement and Gross Margin Inflection Point of Walvax's Bivalent HPV Vaccine

The Chinese vaccine industry is undergoing severe tests of “involutionary” competition. According to the latest industry data, the average price reduction in vaccine centralized procurement in 2024 reached 40%, with some categories seeing reductions exceeding 60%[1]. Walvax’s bivalent HPV vaccine was reduced to 30 yuan per dose in centralized procurement, a price level close to the cost line of some traditional vaccines. The centralized procurement policy has completely restructured the pricing system through the “national bulk purchase” mechanism, significantly compressing the profit margins of vaccine companies.

From the perspective of supply and demand, the HPV vaccine market presents obvious structural contradictions. Although the coverage rate of eligible people is only 27.43%, the扎堆 production of enterprises has led to serious oversupply. Walvax and Wantai Bio, as major domestic suppliers of bivalent HPV vaccines, have fallen into direct price competition. Wantai Bio’s self-paid market sales revenue in the first half of 2025 decreased by more than 50% year-on-year, and it accrued an inventory write-down loss of 5.4978 million yuan[1].

According to the latest financial data, Walvax’s profitability is under significant pressure:

Financial Indicator	Value	Industry Interpretation
Operating Profit Margin	-6.49%	In a loss state
Net Profit Margin	2.05%	Meager profit
ROE	0.52%	Extremely low capital return
P/E	367.00x	Valuation is under severe pressure

The company’s financial attitude is conservative; the high depreciation and capital expenditure ratio indicates that previous investments are being gradually digested, and there is room for performance improvement but it needs time to verify[0]. The latest quarterly financial report shows that the company’s actual EPS was $0.08, exceeding expectations by 7.44%, but operating revenue was only $565 million, significantly lower than expectations by 26.50%, indicating that the pressure on the revenue side remains significant[0].

In the short term, it is difficult for Walvax’s gross margin to show an obvious inflection point, for the following reasons:

• Continuous Price War
  : The bivalent HPV vaccine market has entered the stock game stage, and the competition between Walvax and Wantai will not ease in the short term
• Inventory Digestion Pressure
  : The overall industry inventory is at a high level; Zhifei Bio’s inventory surged from 9 billion yuan at the end of 2023 to 21.9 billion yuan in the first quarter of 2025[1]
• Rigid Centralized Procurement Price
  : The centralized procurement price of 30 yuan is difficult to rise in the short term, and enterprises need to adapt to the new price system

The gross margin inflection point may appear from the second half of 2026 to 2027, for the following reasons:

• Capacity Clearance
  : Single-product-dependent enterprises will gradually exit the market, and the industry supply side will start to optimize
• Product Structure Upgrade
  : Walvax’s 13-valent pneumococcal vaccine has been sold in more than 20 countries, and overseas business may become a new profit growth point[1]
• Cost Control Takes Effect
  : Scale effects and production efficiency improvements will gradually be reflected

From the perspective of technology investment, mRNA platforms, multi-combination and multi-valent vaccines, and therapeutic vaccines form an innovative “golden triangle”. If Walvax can make breakthroughs in these areas, it is expected to reshape its profitability. It is expected that the market size of innovative vaccines will reach 126 billion yuan in 2026, a year-on-year increase of 58.2%[1], and enterprises with technical advantages will obtain excess returns.

It is recommended to pay attention to the following indicators to judge the gross margin inflection point:

1. Quarterly Gross Margin Change
   : Gross margin stabilizes and rebounds for two consecutive quarters
2. Inventory Turnover Rate
   : Accelerated inventory turnover means reduced inventory pressure
3. R&D Investment Conversion
   : R&D progress of nine-valent HPV vaccine or other innovative products
4. Overseas Business Proportion
   : The increase in international revenue will improve the overall profit structure

In the current environment, Walvax’s gross margin inflection point is expected to appear from

, but there is high uncertainty. Investors need to pay attention to:

• Short-term: Further evolution of centralized procurement policies and corporate response strategies
• Medium-term: Progress of industry capacity clearance and the company’s cost control capabilities
• Long-term: Commercialization progress of innovative vaccine pipelines

Against the backdrop of overall industry pressure, it is recommended to remain cautious and pay attention to substantive signals of improvement in the company’s fundamentals.

[1] 东方财富网 - 专家分析：我国疫苗行业"内卷式"竞争严重 (https://caifuhao.eastmoney.com/news/20251226053417694848860)
[0] 金灵API - 沃森生物公司概况及财务数据