Box 3. Box 3 Case study: Sinovac Biotech

In the early 1980s, Weidong Yin worked as a doctor treating infectious diseases in Shanghai where over 300,000 people were infected with HAV alone. This experience motivated Yin and his colleagues to find ways of creating affordable vaccines to address medical needs in China. At the time, the only HAV vaccine available was imported at a high price, making it too expensive for the general population. In 2001, China Bioway Biotech Group (Beijing) along with Peking University (Beijing) made the capital investment into Sinovac Biotech to create a Chinese entity capable of producing vaccines to combat infectious diseases in the local population.

Sinovac Biotech has three locally relevant products currently on the market. Healive is an inactivated HAV vaccine developed by Chinese scientists, which achieved state certification in China as a new drug in 1999. Sinovac Biotech sells this product in China for 94 RMB, the equivalent of $12 dollars. Although this cost is less than half of what it would cost in the United States, the vaccine remains financially out of reach for many of China's rural poor. According to Sinovac Biotech, the company is reaching only about 10% of the domestic market. The company hopes that a government procurement program may help them expand their reach. Sinovac's second product is Bilive, a combined inactivated HAV and HBV vaccine that combines Healive with a recombinant HBV surface antigen (HBsAg) produced in yeast absorbed into aluminum hydroxide. The company's final product, Anflu, is a trivalent inactivated influenza vaccine launched in China in late 2006.

Sinovac Biotech's R&D pipeline has a double focus with both novel and traditional vaccines. Sinovac is currently developing a novel avian influenza (H5N1) vaccine and a nonnovel Japanese encephalitis vaccine. The company also brought a novel SARS vaccine through phase 1 development (however, this project is currently on hold). The company invests 10% of its annual revenues into R&D, and roughly 80 of its 260 employees are focused on R&D.

Sinovac's business strategy is to deliver high quality products to China's large domestic market. Yin explains that the company's mission is to ensure "that everyone has the high[est] quality of vaccine, just the same as the US standard." Sinovac distributes its products through the Chinese Center for Disease Control and Prevention (CCDC; Beijing) regional clinics, which then dispense the product to local doctors. In the future, Sinovac also plans to increase global distribution of its products through international partnerships.