China's first export is likely to be a vaccine against Japanese encephalitis, a mosquito-borne disease caused by a flavivirus (pictured). It is the leading cause of viral encephalitis in Asia. Credit: James Cavallini/Custom Medical Stock Photo/Newscom

China has passed the World Health Organization (WHO)'s vaccine regulatory assessment, an approval that gives local manufacturers a green light to enter the global vaccine market. On March 1, WHO stated that China's State Food and Drug Administration (SFDA) complies with international standards for vaccine regulation. As a result, vaccines coming from China now have the imprimatur of international recognition, both for exports and domestic sales, says Peicheng Liu, a spokesperson of Beijing Sinovac. But keeping up with international standards may erode China's price competitiveness.

In the process of obtaining WHO approval, the SFDA revised indicators such as the overall vaccine approval framework; marketing authorization and licensing; post-marketing surveillance; lot release; laboratory access, regulatory inspections of manufacturing sites and distribution channels; and authorization and monitoring of clinical trials. “Compliance of the SFDA with international standards is the first step in a process that should see Chinese vaccine producers making a significant contribution to meeting the world's vaccine needs in the near future,” says WHO representative in China, Michael O'Leary.

The WHO green light is seen as important because the Chinese vaccine industry has been plagued by scandals. In March 2010, nearly 100 babies in Shanxi province became sick or died after receiving defective vaccines for hepatitis B virus and rabies virus, though the government denied the link. This incident, followed by a problem with substandard rabies vaccines made by the Jiangsu province–based Ealong Biotech, eroded public confidence.

Validation that the Chinese authorities adhere to WHO standards could go some way to restoring public's confidence. “The approval will enable Chinese vaccine makers to better know international norms and practices, which will definitely help improve the vaccine quality in the domestic market,” says Zixin Qiu, general manager of Beijing WanTai, producers of Hecolin, the world's first vaccine against hepatitis E virus (HEV), an Escherichia coli–produced, recombinant, 239-aminoacid fragment of the HEV capsid protein ORF2 with alum adjuvant.

China is the 36th nation to obtain WHO status, and trails other developing countries, such as India and Cuba. SFDA has tried unsuccessfully to obtain WHO approval several times in the past, but as Xiaofeng Liang, director of the national vaccination office under the Chinese Centre for Disease Control and Prevention stresses, “The WHO's approval does not mean China did not have a well-regulated vaccine industry.” The main reason for China's rejection in the past was a lack of a post-sale surveillance system for vaccine side-effects. Because rare vaccine side-effects sometimes appear only when the vaccine is used in a larger general population, the European Medicines Agency and the US Food and Drug Administration requires post-market surveillance.

“Vaccine makers feared that once they reported some cases the public might refuse to take their vaccines,” an employee at one of China's largest vaccine makers, who wished to remain anonymous, told Nature Biotechnology. The open reporting of side effects is likely to remain a problem. The system set up for WHO compliance is a voluntary one, and many domestic vaccine makers are likely to remain reluctant to collect and report side effects of their vaccines. “The Chinese watchdog should increase regulation and education to improve general industry awareness,” the insider says.

Liu of Sinovac adds that most Chinese vaccine makers are not familiar with international vaccine purchasers. “It is a long road to sell Chinese vaccines in the global market, despite our lower prices,” he says.

Vaccines made in China are indeed cheap. For example, the combined measles, mumps and rubella vaccine is priced by China's National Development and Reform Commission at 20.8 yuan ($3.20) per dose—one-fifth of the price approved by the US Centers for Disease Control and Prevention. Most of these low-cost vaccines are made by the China National Biotec Group, headquartered in Beijing, for the domestic market. But meeting international standards will likely require more expensive materials than those currently employed by manufacturers, says WanTai's Qiu.

To supply vaccines through the United Nations agencies, vaccine makers must now abide by China's new version of good manufacturing practice (GMP), which was released in late February. The new GMP stipulates stricter requirements on sanitation, production process and standardization, in line with requirements adopted by the US, EU and WHO. Most of China's nearly 5,000 pharmas have been asked to pass the new GMP approval in three years and vaccine makers must pass in five years or lose their drug production licenses.

For Western pharma, China's new status presents an interesting prospect. On the one hand, an opportunity exists for technology transfer agreements and partnerships to help Chinese manufacturers maintain compliance with the SFDA. On the other hand, China could gain significant market share in developed nations where vaccine companies, such as Merck of Whitehouse Station, New Jersey, GlaxoSmithKline of London, Pfizer of New York, Novartis of Basel, and Sanofi of Paris currently have a stranglehold, with combined vaccine sales of about $20 billion in 2010.

When contacted by Nature Biotechnology, executives at multinational vaccine makers were reluctant to speculate on how WHO approval might influence the business strategy of China's 36 vaccine manufacturing firms going forward (Table 1). . But in the short term, Chinese manufacturers are likely to seek help from foreign firms in improving their operations, particularly as the government begins to open its doors to multinational corporations.

Table 1 Selected vaccine manufacturers in China
Full size table

Geneva's International Federation of Pharmaceutical Manufacturers and Associations says the SFDA has “lowered the barriers to entry,” allowing foreign investments, buyouts and partnerships in an effort to improve the country's capabilities. To Western pharmaceutical firms, China's domestic vaccine market is an attractive prospect. Novartis, for example, laid down $125 million in March to pick up an 85% stake in Bio-Pharmaceutical, located in Zhejiang, Tianyuan. This vaccine maker produces seasonal inactivated flu vaccines, inactivated bivalent hemorrhagic fever with renal syndrome virus vaccine with alum adjuvant, inactivated Japanese encephalitis virus vaccine and a quadrivalent polysaccharide-based vaccine covering the other four pathogenic meningococcal serogroups, A, C, Y and W-135.

“This is a very positive signal for other foreign companies and investors who wish to follow,” says Feng Li, senior vice president of Advanced Pharmaceuticals, a technology transfer consulting firm based in Raleigh, North Carolina, and Shanghai. “There might be an opportunity for them to get their foot in the Chinese market.”

GlaxoSmithKline and Merck each believe there is a place for Chinese manufacturers beyond the domestic market in emerging nations, such as Brazil, India, Mexico, Russia and Turkey. Two years ago, GlaxoSmithKline joined with Chinese companies Shenzhen Neptunus and Walvax Biotech to manufacture influenza vaccines and pediatric vaccines, whereas Merck signed a deal in 2010 with Sinopharm Group and its affiliates to work on human papilloma virus and other vaccines. “We believe that great science knows no borders,” says Mark Feinberg, vice president of medical affairs and policy at Merck, “and we are impressed with the strong scientific capabilities that are abundant in China.”

Chinese manufacturers may help improve access to vaccines in developed nations. WHO prequalification acts as a quality assurance watchdog for low-income countries that lack their own regulatory process. Sabine Haubenreisser, of the European Medicines Agency in London, says, “influenza vaccine supply during the H1N1 pandemic was a bottleneck. China could potentially facilitate supply for global demand in a pandemic.”

China's first export is likely to be a vaccine against Japanese encephalitis virus, a virus for which there are currently no WHO-prequalified vaccines, although there are marketed ones made by The Research Foundation for Microbial Diseases of Osaka University (BIKEN) and Vienna-based Intercell, and distributed by Sanofi and Novartis. China expects to have a WHO prequalified vaccine for this disease within one to two years.