South Korea’s leading vaccine producer says it is unlikely to supply Covid jabs to China due to Beijing’s “national pride” and insistence on using domestic vaccines, even as the country is hit by its biggest outbreak of the pandemic.

In a Financial Times interview, Jaeyong Ahn, chief executive of SK Bioscience, said it was “unrealistic” to supply Covid vaccines to China in the near future.

“China is now at the heart of the pandemic. It is a matter of speed, but it won’t be easy for us to supply vaccines there unless dramatic talks take place,” he said, adding it was “about [China’s] national pride and justification as well as science”.

He said SK, which produces Covid vaccines for AstraZeneca and Novavax, is monitoring whether any variants are emerging from the country.

The World Health Organization has accused China of underrepresenting the severity of its outbreak and the real number of deaths. Beijing has not approved the use of foreign-made vaccines, saying it has “ample” supply of domestically produced jabs.

SK Bioscience developed its own Covid vaccines last year and won domestic approval in June for their use. It is now awaiting approval from the WHO and the European Union, which it expects to receive in the first half of this year.

The company, one of the world’s leading contract manufacturers, has produced a large volume of vaccines for global customers. It is keen to accelerate its overseas expansion on the back of rapid growth during the pandemic, with sales quintupling between 2019 and 2021 to Won929bn ($732mn).

It is now in acquisition talks with several foreign companies, Ahn said, as it tries to sustain growth in the post-pandemic era by developing new vaccines and expanding into cell and gene therapies.

“We are seeing the best M&A environment in 14 years in terms of valuations, although financing conditions have deteriorated,” he said. “We have the financial firepower and investing well is our most important agenda [item] to boost our corporate value.”

SK’s share price dropped 67 per cent last year over concern about its post-pandemic growth prospects. The fall was partly due to a global biotech rout after sector stocks soared to record highs in 2021 during the coronavirus outbreak.

Its operating profit has more than halved to Won106bn in the first nine months of 2022 compared with Won220bn a year earlier, with sales down 34 per cent year on year at Won316bn, due to vaccination programmes maturing in many parts of the developed world.

With its Won1.5tn cash pile, SK is hunting for vaccine companies with technologies that can overcome mRNA’s weaknesses, such as the need for storing at ultra-low temperatures. It is also searching for biotech firms that can help it expand into anticancer cell and gene therapies (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 each in the mRNA and CGT areas this year,” Ahn said.

SK is keen to acquire an American biotech company to secure production facilities in the US, as President Joe Biden pushes to reshore strategically important industries. The company has recently set up a US subsidiary to gain a foothold in the world’s largest pharmaceutical market.

“The US executive order presents us with both opportunities and risks,” Ahn said. “If we utilise our cash well, it can substantially boost our growth momentum.” 

The company, which is grappling with weak domestic demand for its Covid vaccines, is hopeful that it can export to low-to middle-income countries in Africa, south-east Asia and South America. It plans to incentivise those deals by offering a technology transfer and by building production facilities through local joint ventures.

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