Shenzhen Kangtai Biological Products Co.,Ltd. (300601.SZ) has cited "significant changes in the market environment" as the reason for terminating its plan to establish a joint vaccine enterprise with AstraZeneca PLC (AZN).

The company recently announced that, following careful evaluation and amicable discussions, all parties have decided to terminate the Economic Development Cooperation Agreement, the Term Sheet, and the related plan to establish a joint venture.

In March 2025, Kangtai Biological had announced a plan to co-found a joint venture with AstraZeneca in the Beijing Economic-Technological Development Area. The venture was expected to have a registered capital of 345 million Chinese yuan (approximately 50 million US dollars), with each party holding a 50% equity stake. The total investment for the joint company was projected to be around 400 million US dollars (approximately 2.76 billion Chinese yuan).

The joint venture was originally intended to focus on the development, registration, localized production, and commercialization of globally innovative vaccines in China. These were expected to include AstraZeneca's investigational combination vaccine for respiratory syncytial virus (RSV) and human metapneumovirus (hMPV), known as IVX-A12, among other innovative products. The joint company was also set to become AstraZeneca's first and only vaccine production base in China.

To date, the joint venture has not been formally established, and Kangtai Biological has not made any actual capital contributions.

Kangtai Biological explained that the decision to terminate the joint venture plan was due to "significant changes in the market environment, considerable downward pressure on the industry, and the high risks associated with new investments in the vaccine sector."

Currently, no RSV or hMPV vaccines have been approved for market use in China, and effective antiviral drugs for these viruses are still lacking. For a long time, many domestic vaccine companies have focused on traditional technology pathways with high maturity and lower market risks, resulting in a high proportion of "me-too" product pipelines. This has led to increasingly homogeneous competition in the domestic vaccine market. A continued decline in birth rates has slowed demand for some pediatric vaccine products, while the adult vaccination market still requires cultivation, leaving the entire vaccine industry in a period of challenging transition.

Kangtai Biological itself forecasts that its net profit attributable to shareholders for 2025 will be between 49 million and 73 million Chinese yuan, representing a year-on-year decrease of 75.70% to 63.80%.

Recent data from the China Chamber of Commerce for Import & Export of Medicines & Health Products shows that in 2025, the volume of imported vaccines approved for release and the quantity of imports have both declined. Multinational pharmaceutical companies operating in China have primarily focused on reducing or halting imports to consume existing inventory.

Despite this termination, AstraZeneca continues to increase its investment in China. On January 29 of this year, the multinational pharmaceutical giant announced plans to invest over 100 billion Chinese yuan (15 billion US dollars) in China by 2030 to expand its footprint in pharmaceutical production and research and development.