GSK Inks Shingles Vaccine Deal with Zhifei For $3 Billion

Zhifei, China's largest vaccines producer, will pay British drugmaker GSK 2.5 billion pounds ($3.05 billion pounds) for exclusive distribution rights to GSK's shingles vaccine in the world's No.2 pharmaceuticals market. The agreement is part of a series of initiatives by Western pharmaceutical corporations to get a larger piece of China's market, including statements from AstraZeneca. The vaccine, named Shingrix, is GSK's top-selling medicine.

The deal with Zhifei is part of its efforts to reach more than 4 billion pounds ($4.88 billion) in sales by 2026, GSK said. GSK said Zhifei has a strong track record of driving access to innovative vaccines in China and has significant scale. The deal will result in the vaccine being available in more than 30,000 locations across China, up from 9,500 currently, as per reuters. GSK stated that Zhifei will acquire quantities of Shingrix worth 2.5 billion pounds over a three-year period.

The deal is slated to go into effect on January 1. Following the filing, Zhifei shares rose as much as 20% to 58.40 yuan ($8.00), their highest level since March 27. By 0812 GMT, GSK shares were up 1.2%, close to the session high. Shingrix is presently GSK's biggest product and most important growth engine with 1.71 billion pounds in first-half sales, up 20% from the previous year. According to JPMorgan analysts, the move "de-risks GSK's GSK's Shingrix China sales for the next three years" and offers the potential for a 6% boost to 2026 consensus Core EPS (Earnings per Share) predictions.