Chinese Government Should Audit Investment In COVID-19 Vaccines And Medications – Analysis


By He Jun

After three years of battle against COVID-19, when the Chinese government began to tweak its measures in November 2022 in response to the actual changes of the situation, China soon finds itself lack of medical resources.

Because of the spread of the contagious Omicron variant, there is the emergence of a large number of infections in a short period of time. With this, the demand for clinics, antipyretics, antigen test kits, and medications has increased rapidly. Due to insufficient preparations in the early stage, the existing reserves are simply unable to cope with the surge in demand, resulting in a shortage of medical services and diagnostic devices. With the surge of infected patients with comorbidities, especially elderly patients, the demand is further transmitted to critical care and ICUs. Finally, with the increase in the number of deaths, there has also been a lack of funeral resources, something detrimental to the mind of society.

In the three-year war against COVID-19, the Chinese government has invested considerable resources in vaccine and medication research and development. Chinese vaccine companies, novel coronavirus testing institutions, and some medication institutions have received huge sums of “COVID-19 dividends”.

Among the three most prominent vaccine companies in China, the state-owned Sinopharm’s operating income reached RMB 701.7 billion in 2021, with a total profit of RMB 100 billion and RMB 564 billion in total assets at the end of the year. Both its preservation and appreciation rate of state-owned assets and the rate of return on net assets rank first among central enterprises. It has also been rated as A-level in the performance assessment of central enterprises for 9 consecutive years and 3 terms. In the Fortune 500 list in 2021, Sinopharm Group ranked 109th, the second among global pharmaceutical companies. In 2022, in the latest list of the world’s top 500, Sinopharm ranked 80th, first among global pharmaceutical companies. Its performance growth has benefited from the “COVID-19 dividend”. Zhu Jingjin, deputy president of Sinopharm, said on August 15 last year that the company has independently developed 4 COVID-19 vaccines, 4 test reagents, and 4 new treatment medications, being the only company in the world that has independently developed 4 vaccines based on 3 technical routes (inactivation, gene recombinant, mRNA). Sinopharm’s vaccine revenue is estimated to be more than USD 15 billion.

The second is Sinovac which has also made a lot of money during the pandemic, and its huge income came from the development and sales of the Coronavac vaccine. In 2021, Sinovac’s total revenue was USD 19.375 billion (approximately RMB 128.033 billion), and its net profit was USD 14.458 billion (approximately RMB 95.541 billion). This is equivalent to a daily income of RMB 350 million. The profit was RMB 95.5 billion, equivalent to a daily profit of RMB 268 million. In the previous few years, Sinovac’s performance was lackluster. In 2020, Sinovac’s total revenue was RMB 510 million, and its performance in 2021 soared 37 times compared to the previous year. From 2015 to 2019, the net profit of Sinovac was USD -957,000, USD -720,000, USD 36.705 million, USD 36.111 million, and USD 65.215 million. This is equivalent to 1/106 of the annual net profit of the year 2021.

The third is CanSino. This company, founded by several Canadian Chinese, is mainly engaged in the research and development, production, and commercialization of innovative vaccines. Before 2021, CanSino had meager revenue and suffered losses for many years. Its revenue in 2020 was only RMB 24.89 million, with a net profit loss of RMB 397 million. The outbreak of the COVID-19 pandemic has created a historic opportunity for the company. In 2021, CanSino achieved an operating income of RMB 4.3 billion, a year-on-year increase of 17174.82%, with a net profit of RMB 1.914 billion. CanSino’s revenue and profit growth were mainly due to the company’s recombinant vaccine (type-5 adenovirus vector) that obtained conditional marketing approval and emergency use authorization in many countries.

It is worth mentioning that CanSino has worked closely with the virologist Chen Wei of the Chinese Academy of Military Sciences who was awarded the honorary title of “People’s Hero”. Phase I and Phase II clinical trials were launched in Wuhan on March 16 and April 12 in 2020 respectively. Chen said in 2020 that the vaccine she developed had left the production line as early as February 26, 2020. Her words at the time were “victory is the only option”. However, it was not until February 25, 2021, that China’s National Medical Products Administration conditionally approved CanSino’s adenovirus vector vaccine marketing registration application. The cooperation with Chen is undoubtedly a great blessing to CanSino. In 2021, the total market value of the company was close to RMB 200 billion at its peak. Recently, CanSino announced that the mRNA vaccine developed by it has obtained positive phase data. It said that the vaccine under development can be more effective in preventing infection with mutated strains than the original vaccine.

The above three representative vaccine companies have made a lot of money during the pandemic, and they have produced billions of doses of vaccines. As of January 8, 2023, 31 provinces (autonomous regions, municipalities directly under the Central Government) and the Xinjiang Production and Construction Corps have reported a total of 3,483,438,000 doses of COVID-19 vaccines. Based on China’s 1.4 billion population, the per capita vaccination is 2.4 doses. Although China already has a relatively high vaccination rate, judging from the outbreak in China from November 2022 onwards, it is clear that while these three companies have made a lot of money and won honors because of the vaccines, as well as favored by capital, the vaccine products have little effect on the prevention of infection. At least, no verifiable effects are found.

China has spent a lot of money on health every year. According to official data, from 2018 to 2021, the total national health expenditure was RMB 5,799.83 billion (6.4% of GDP, the same below), RMB 6,519.59 billion (6.67%), RMB 7,230.64 billion (accounting for 7.12%), and RMB 7,559.36 billion (6.5%). In the 2021 total, the government health expenditure was RMB 2071.85 billion, accounting for 27.4%. Social health expenditure was RMB 3392.03 billion, accounting for 44.9%. Personal health expenditure was RMB 2095.48 billion, accounting for 27.7%. The per capita total health expenditure in 2021 was RMB 5348.1.

The question is if the vaccines developed by these companies have little effect on viral infection prevention, does it mean that the huge money spent was an ineffective investment and expenditure? Researchers at ANBOUND believe that judging from the embarrassing situation of the lack of medical resources n China after the relaxation of the policy in November 2022, there is every reason to raise such doubts.

Similar problems are not only reflected in vaccines, but also in treatment medications. In the past three years, China has mainly adopted social governance means to prevent the spread of the pandemic, which has to a certain extent suppressed the demand and attention on medications for treating COVID-19. What was even more absurd is that in order to detect people infected with the novel coronavirus, many places have banned pharmacies from selling antipyretics to ordinary people through administrative means. Under such circumstances, many Chinese medical institutions were not under the urgency to research and produce medications for it. As an independent think tank, ANBOUND has already put forward policy recommendations as early as August 2021. Among them, the focus of China’s battle against the pandemic should shift from detection to medical treatment, because the pandemic can only be brought under control when effective medications are available. Unfortunately, ANBOUND’s rational voice was not heard under the mass testing and concentrated quarantine due to the “dynamic zeroing” principle.

According to our incomplete observations, in the past few years, there have been too many Chinese companies that have taken advantage of the pandemic and made a lot of profits in the market. The Chinese government has invested a lot of money in this. Generally speaking, the sudden outbreak of the novel coronavirus has brought a sudden “COVID-19 dividend to hospitals, related companies, and scientific research institutions. However, after large-scale investments within the three years of the pandemic, China has become the country with the most infected people and the worst outbreak in the world. It is still facing a shortage of medical resources. What awaits to be answered is where did all the money go, and why are there no effective vaccines and medications being produced?

Final analysis conclusion:

Given the actual performance of Chinese medical institutions and R&D companies during the COVID-19 pandemic, we believe that it is necessary for the Chinese government to strictly audit the related scientific and technological investment in vaccines and medications. If such companies and institutions accepted state investment funds, they will need to be evaluated. This kind of audit is of great significance for China to deal with similar public health disasters in the future.

He Jun is a researcher at ANBOUND


Anbound Consulting (Anbound) is an independent Think Tank with the headquarter based in Beijing. Established in 1993, Anbound specializes in public policy research, and enjoys a professional reputation in the areas of strategic forecasting, policy solutions and risk analysis. Anbound's research findings are widely recognized and create a deep interest within public media, academics and experts who are also providing consulting service to the State Council of China.

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