SK Bioscience halts flu vaccine output to focus on COVID vaccines

South Korea’s SK Bioscience Co. is suspending production of SKYCellflu, an influenza vaccine, to focus on manufacturing COVID-19 vaccines instead.

An SK Bioscience official said on Monday that the decision not to manufacture the flu vaccine this year is designed to reallocate output capacity at its plants in Andong, North Gyeongsang Province to produce coronavirus vaccines.

“Our production capacity is limited. We’re going to ensure a stable supply of COVID-19 vaccines that we’re making for Novavax and meet orders from other global companies,” said the official.

But the company said it will continue to manufacture vaccines for shingles and chickenpox.

SK Bioscience was the first in the world to develop a cell-culture influenza vaccine, SKYCellflu, the revenue of which accounts for about 100 billion won ($88 million) a year, or two-thirds of the company’s total vaccine revenue of 148.2 billion won.

PERSISTENT ENDEMIC

The move comes amid a growing industry view that COVID-19 is more likely to become a persistent endemic rather than a pandemic, signaling that the disease will not disappear in the near future.

SK Bioscience expects the global COVID-19 vaccine market to considerably grow from $1.3 billion in 2020 to $16.1 billion in 2025.

“Demand for COVID-19 vaccines is steadily growing. But such vaccines are already in short supply due to the shortage of raw materials. The COVID vaccine business will remain profitable for years to come,” said a fund manager.

COVID-19 vaccines’ profitability is higher than that of flu vaccines.

Flu vaccines were sold at 10,000-15,000 won per dose in 2020. By contrast, Novavax COVID-19 vaccines were sold to the Korean government at $16-$22, or 18,000-25,000 won, per dose.

SK Bioscience is currently running its COVID-19 vaccine manufacturing plants at full capacity to meet rising demand. Its annual output capacity was 157.9 million doses in 2020.

SK has been producing British-Swedish pharmaceutical giant AstraZeneca plc’s COVID-19 vaccine since September 2020. It also inked a contract development and manufacturing organization (CDMO) order for a coronavirus vaccine candidate developed by US-based Novavax Inc. last year.

SK Bioscience Chief Executive Ahn Jae-yong recently said the company is getting requests from AstraZeneca and Novavax for additional vaccine production deals as well as from other bio companies.

The Korean vaccine maker said it may be getting manufacturing orders from France’s Sanofi S.A. and British multinational pharmaceutical company GlaxoSmithKline plc (GSK).

OWN COVID VACCINE CANDIDATES UNDER DEVELOPMENT

Separately, SK is also developing two types of its own COVID-19 vaccine candidates -- NBP2001 and GBP510.

NBP2001 is a recombinant vaccine manufactured from the virus' surface antigen protein through genetic combination. The company has promised to develop safe vaccines through the protein culture and refining platform of an antigen produced with gene recombination technology.

Industry watchers said SK’s decision to halt the production of SKYCellflu might disrupt Korea’s flu immunization program.

However, SK Bioscience said the company had already consulted with the Korea Disease Control and Prevention Agency (KCDA) on the decrease in flu vaccine supply.

Earlier this month, SK Bioscience set a new record in the country’s stock market history with 63.6 trillion won ($56 billion) in investor deposits for its initial public offering shares during a two-day subscription period that closed on Mar. 10.

Write to Woo-Sub Kim at duter@hankyung.com
In-Soo Nam edited this article.