Following a sharp decline in demand for the HPV vaccine (Gardasil) in China, Merck & Co. and its domestic distribution partner, Chongqing Zhifei Biological Products, have officially revised the terms of their strategic partnership.
Key adjustments in the new arrangement include:
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Transition to demand-based supply: The companies have agreed to eliminate annual minimum purchase commitments. A rolling supply model based on real-time market demand will now be utilized for the three Merck vaccines distributed by Zhifei (Gardasil, RotaTeq, and Pneumovax 23).
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Extension of partnership: Originally set to expire in 2026, the deal has been extended until the end of 2028. This restructuring is intended to alleviate Zhifei’s operational pressures and mitigate financial risks amid market fluctuations.
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Economic and competitive context: Gardasil sales experienced a significant downturn in 2025, plummeting 39% from $8.6 billion to $5.2 billion. Merck attributed this decline to fierce competition from lower-cost domestic alternatives in the Chinese market.
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Financial impact: Data indicates that Zhifei’s total procurement of Merck vaccines fell from 34.8 billion yuan in 2023 to below 2.2 billion yuan last year, far below the minimum commitment levels initially established.
This restructuring follows a similar adjustment Zhifei made with its GSK partnership in 2024. These shifts reflect a profound evolution in China’s vaccine landscape, where multinational pharmaceutical companies face increasing pressure from local competitors and changing consumer behavior.