Moderna’s refusal to hand over the core intellectual property behind the development of its ground-breaking Covid-19 vaccine has led to a breakdown in its sales talks in China, according to multiple people familiar with the matter.
Two people involved in the 2020-2021 negotiations said the Massachusetts-based drugmaker had rejected Beijing’s demands to hand over its messenger RNA vaccine formulation, citing commercial and safety concerns. The vaccine maker said it was still “eager” to sell to China.
The mRNA vaccine technology used by Moderna and BioNTech/Pfizer provides longer-lasting and higher levels of protection than the inactivated vaccine technology used by Chinese manufacturers. Several Chinese pharmaceutical companies are racing to develop a homemade mRNA replacement, but have struggled with the emergence of a more infectious variant.
A person close to Moderna’s Greater China team said the company had “abandoned” previous efforts to enter the Chinese market after Beijing demanded it hand over technology as a prerequisite for selling to China.
Beijing has so far offered two avenues for foreign Covid-19 vaccine manufacturers to distribute in China, subject to regulatory approvals: a full-scale technology transfer to a domestic drugmaker or a manufacturing facility in China with a local partner, while maintaining Control or underlying technology. Moderna was forced to take the former option.
German group BioNTech has struck a deal with Shanghai Fosun Pharma to start clinical trials and commercialize its vaccine in 2020, meaning it retains control of intellectual property. Under the partnership, Fosun has agreed to supply a factory that can produce up to 1 billion doses of the vaccine a year.
By contrast, Shanghai-based Everest Medicines Group struck a deal to acquire Canadian biotech Providence Therapeutics’ mRNA vaccine candidate, which involved a full-scale technology transfer.
Beijing has yet to approve the two vaccine regulators.
Moderna leadership did not want to hand over the vaccine formulation to a Chinese partner because of the reputational damage if a local partner screwed up production, two people familiar with the matter said.
Moderna has been vigorously protecting its intellectual property around the world, saying handing over patents would not help address supply constraints. Negotiations in Italy to transfer technology to a local manufacturing base also failed, but Moderna gave reasons for its lack of oversight capabilities.
China has not yet approved any mRNA product for therapeutic purposes, and the mass production of such a vaccine is more complicated than the inactivated vaccines produced by China’s existing Sinopharm and Sinovac.
In recent weeks, Moderna has expressed willingness to restart talks with China. Paul Burton, its chief medical officer, said this month: “If they think China needs a vaccine, we will definitely be very eager to work with China.”
Burton’s comments came days after U.S. President Joe Biden declared “the pandemic is over,” wiping more than $10 billion off the market value of major vaccine makers including Moderna.
Moderna told the Financial Times: “We are currently not in supply negotiations with China. We are open to dialogue with countries about their supply needs for a Covid-19 vaccine.”
Industry insiders have observed that the company’s willingness to renegotiate with China, the last major economy without an mRNA hit, is due to weaker demand for the vaccine in the wealthier countries it initially targeted sales.
Moderna has shipped more vaccines to high-income countries than the other three major vaccine makers, according to Airfinity, a data firm that monitors vaccine shipments, a strategy that has earned it billions of dollars in profits. More than 86% of Moderna’s vaccines have been delivered to high-income countries, compared to 74% for BioNTech/Pfizer, 63% for Johnson & Johnson and 19% for AstraZeneca.
Slowing demand has plagued all major coronavirus vaccine makers, but Moderna’s management is particularly stressed because Covid-19 is its only approved product, according to people familiar with the matter.
Additional reporting by Jamie Smyth in New York