Chinese pharmaceutical company Sinovac Biotech is investing hundreds of millions of dollars into vaccine facilities across Latin America.

On May 9, the company announced plans to invest $100m into a facility in Bogotá, the capital of Colombia. It will produce vaccines against not only Covid-19 but also hepatitis A, polio, varicella and influenza. It will focus on filling and packaging in the first instance, before later looking at full-cycle production.

In February, Sinovac and Ecuador’s ministry of health signed a cooperation agreement to “carry out clinical trials in the country” and “strengthen technical, scientific and technological transfer”, including building this facility. Last year, Sinovac also invested $60m into a plant in Chile. All facilities include vaccines against diseases in addition to Covid-19.

Chinese-produced Covid-19 vaccines, either from pharmaceutical company Sinovac or state-owned Sinopharm, have been approved in several countries around the world, from Brazil and Mexico to the UAE and Thailand. But this latest trend of vaccine facilities indicates a soft power play in which Sinovac is plugging a healthcare gap in several Latin American countries, in line with Chinese firms becoming more assertive in the region.

Any vaccine is better than none

Sinovac’s investment announcements in Latin America come as China continues to struggle with Covid-19. A new wave of infections forced the country, which sourced most of its Covid vaccines through state-owned Sinopharm and the same Sinovac, to newly resort to its zero-Covid policy. The draconian lockdowns that ensued as the rest of the world lifted most Covid restrictions inevitably brought into question, among other things, the efficacy of Chinese vaccines. 

The Sinovac Covid-19 vaccine’s efficacy stands at 51% for two doses against symptomatic infection of Covid-19, according to the World Health Organization, with 100% efficacy against severe Covid-19 and 100% against hospitalisation. A study by the University of Hong Kong last year showed that three doses of only Sinovac’s ‘CoronaVac’ vaccine “does not provide adequate levels of protective antibody”.

However, China and Sinovac were still able to make inroads in foreign markets to meet the demand that would have otherwise gone unnoticed by other vaccine producers. 

Seow Ting Lee, professor of strategic and health communication at the University of Colorado Boulder, says that the comparative lack of efficacy in Chinese-produced vaccines “will not deter China from expanding its reach”.

“Given how desperately many countries still need vaccines, due to persistent vaccine inequities, many countries are still favourable to receiving and administering Sinovac ... Any vaccine is better than none,” she says.

“The state of play is still in China’s favour as vaccine inequities have only worsened in many parts of the world, and this continues to offer opportunities to Sinovac.”

Ms Lee says that Sinovac’s expansion into Latin America is “very significant” and is “merely one programme in the larger scheme of China’s public diplomacy and soft power agenda”, as these vaccine production facilities will open up more soft power opportunities for Beijing beyond vaccines.

By taking a case-by-case, or country-by-country approach, China is on track to use Sinovac as an instrument of soft power, she says.

The Wilson Centre estimates that as of last year, more than 109 million doses of Chinese-produced vaccines were administered across 15 countries in Latin America, outstripping the 87 million US-made doses distributed in the same countries.

One is not enough

The vaccines produced at the $100m Sinovac plant in Bogotá will supply the national immunisation programme of Colombia, and are expected to be sold in regional markets outside Colombia too.

Laura Uribe, Sinovac’s government affairs supervisor in Colombia, says that “it is very important for Sinovac to guarantee pharmaceutical security in every country through vaccine production and research and development”. In each of the plants in Latin America, she says, there will be production of 50 million doses per year for both the local and regional market.

She adds that Sinovac’s mission is to “supply vaccines to eliminate diseases” and in a pandemic-ridden world, “one plant is not enough”. “In case one country cannot produce due to a lockdown, we can do it elsewhere — this goes for the whole region,” she says. 

Colombia’s outgoing president Ivan Duque says in an interview with fDi (see p30) that while Chinese capital is not the only way to develop domestic vaccine production, it is “available” capital. “We are open for investment [to] generate the capacity to produce vaccines [to] supply Colombian needs, but at the same time supply Latin America,” he explains.

The Sinovac Covid-19 vaccine has two advantages over US or European vaccines: cost and logistics, in that they are cheaper to make and easier to transport as they do not require cold chain storage. 

Mariano Machado, senior Latin America analyst at Verisk Maplecroft, says that with at least a dozen countries in the region signing vaccine contracts with Beijing, some of which include technology transfers and research cooperation with Chinese vaccine developer Sinovac, Chinese-made vaccines have widespread support. 

With “significant challenges around healthcare capacity and infrastructure in the region”, governments in Latin America are likely to deem Sinovac’s expansion as “good news”, he says.

In Chile, for instance, he says, the Sinovac plant “falls [in line with] the narrative of economic diversification, promoted by all sides of the political aisle”.

Entry by the front door 

In keeping with other public contracts won by Chinese companies, the pharmaceutical push is set against the broader context of China’s Belt and Road Initiative (BRI).

In 2019, China Harbour Engineering Company and Xi’an Rail Transit Group won the bid to build Bogotá’s metro. Elsewhere in Colombia, Chinese companies have won contracts for electric bus fleets and the Mar 2 highway. In 2020, Ganfeng Lithium, China’s biggest lithium producer, announced it was building a battery recycling facility in Mexico.

“Chinese firms are seizing this opportunity to advance their influence in the region,” Mr Machado says. “Having built up experience under Beijing’s state-to-state contracts, Chinese firms are now active in their own right on the global stage. [They’re] no longer confined to backdoor access to critical sectors through opaque bilateral deals, [but] winning several big project tenders in Latin America in sectors including energy, electricity transmission and transport infrastructure.”

The main risk of “walking the geopolitical tightrope” in Latin America, he maintains, is that short-term gains are followed by long-term deterioration of links with the US and Europe.

Chile and Ecuador have both joined the BRI, and Mr Machado adds that “we cannot rule out Colombia following that path after the upcoming election”.

This article first appeared in the June/July 2022 edition of fDi Intelligence.