Germany to urge China to approve BioNTech vaccine, potential for major stock market catalyst

In what is one of the most controversial moves by an EU leader in recent times, Germany’s Chancellor Olaf Scholz will arrive in China this Friday, with a business delegation in tow.

Amongst the delegation are the chiefs of some of the nation’s largest corporations – the likes of Adidas, Siemens, Volkswagen, BMW, Bayer, and arguably most notably, BioNTech.

The presence of BioNTech CEO Ugur Sahin is of great interest because China is yet to approve a mRNA COVID-19 vaccine, and BioNTech remains the only foreign vaccine with any likelihood of gaining approval.

Access to the lucrative, largely un-vaxxed, Chinese population would bring a multi-billion dollar windfall to the German pharmaceutical giant and could cement relations between the two nations as Germany faces an energy nightmare and both nations grapple with economic and trade woes.

Thus, some German political observers believe convincing Xi Jinping to approve the BioNTech vaccine is among the top strategic priorities for Germany on the contentious visit, which has caused significant domestic backlash for Olaf Scholz.

The long game for BioNTech in China

In March 2020, BioNTech received a $135 million investment from Shanghai Fosun Pharmaceutical, a subsidiary of Fosun International, one of the largest privately-owned conglomerates in China.

In exchange, Shanghai Fosun received 1.58 million shares in BioNTech, along with future development and marketing rights to the mRNA vaccine in mainland China.

Ugur Sahin was so confident of progress, he declared in April 2021 that BioNTech would gain full approval by Chinese authorities “by June (2021) at the latest”.

In July 2021 it was announced that the BioNTech vaccine was given the green light by a special advisory panel, and was proceeding to the administrative review stage.

But that’s where the process has stalled.

More recently, talks with Unites States’ pharma giant Moderna regarding approval of its mRNA vaccine broke down because Moderna refused requests by regulators to provide information relating to the core vaccine technology.

But Germany is currently at a far friendlier juncture with China when compared to the United States. It seems BioNTech, which counts a Chinese company as a significant shareholder, may be more willing to play ball.

“Many believe that China has been waiting to approve its own domestic mRNA vaccine before granting a nod to the Fosun/BioNTech product,” said Scrip pharmaceutical industry analyst Brian Yang

Without more effective vaccines such as those based on mRNA platforms, the country will have very few options to open its doors to freer travel after more than two years of effectively sealing off its borders.”

BioNTech deal will be a shot in the arm for global stock markets

Should Olaf Scholz and Ugur Sahin seal a deal with Xi Jinping over the coming days, it would be a catalyst for significant upside in global economic activity and bring about a major sentiment shift regarding China’s economy and Chinese stocks.

The theory is, mass mRNA vaccinations would finally end China’s draconian COVID-zero policy which has had a terminal impact on economic activity and major flow-on effects globally.

“Under zero-COVID, China’s economy is on an unsustainable path,” says Matthews Asia Investment Strategist, Andy Rothman.

He says a rise in vaccination rates in China is a “most important” milestone investors should be watching.

“There are now about 25 million people over the age of 60 who have not received any COVID vaccinations, as well as another 62 million older Chinese who have received only two shots, and who need a third for better protection.

“This is a very large number of people who would be at risk if COVID policy is relaxed prior to a major vaccination campaign. Moreover, in recent weeks, the pace of new vaccinations for the entire country has been declining.

“This must be reversed in order to prepare for ending lockdowns and living with COVID.”