Moderna signs deal to make mRNA vaccines for Chinese market

Moderna will push toward producing messenger RNA vaccines for China, seeking a foothold in the world’s second-largest pharmaceutical market even as geopolitical tensions rise.

Moderna signed a memorandum of understanding and land collaboration agreement on Wednesday to work toward researching, developing and producing mRNA vaccines in China, according to a statement. The U.S.-based developer of an mRNA vaccine for COVID-19 may invest around $1 billion, local media outlet Yicai reported Tuesday, citing sources it didn’t identify. Moderna declined to comment on the size of its investment.

Moderna is under pressure to elevate sales of COVID vaccines after dismal uptake of boosters last year. While Moderna and rival Pfizer are expecting more people to receive an additional shot this fall, the clamor is unlikely to return to its initial levels. While sales of Moderna’s COVID shot, Spikevax, are expected to shrink in the rest of the world, China offers a potential new source of growth.

Moderna shares rose 2.9% at 11:28 a.m. in New York. They’ve lost about a third of their value this year.

The Cambridge, Massachusetts-based company will open its Chinese headquarters in Shanghai’s Minhang District, according to a company spokesperson. Moderna will work with the local government to conduct clinical trials and apply to bring products to the market, as well as to produce and sell them in China.

Any medicines produced under the deal will be only for the Chinese market and won’t be exported, Moderna said. The agreement targets unmet needs for Chinese patients, Moderna said.

The investment comes days ahead of a high-profile visit to China by Treasury Secretary Janet Yellen as the U.S. seeks to mend ties and reinstate lines of communication with officials in Beijing. Tensions between the world’s two biggest economies have escalated over a range of issues, from national security to a heavy reliance on Chinese supply chains.