He invested in a top COVID-19 vaccine—and says development isn’t a U.S.-China race

Chinese biotech firm CanSino Biologics received approval from Beijing this week to inject Chinese troops with its COVID-19 vaccine after seeing positive results in Phase I and Phase II clinical trials.

The trial of the vaccine on Chinese troops is a “huge step forward,” said Gary Rieschel, founding partner of Qiming Ventures Partners, a venture capital firm and CanSino investor. The development cements CanSino’s status as having one of the world’s leading coronavirus vaccine candidates. It was the first globally to begin clinical trials in March.

Even with CanSino’s progress, Rieschel urges against framing the development of a COVID-19 vaccine as a race.

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“I’ve been a little bit frustrated with this idea that there’s a race between China and the U.S. to develop a vaccine,” he said. “The real key thing is you want multiple shots on goal on this because there’s not going to be one vaccine that is going to be ideal for everybody, and there’s risk in literally every single vaccine.”

Also key is developers’ ability to ramp up production so a vaccine’s supply can meet demand as soon as it’s proved safe and effective. Rieschel discussed the vaccine industry as well as CanSino’s early edge with Fortune’s Clay Chandler this week. The conversation below has been edited for length and clarity.

Fortune: CanSino is one of your portfolio firms, and it’s just received clearance from Beijing to proceed to the next step of testing. What’s next for CanSino?

Gary Rieschel: The key with CanSino was that the Chinese government approached them in January and wanted them to help in working on [a COVID-19 vaccine]. There was a precedent for that because they worked with the Chinese government to develop an Ebola vaccine several years ago. They had a very good reputation, very good relationships within the medical infrastructure in China.

I’ve been a little bit frustrated with this idea that there’s a race between China and the U.S. to develop a vaccine. The real key thing is you want multiple shots on goal on this because there’s not going to be one vaccine that is going to be ideal for everybody, and there’s risk in literally every single vaccine. 

I think that what you’re seeing with CanSino is, having done Ebola, having done COVID, they clearly have a platform and an approach that can handle multiple different viral families in terms of looking at vaccines.

Vaccines are seen as less profitable compared to daily drugs. Are we looking at a shift in which vaccines actually become quite profitable on their own now?

I think so. With flu, there is typically a flu vaccine every year. We are in the very early stages with COVID. We need to understand which vaccine will be most effective for which patient population. So I think you are going to have multiple companies in the market for an extended period of time. We may very well wind up needing to have a yearly COVID vaccine because the version [of the virus] that’s coming out that year may be slightly different, just like we have with the flu.

Why is it hard for vaccines to be profitable?

Over the last five or 10 years in the pharmaceutical industry, there has not been a great deal of attention paid to vaccines. Because even with Ebola, the number of cases was so small, it was hard to build a multibillion-dollar business out of that. Vaccines were really kind of a niche.

I think what you are going to see now is a serious rethinking of that. Because all it takes is one example of COVID with millions of cases and potentially hundreds of millions of vaccinations every year.

How far away are we from having a COVID-19 vaccine?

Some companies are ramping up production of vials and syringes. They’re doing all that in advance of knowing whether or not the vaccine is going to work. Private enterprises are taking huge business risk in order to facilitate getting vaccines into the market at scale as soon as possible. There’s an awful lot of private capital that’s being put at risk to achieve that.

Having said that, I don’t think, for this flu season, we will have vaccines in volume. I think the earliest that you’re going to see volumes of vaccines available [is] next spring.

Do you have any thoughts as to how much cross-border sharing of vaccines there will be?

This will depend largely on what the fall looks like with the virus. Let’s say the U.S., Brazil, and India start to trend down by the fall, and what you see are small little spikes, you don’t have this feeling that we need to give a vaccine to the entire population. If you have that situation, then I think you’ll get a relatively broad distribution of the vaccine.

If China starts to see hundreds or thousands of cases…if I am the Chinese, I’d say, “Well, we are going to need a billion vaccine kits here.” The same thing may very well happen in the U.S. 

Will China be capable of manufacturing hundreds of millions of doses of vaccines?

A significant percentage of the vaccine [production] capacity in the world is in China, and a fair amount in India. Those two countries have a pretty large ability to manufacture vaccines at scale. From our perspective, that can ramp up relatively quickly. The interesting thing in China will be, can CanSino find other places that would license and enter into business relationships to manufacture [the vaccines]. If [CanSino] is left to just doing everything itself, that’ll make it a challenge for them to scale [the production] quickly.

One of the things I’ve seen in the U.S. that I am actually very happy about is where Pfizer is willing to let another company use its manufacturing capacity. That type of collaboration needs to be applauded. That’s extremely unusual.

Cooperation among competitive companies in China is sometimes a little more challenging than the U.S. I honestly don’t know how that will play out. I think the [Chinese] government will have a pretty heavy say in wanting to make sure that the Chinese population gets access to as much vaccine as possible. So I think there’ll be pressure on that.

This story is part of Eastworld Spotlight, a series of conversations on matters of business, tech, and finance with executives, experts, entrepreneurs, and investors in Asia. Subscribe to Fortune’s Eastworld newsletter to get them in your inbox.

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