20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

(Mark One)

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from              to              

Commission file number: 001-32371

SINOVAC BIOTECH LTD.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Antigua, West Indies

(Jurisdiction of incorporation or organization)

No. 15 Zhi Tong Road,

Zhongguancun Science & Technology Park,

Changping District, Beijing 102200

People’s Republic of China

(Address of principal executive offices)

Nan Wang

Chief Financial Officer

No. 15 Zhi Tong Road,

Zhongguancun Science & Technology Park,

Changping District, Beijing 102200

People’s Republic of China

Tel: +86-10-5693-1800

Fax: +86-10-5693-1800

E-mail: ir@sinovac.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $0.001 per share Preferred Share Purchase Rights	SVA*	The NASDAQ Global Select Market The NASDAQ Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report

99,294,743 Common Shares and 14,630,813 Series B Convertible Preferred Shares as of December 31, 2020

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes ☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

☐ Yes ☒ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒	Non-accelerated filer ☐
		Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

☐ Yes ☐ No

CONTENTS

INTRODUCTION			1
PART I			2
	ITEM 1.	Identity of Directors, Senior Management and Advisers	2
	ITEM 2.	Offer Statistics and Expected Timetable	2
	ITEM 3.	Key Information	2
	ITEM 4.	Information on the Company	31
	ITEM 4A.	Unresolved Staff Comments	46
	ITEM 5.	Operating and Financial Review and Prospects	46
	ITEM 6.	Directors, Senior Management and Employees	57
	ITEM 7.	Major Shareholders and Related Party Transactions	66
	ITEM 8.	Financial Information	67
	ITEM 9.	The Offer and Listing	71
	ITEM 10.	Additional Information	72
	ITEM 11.	Quantitative and Qualitative Disclosures about Market Risk	84
	ITEM 12.	Description of Securities other than Equity Securities	84
PART II			84
	ITEM 13.	Defaults, Dividend Arrearages and Delinquencies	84
	ITEM 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	85
	ITEM 15.	Controls and Procedures	85
	ITEM 16A.	Audit Committee Financial Expert	86
	ITEM 16B.	Code of Ethics	86
	ITEM 16C.	Principal Accountant Fees and Services	86
	ITEM 16D.	Exemptions from the Listing Standards for Audit Committees	87
	ITEM 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	87
	ITEM 16F.	Change in Registrant’s Certifying Accountant	87
	ITEM 16G.	Corporate Governance	87
	ITEM 16H.	Mine Safety Disclosure	87
PART III			87
	ITEM 17.	Financial Statements	87
	ITEM 18.	Financial Statements	87
	ITEM 19.	Exhibits	87

INTRODUCTION

In this annual report on Form 20-F, unless otherwise indicated or unless the context otherwise requires,

• “Sinovac,” “Sinovac Biotech,” “Company,” “we,” “us,” “our company,” and “our” refer to Sinovac Biotech Ltd., its predecessor entities and its consolidated subsidiaries

• “Sinovac Antigua” refers to Sinovac Biotech Ltd.;

• “China,” “Chinese” or the “PRC” refers to the People’s Republic of China, excluding, for the purposes of this annual report on Form 20-F only, Taiwan and the special administrative regions of Hong Kong and Macau;

• “RMB” or “renminbi” refers to the legal currency of China; and “$” or “U.S. dollars” refers to the legal currency of the United States;

• “shares” or “common shares” refers to our common shares, par value $0.001 per share; and

• “U.S. GAAP” refers to generally accepted accounting principles in the United States.

Discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

This annual report contains translations of certain renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. All translations from renminbi to U.S. dollars were made at the noon buying rate in The City of New York for cable transfers in renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York, or the noon buying rate. Unless otherwise stated, the translation of renminbi into U.S. dollars has been made at the noon buying rate in effect on December 31, 2020, which was RMB6.5250 to $1.00. We make no representation that the renminbi or U.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars or renminbi, as the case may be, at any particular rate or at all. On April 16, 2021, the noon buying rate was RMB6.5203 to $1.00.

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PART I

ITEM 1. Identity of Directors, Senior Management and Advisers

Not applicable.

ITEM 2. Offer Statistics and Expected Timetable

Not applicable.

ITEM 3. Key Information

A. Selected Financial Data

The following selected consolidated statements of comprehensive income (loss) data for the fiscal years ended December 31, 2020, 2019 and 2018, and consolidated balance sheet data as of December 31, 2020 and 2019 have been derived from our audited consolidated financial statements that are included in this annual report beginning on page F-1. The following selected consolidated statements of comprehensive income (loss) data for the fiscal years ended December 31, 2017 and 2016 and consolidated balance sheet data as of December 31, 2018, 2017 and 2016 have been derived from our audited consolidated financial statements that are not included in this annual report.

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Our historical results do not necessarily indicate results expected for any future periods.

Consolidated statements of	Year ended December 31,
Comprehensive income (loss) data	2020			2019			2018			2017			2016
				(in thousands except share and per share data)
Sales	$	510,624		$	246,053		$	229,650		$	174,346		$	72,431
Cost of sales(1)		67,180			32,469			24,723			20,240			22,393
Gross profit		443,444			213,584			204,927			154,106			50,038
Operating expenses:
Selling, general and administrative expenses(1)		176,534			121,468			137,003			87,365			41,980
Provision (recovery) for doubtful accounts		2,640			(306	)		820			934			1,412
Research and development expenses(1)		48,760			24,254			21,910			20,489			12,648
Loss on disposal and impairment of property, plant and    equipment		163			294			75			42			478
Government grants recognized in income		(297	)		(688	)		(197	)		(141	)		(6,984	)
Total operating expenses		227,800			145,022			159,611			108,689			49,534
Operating income		215,644			68,562			45,316			45,417			504
Interest and financing expenses		(1,453	)		(650	)		(1,070	)		(1,569	)		(1,729	)
Interest income		1,930			1,996			2,016			1,183			731
Other income		496			912			321			13			100
Income (loss) before income taxes and non-controlling interests		216,617			70,820			46,583			45,044			(394	)
Income tax expenses		(31,438	)		(5,605	)		(10,472	)		(8,339	)		(2,664	)
Income (loss) from continuing operations		185,179			65,215			36,111			36,705			(3,058	)
Net income from discontinued operations, net of tax of nil		—			—			—			—			2,338
Net income (loss)		185,179			65,215			36,111			36,705			(720	)
Less: (income) loss attributable to non-controlling interests		(74,810	)		(20,286	)		(14,329	)		(10,898	)		124
Net income (loss) attributable to the shareholders of Sinovac		110,369			44,929			21,782			25,807			(596	)
Preferred stock dividends		(6,015	)		(5,128	)		—			—			—
Net income (loss) attributable to common shareholders of Sinovac		104,354			39,801			21,782			25,807			(596	)
Comprehensive income (loss)		217,507			62,388			25,115			44,803			(9,563	)
Less: comprehensive (income) loss attributable to non-    controlling interests		(82,892	)		(19,681	)		(12,507	)		(12,089	)		953
Comprehensive income (loss) attributable to shareholders    of Sinovac		134,615			42,707			12,608			32,714			(8,610	)
Weighted average number of common shares outstanding
- basic		98,897,345			94,876,946			64,727,146			57,033,816			56,949,083
- diluted		113,662,362			109,691,959			64,977,554			57,101,191			56,949,083
Earnings (loss) per share
Basic
Continuing operations		1.06			0.42			0.34			0.45			(0.05	)
Discontinued operations		—			—			—			—			0.04
Basic net income (loss) per share		1.06			0.42			0.34			0.45			(0.01	)
Diluted
Continuing operations		0.97			0.41			0.34			0.45			(0.05	)
Discontinued operations		—			—			—			—			0.04
Diluted net income (loss) per share		0.97			0.41			0.34			0.45			(0.01	)
Weighted average number of common shares outstanding
- basic		98,897,345			94,876,946			64,727,146			57,033,816			56,949,083
- diluted		113,662,362			109,691,959			64,977,554			57,101,191			56,949,083
Supplemental information(2)
Non-GAAP adjusted EBITDA		229,884			76,382			54,757			51,277			8,223
Non-GAAP net income from continuing operations		197,080			68,524			39,857			36,361			293
Non-GAAP Diluted EPS from continuing operations	$	1.03		$	0.44		$	0.38		$	0.44		$	0.01

(1) Includes share-based compensation of $10.2 million, $3.0 million, $4.3 million, $1.0 million and $2.4 million in 2020, 2019, 2018, 2017 and 2016, respectively.

(2) See “Non-GAAP Measures” below.

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Non-GAAP Measures

We use Non-GAAP adjusted EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations, in evaluating our operating results and for financial and operational decision-making purposes.

We believe that Non-GAAP adjusted EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations help identify underlying trends in our business that could otherwise be distorted by the effect of certain income or expenses that we include in income from operations from continuing operations, net income from continuing operations and diluted EPS from continuing operations. We believe that Non-GAAP adjusted EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations provide useful information about our core operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by management in our financial and operational decision-making.

Non-GAAP adjusted EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations should not be considered in isolation or construed as an alternative to income from operations from continuing operations, net income from continuing operations, diluted EPS from continuing operations, or any other measure of performance or as an indicator of our operating performance. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

Non-GAAP adjusted EBITDA represents income (loss) from continuing operations, excludes interest and financing expenses, interest income, net other income (expenses) and income tax benefit (expenses), and certain non-cash expenses, consisting of share-based compensation expenses, amortization and depreciation that we do not believe are reflective of our core operating performance during the periods presented.

Non-GAAP net income from continuing operations represents net income (loss) from continuing operations before share-based compensation expenses, and foreign exchange gain or loss.

Non-GAAP diluted EPS from continuing operations represents non-GAAP net income attributable to ordinary shareholders from continuing operations divided by the weighted average number of shares outstanding during the periods on a diluted basis, including accounting for the effect of the assumed conversion of options.

The table below sets forth a reconciliation of our income (loss) from continuing operations to Non-GAAP adjusted EBITDA for the periods indicated:

	Year ended December 31,
	2020			2019			2018			2017			2016
	(in thousands)
Income (loss) from continuing operations	$	185,179		$	65,215		$	36,111		$	36,705		$	(3,058	)
Adjustments
Share-based compensation		10,203			3,003			4,305			979			2,409
Depreciation and amortization		4,037			4,817			5,136			4,881			5,310
Interest and financing expenses, net of interest income		(477	)		(1,346	)		(946	)		386			998
Net other income		(496	)		(912	)		(321	)		(13	)		(100	)
Income tax expense		31,438			5,605			10,472			8,339			2,664
Non-GAAP adjusted EBITDA	$	229,884		$	76,382		$	54,757		$	51,277		$	8,223

The following table sets forth a reconciliation of our net income from continuing operations to non-GAAP net income from continuing operations for the periods indicated:

	Year ended December 31,
	2020		2019		2018			2017			2016
	(in thousands)
Net Income (loss) from continuing operations	$	185,179	$	65,215	$	36,111		$	36,705		$	(3,058	)
Add: Foreign exchange (gain) loss		1,698		306		(559	)		(1,323	)		942
Add: Share-based compensation		10,203		3,003		4,305			979			2,409
Non-GAAP net income from continuing operations	$	197,080	$	68,524	$	39,857		$	36,361		$	293

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The following table sets forth a reconciliation of our diluted EPS from continuing operations to non-GAAP diluted EPS from continuing operations for the periods indicated:

	Year ended December 31,
	2020		2019		2018		2017			2016
	(in thousands except share and per share data)
Net income (loss) from continuing operations    attributable to common shareholders of Sinovac	$	104,354	$	39,801	$	21,782	$	25,807		$	(2,934	)
Add: Preferred stock dividends		6,015		5,128		—		—			—
Net Income (loss) from continuing operations    attributable to common shareholders of Sinovac    for computing diluted earnings per share		110,369		44,929		21,782		25,807			(2,934	)
Add: Non-GAAP adjustments to net income from    continuing operations(1)		7,365		2,109		2,764		(344	)		3,351
Non-GAAP net income attributable to common    shareholders of Sinovac from continuing operations    for computing non-GAAP diluted earnings per share		117,734		47,038		24,546		25,463			417
Weighted average number of shares on a diluted basis		113,662,362		109,691,959		64,977,554		57,101,191			56,949,083
Diluted earnings (loss) per share from continuing    operations(2)		0.97		0.41		0.34		0.45			(0.05	)
Add: Non-GAAP adjustments to net income per share    from continuing operations(3)		0.06		0.02		0.04		(0.01	)		0.06
Non-GAAP diluted earnings per share from continuing    operations(4)	$	1.03	$	0.43	$	0.38	$	0.44		$	0.01

(1) See the table above about the reconciliation of net income from continuing operations to non-GAAP net income from continuing operations for more information on these non-GAAP adjustments.

(2) Diluted EPS from continuing operations is derived from net income attributable to ordinary shareholders from continuing operations for computing diluted EPS divided by weighted average number of shares on a diluted basis.

(3) Non-GAAP adjustments to net income per share from continuing operations is derived from non-GAAP adjustments to net income from continuing operations divided by weighted average number of shares on a diluted basis.

(4) Non-GAAP diluted EPS from continuing operations is derived from non-GAAP net income attributable to ordinary shareholders from continuing operations for computing non-GAAP diluted EPS from continuing operations divided by weighted average number of shares on a diluted basis.

	As of December 31,
Balance sheet data	2020		2019		2018		2017		2016
	(in thousands)
Cash and cash equivalents	$	1,041,008	$	152,718	$	158,170	$	114,415	$	62,434
Total assets		1,901,326		452,299		369,780		299,219		211,355
Short-term bank loans and current portion of long-term debt		32,941		5,934		3,321		18,152		31,279
Total current liabilities		679,610		87,199		58,205		92,543		66,264
Long term debt (include due to related party)		8,285		1,436		10,595		21,919		9,448
Net assets		1,120,125		352,195		291,928		177,140		129,666
Non-controlling interests		373,653		58,176		38,495		25,988		13,899
Common stock		99		99		71		57		57
Total shareholders’ equity	$	746,472	$	294,019	$	253,433	$	151,152	$	115,767

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

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D. Risk Factors

Risks Related to Our Company

Our business growth relies on our ability to react to infectious disease threats and to continually introduce new vaccine products into the commercial market. Our failure to effectively develop and commercialize new products could materially and adversely affect our business, financial condition, results of operations and prospects.

The biopharmaceutical market in general and the vaccine product market in particular are developing rapidly as a result of ongoing infectious disease threats and new trends in the related research and technology developments. Consequently, our success depends on our ability to react to threats of disease and technology development trends and to identify, develop and commercialize in a timely and cost-effective manner effective vaccine products that meet evolving market needs.

Whether we are successful in developing and commercializing new products is determined by, among other things, our ability to:

• accurately assess disease and technology trends and market needs;

• maintain strong research and development capabilities;

• optimize our manufacturing and procurement processes to predict and control costs;

• manufacture and deliver products with good quality in a timely manner and in sufficient quantities;

• increase customer awareness and acceptance of our products;

• minimize the time and cost required to obtain required regulatory clearances and approvals;

• anticipate and compete effectively with other vaccine product developers, manufacturers and marketers;

• price our products competitively;

• comply with the guidelines of Good Manufacturing Practice (“GMP”) and other related regulations; and

• thoroughly understand the frequently developing regulatory guidelines and regulations on vaccine products and comply with the regulations and guidelines accordingly.

Although we are profitable in 2018, 2019 and 2020, we incurred a loss in past years, and may incur losses again in the future.

Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We recorded a profit in 2018, 2019 and 2020. However, we incurred a loss in the past years, caused primarily by research and development expenses. None of the research and development expenses incurred were capitalized in our financial statements. We intend to continue to invest in research and development to sustain our long-term growth. We expect our research and development expenses to fluctuate depending on the progress we make on each project, with relatively more spending on clinical studies than preclinical studies. We expect that our spending on research and development will have a negative impact on our future net earnings. As a result, we may incur losses in the future, which will have an adverse impact on our working capital, total assets, shareholders’ equity and cash flow.

As required by the PRC laws, we sell vaccines in China through Centers for Disease Control (“CDCs”) which are PRC government agencies. This exposes us to risks relating to doing business with the government.

As required by the PRC laws, we sell our vaccines to CDCs, which exposes us to various risks relating to doing business with the government. For example, demand and ability to pay for our products may be affected by government budgetary cycles, shifting availability of public funds and changes in policy. Funding reductions, delays in payment or unilateral demands for changes to the terms of our contracts by our government customers could adversely impact our results of operations and financial condition, exacerbate the existing seasonality of our revenues and make it difficult for us to allocate resources or anticipate demand for our products. More importantly, we have little or no control over government procurement decisions, and government agencies that contract to purchase our products may reduce or cancel orders, or demand price adjustments or other changes to their contracts with us without our consent. Changes in the personnel of the PRC government agencies that purchase our products may result in changes or delays to or cancellations of purchase commitments due to, among others, differing policy and budgetary agendas of the personnel involved. Similar changes could occur if CDC or other relevant government agencies were to be consolidated with another ministry. In addition, if our vaccines are to be sold in other countries or regions other than China, regulatory approvals from the relevant governmental authorities of the target markets are to be obtained. Any of the above mentioned actions taken by government agencies could have a material adverse effect on our results of operations and expected earnings, or result in our failure to meet, or having to adjust downwards, our sales and gross margin guidance or estimates, which could adversely affect our stock price and result in substantial losses. In addition, many of

6

the remedies that are available to us when dealing with private parties, such as making claims for breach of contract or taking other legal actions, may not be available or practicable in our dealings with government agencies.

We currently have limited revenue sources. A reduction in revenues from sales of hepatitis A vaccine, hepatitis A&B vaccine, influenza vaccines, enterovirus type 71 (“EV71”) vaccine, varicella vaccine, mumps vaccines and COVID-19 vaccine would cause our revenues to decline and could materially harm our business.

We generate all of our revenues from sales of our vaccine products. We derive a substantial percentage of our revenues from a small number of vaccine products, including hepatitis A vaccine, Healive, hepatitis A&B vaccine, Bilive, influenza vaccines, EV71 vaccine, Inlive, varicella vaccine, mumps vaccine and COVID-19 vaccine, CoronaVac. As a result of this relative lack of product diversification, an investment in our company would be riskier than investments in companies that offer a wide variety of products or services.

We expect our key products, which will likely shift over time, to account for a significant portion of our net revenues for the foreseeable future. As a result, continued market acceptance and popularity of these products are critical to our success and a reduction in demand due to, among other factors, the introduction of competing products by our competitors, the entry of new competitors, or end-users’ dissatisfaction with the quality of our products, could materially and adversely affect our financial condition and results of operations.

We could be subject to costly and time-consuming product liability actions and, because our insurance coverage is limited, our exposure to such claims could cause significant financial burden.

Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing and marketing of biopharmaceutical products. We manufacture vaccines that are injected into healthy people to protect against infectious illnesses. If our products do not function as anticipated, whether as a result of flaws in our design, unanticipated health consequences or side effects, misuse or mishandling by third parties, or faulty or contaminated supplies, they could harm the vaccines and, as a result, subject us to product liability lawsuits. Claims against us also could be based on failure to immunize as anticipated. Any product liability claim brought against us, with or without merit, could have a material adverse effect on us. Meritless and unsuccessful product liability claims can be time-consuming and expensive to defend and could result in the diversion of management’s attention from managing our core business or result in associated negative publicity.

Successful assertion of product liability claims against us could require us to pay significant monetary damages. Although we currently carry worldwide product liability insurance for Healive, Bilive, Anflu, Panflu and Inlive, we cannot assure that such coverage will be sufficient to cover any liabilities resulting from successful product liability claims. In such a case, we may be required to make substantial payments to cover any losses, damages or liabilities arising from product liability claims. For any amounts covered by insurance, foreign exchange or other regulatory restrictions may prevent the use of insurance proceeds to meet the liabilities. In addition, we do not have or plan to procure clinical trial liability insurance for our clinical trials to mitigate any unsuccessful clinical trial expenses or product liability claims arising therefrom. Any of these factors could have a material adverse effect on our business, financial condition and results of operations.

We face risks related to health epidemics and other widespread outbreaks of contagious disease, which could disrupt our operations and impact our operating results.

Significant outbreaks of contagious diseases, and other adverse public health developments, could have a material impact on our business operations and operating results. In December 2019, a strain of novel coronavirus, COVID-19, causing respiratory illness emerged in the city of Wuhan in the Hubei province of China and has subsequently spread throughout the world. The outbreak of COVID-19 was recognized as a pandemic by the World Health Organization on March 11, 2020. In response to the outbreak, governmental authorities in various jurisdictions imposed lockdowns and other restrictions to contain the virus, and various businesses suspended or reduced operations. The PRC government took certain emergency measures to combat the spread of the virus, including implementation of travel bans and closure of factories and businesses throughout the whole country, including Beijing where our research and development functions and main production lines are located. We continue to monitor the spread of COVID-19 in China and globally and have put in place and will continue to put in place measures as appropriate and necessary for our business. Any prolonged deviations from normal daily operations could negatively impact our business. In the first half of 2020, our domestic sales ceased due to suspension of vaccination by the CDCs in China, and our export is disrupted due to cancellations of cargo flights. We have been closely monitoring the changes and continually assessing the potential impact on our business. Any prolonged disruption of our clinical trials, suppliers or contract manufacturers could delay regulatory approvals or the commercialization of any current or future products.

We could face risks and uncertainties related to our efforts to develop a vaccine to help prevent COVID-19 and potential treatments for COVID-19, as well as challenges related to their manufacturing, supply and distribution.

We face uncertainties related to our efforts to develop a vaccine to prevent the COVID-19, including uncertainties and risks that our existing and future vaccines may not be successful, commercially viable or receive final approval from regulatory authorities. The pre-clinical, clinical data or safety data and further analysis of the existing pre-clinical, clinical or safety of our existing COVID-19 vaccine or future vaccines or treatments may be unfavorable, or we may not be able to produce comparable clinical or other results, including but not limited to the rate of vaccine effectiveness and safety and tolerability profile observed to date or in larger, more diverse populations upon commercialization. Our COVID-19 vaccine, CoronaVac, may not be able to prevent COVID-19 caused by emerging virus variants. The widespread use of the vaccine may lead to new information about efficacy, safety or other developments, including the risk of additional adverse reactions or side effects and regulatory authorities may not be satisfied with the results from our and any future pre-clinical and clinical studies and may not approve our existing or

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future vaccines or treatments, or may withdraw or terminate such approvals granted previously to us. Disruptions in the relationships between us and our collaboration partners, research and development institutes, clinical trial site, countries where the trials are conducted or third-party suppliers, availability of raw materials to manufacture any such products, our ability to scale up or maintain the manufacturing capacity on a timely basis or have access to logistics or supply channels commensurate within global demand for any potential approved vaccine or product candidate, could delay the commercialization of our existing COVID-19 vaccine or any future vaccines or products or otherwise have a significant impact on our business, financial condition and results of operations. We cannot guarantee you that we can produce superior or more competitive products than our other competitors, or whether the demand for our COVID-19 vaccine may still exist. Any of these factors could have a material adverse effect on our business, financial condition and results of operations.

Our financial prospects depend on the success of our clinical-stage and pre-clinical stage product pipeline.

We have invested significant time and resources on the development of our existing vaccine candidates, and we expect to continue to incur substantial and increasing expenditures for the development and commercialization of our vaccine candidates. Our ability to achieve revenue and profitability is dependent on our ability to complete the clinical development of our vaccine candidates, obtain necessary regulatory approvals, and have our vaccines manufactured and successfully marketed. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of pre-clinical studies and early clinical trials of our vaccine candidates may not be predictive of the results of later-stage clinical trials, and initial or interim results of a trial may not be predictive of the final results. If our vaccine candidates fail to achieve their expected success in a timely manner or at all, we could experience significant delays in our ability to obtain approval for and/or to successfully commercialize our vaccine candidates. We would have expended a significant amount of capital to progress the relevant vaccine candidates to that stage, and would not realize any revenue on such vaccine candidate if it then ultimately failed to receive regulatory approval due to poor clinical trial results. It would materially harm our business and we may not be able to generate sufficient revenues and cash flows to continue our operations.

We have devoted significant resources to research and develop various vaccines to address the pandemic threat of infectious diseases, including COVID-19, SARS, avian flu and swine flu, and will continue to devote resources to the development of vaccines to address any new needs.

However, the threat of a pandemic outbreak may subside before we realize any return on our investment in our research and development. For example, although we believed we were the first company to complete a phase I clinical trial of an inactivated SARS vaccine in December 2004, we did not proceed with the phase II and phase III trials as the SARS epidemic subsequently subsided. Other organizations may obtain licenses for their own pandemic vaccines, or government health organizations may acquire adequate stockpiles of pandemic vaccine or adopt other technologies or strategies to prevent or limit outbreaks before our pandemic vaccines achieve significant sales. We may not achieve a return on our investment before the threat of a pandemic outbreak subsides or a competing product is adopted. We have completed phase III trials of COVID-19 vaccine in Brazil, Turkey, Indonesia and Chile and have received a conditional marketing authorization for CoronaVac from the NMPA. We cannot assure comparable clinical or other results, including the rate of vaccine effectiveness and safety and tolerability profile or in larger, more diverse populations upon commercialization. Major international and Chinese vaccine companies, universities and other research institutions are also pursuing the development of the COVID 19- vaccines. They may succeed in developing COVID-19 vaccine and obtaining regulatory approvals before us or gain better acceptance for the same target markets as ours, which will undermine our competitive position.

Moreover, because we have limited financial and managerial resources, we focus our product pipeline on research programs and vaccine candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other vaccine candidates that later prove to have greater commercial potential.

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Failure to comply with the U.S. Foreign Corrupt Practices Act (“FCPA”) and other applicable anti-corruption laws could subject us to penalties and other adverse consequences and corrupt practices by our competitors may place us at a competitive disadvantage.

Our executive officers, employees and other agents may violate applicable laws in connection with the marketing or sale of our products, including FCPA and applicable anti-corruption laws in China and other jurisdictions in which our products are sold or registered for sale. FCPA generally prohibits United States issuers from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business and requires issuers to maintain reasonable internal controls. The PRC also strictly prohibits bribery of government officials. We have adopted a policy regarding compliance with FCPA and other applicable anti-corruption laws to prevent, detect and correct such corrupt practice. However, corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time to time in the PRC and some of the countries in which we seek to do business. While we have sought to enhance measures and controls to ensure compliance with FCPA and other applicable anti-corruption laws by individuals involved with our company, our existing compliance policies and procedures may be insufficient or may fail to prevent our employees or other agents from engaging in inappropriate conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations. In addition, our brand and reputation, our sales activities or the price of our common shares could be adversely affected if we become the target of any negative publicity as a result of actions taken by our employees or other agents. As discussed under “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal and Administrative Proceedings,” we have conducted an internal investigation regarding FCPA related matters and have informed NASDAQ, the SEC and the U.S. Department of Justice (the “DOJ”) regarding these matters. On August 14, 2018, the SEC notified us that the SEC had concluded its investigation and would not recommend an enforcement action against us at this time. On September 12, 2018, the DOJ notified us that it had closed its investigation, with no charges. With the closure of the DOJ’s investigation, we are not aware of any pending U.S. government investigations on us related to these matters. 

In addition, there may be corrupt practices in the healthcare industry in China and other countries in which we conduct business. Our competitors may engage in corrupt practices in order to influence decision-makers in violation of the anti-corruption laws of China and FCPA. As competition persists and intensifies in our industry, we may lose potential clients, client referrals and other opportunities to the extent that our competitors engage in such practices or other illegal activities.

Failure to achieve and maintain effective internal controls could have a material adverse effect on our business, results of operations and the trading price of our common shares.

We are subject to the reporting obligations under U.S. securities laws. Section 404 of the Sarbanes-Oxley Act of 2002 and related rules require public companies to include a report of management on their internal control over financial reporting in their annual reports. This report must contain an assessment by management of the effectiveness of a public company’s internal control over financial reporting. In addition, an independent registered public accounting firm for a public company must attest to and report on the effectiveness of our internal control over financial reporting.

Our management has concluded that our internal control over financial reporting is effective as of December 31, 2020. See “Item 15. Controls and Procedures.” Our independent registered public accounting firm has issued an attestation report on our internal control over financial report, which concludes that our internal control over financial reporting is effective in all material aspects. However, we cannot assure that any material weakness or deficiency in our internal control over financial reporting will not be identified in the future. We may not always be able to maintain an effective internal control over financial reporting. If we fail to maintain effective internal control over financial reporting in the future, we and our independent registered public accounting firm may not be able to conclude that we have effective internal control over financial reporting at a reasonable assurance level. This could in turn result in the loss of investor confidence in the reliability of our financial statements and negatively impact the trading price of our common shares, inhibiting our ability to raise sufficient capital on favorable terms. Furthermore, we have incurred and anticipate that we will continue to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.

If we are unable to successfully compete in the highly competitive biopharmaceutical industry, our business could be harmed.

We operate in a highly competitive environment and we expect the competition to increase in the future. Our competitors include large pharmaceutical and biotechnology companies, both domestic and international. Many of these competitors have greater resources than we do. New competitors may also enter into the markets in which we compete. Accordingly, even if we are successful in launching a product, we may not be able to outperform a competing product for any number of reasons, including the possibility that the competitor may:

• have launched its competing product first or the competing product may have, or be perceived as having, better efficacy, stronger brand recognition, or other advantages;

• have better access to certain raw materials;

• have more efficient manufacturing processes and greater manufacturing capacity;

• have greater marketing capabilities;

• have greater pricing flexibility;

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• have more extensive research and development and technical capabilities;

• have proprietary patent portfolios or other intellectual property rights that may present obstacles to our business;

• have greater knowledge of local market conditions where we seek to increase our international sales;

• have capability to maintain a competitive management team; or

• have investment capability to acquire businesses when the opportunity is not available to us.

The technologies applied by our competitors and us are rapidly evolving and new developments frequently result in price competition and product obsolescence. In addition, we may be impacted by competition from generic forms of our products, substitute products or imports of products from lower-priced markets. For a detailed description of our competitors, please see “Item 4. Information on the Company — B. Business Overview — Competition.”

We may not be able to maintain market share in China with our commercialized vaccines, which could adversely affect our ability to increase our revenues.

We used to estimate our market share in China based on the batch release number published by the National Institutes for Food and Drug Control (“NIFDC”) which represents the market share estimated based on published supply quantity, but not the actual number of sales in the market. We supplied 10.9%, 20.6% and 41.8% of the EV71 vaccine market in China in 2020, 2019 and 2018, respectively. We supplied 30.4%, 26.7% and 24.3% of the total hepatitis A vaccine market in China, or 81.8%, 71.9% and 67.8% of the inactivated hepatitis A vaccine market in China in 2020, 2019 and 2018, respectively. We supplied 18.6%, 14.8% and nil of the seasonal flu vaccine market in China in 2020, 2019 and 2018, respectively. We supplied 82%, 70.6% and 21.2% of the mumps vaccine market in China in 2020, 2019 and 2018, respectively. We also launched varicella vaccine in 2020 and supplied 4.1% of varicella in 2020. Our revenue could be adversely impacted if we are not able to maintain our market share.

We may not be able to maintain market share in the government-funded hepatitis A vaccine market, or other government-funded vaccine markets, which could adversely affect our revenues, and if we do maintain or expand market share in these markets, we may need to sell our vaccines at a lower price, which could adversely affect our gross margin.

Hepatitis A vaccines have been included in the Expanded Program on Immunization (“EPI”) in China since 2007. The PRC government purchases hepatitis A vaccines for each 18-month-old child. Although the hepatitis A vaccines have been included in the EPI, most provincial and municipal governments are not able to afford the two shots of inactivated hepatitis A vaccines due to insufficient financial support, which constrains the purchase of inactivated hepatitis A vaccines in government-funded markets. Most provincial and municipal governments prefer to purchase lower-priced live attenuated hepatitis A vaccines; however, a few affluent provincial and municipal governments, such as Beijing, Tianjin, Shanghai and Jiangsu province, have started to purchase inactivated hepatitis A vaccines. We are supplying vaccines in these government-funded markets at a lower price than we do in the private market, which could adversely affect our gross margin. Our revenue could also be adversely impacted if we are not able to maintain our market share of the government-funded markets in these cities and provinces. As we are making efforts to breakthrough into additional provincial and municipal public markets, we may be forced to lower our prices to win tenders, which will adversely affect our gross margin.

Since 2007, we have been selected as one of the suppliers by Beijing CDC to supply seasonal influenza vaccines to Beijing citizens. We cannot assure that we will continue to obtain orders in the future and maintain our market share. If the supply volume decreases, it would negatively impact our sales revenue in the future.

Since 2008, we have received three stockpiling orders for our H5N1 vaccine from China’s central government every two years in an amount of three million doses per order, and four stockpiling orders from Beijing government in an amount of 20,000 doses per order. The latest batch of stockpiled H5N1 vaccines for the central government expired in the first half of 2016 and we recognized the revenue upon the government inspection. The most recent batch ordered by Beijing government expired in 2020. We cannot assure that we will receive additional stockpiling orders from governments in the future.

If CDCs, hospitals, physicians and patients do not accept our products, we may be unable to generate significant revenue.

Even if we have obtained regulatory approvals for commercialization of our vaccines in China or in other countries or regions, they still may not gain market acceptance among CDCs, regulatory agencies, hospitals, physicians, patients and the medical community, which would limit our ability to generate revenue and adversely affect our results of operations. CDCs, regulatory agencies, hospitals and physicians may not recommend products developed by us or our collaborators until clinical data or other factors demonstrate superior or comparable safety and efficacy of our products as compared to other available treatments. Even if the clinical safety and efficacy of our products are established, CDCs, regulatory agencies, hospitals and physicians may elect not to recommend these products for a variety of reasons. There are other vaccines and treatment options for the conditions that many of our products and product candidates target, such as EV71, hepatitis A and B and influenza. In order to successfully launch a product, we must educate physicians and patients about the relative benefits of our products. If our products are not perceived as easy and convenient to use, perceived to present a greater risk of side effects or are not perceived to be as effective as other

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available vaccines, CDCs, hospitals, physicians and patients might not adopt our products. A failure of our products to gain commercial acceptance would have a material adverse effect on our business, financial condition and results of operations.

Our business could be negatively affected as a result of actions of shareholders or others.

On March 5, 2018, we announced the re-election of the members of our board of directors—Mr. Weidong Yin, Mr. Yuk Lam Lo, Mr. Simon Anderson, Mr. Kenneth Lee, and Mr. Meng Mei—at our annual general meeting of shareholders held on February 6, 2018 (the “2017 AGM”). We also announced that we had determined, after consultation with our Antigua legal counsel, that an alternative, pre-printed ballot not made available to all our shareholders and purportedly submitted at the 2017 AGM by certain of our shareholders, including 1Globe Capital LLC (“1Globe”), The Chiang Li Family, OrbiMed Advisors LLC and OrbiMed Capital LLC (together “OrbiMed”), and certain additional shareholders (collectively, the “Shareholder Group”) was invalid. We refer to this ballot as the “Non-Public Submission.” On March 13, 2018, 1Globe filed a complaint against Sinovac Antigua in the Eastern Caribbean Supreme Court in the High Court of Justice, Antigua and Barbuda (the “Antigua Court”). The complaint sought a declaration that the five persons purportedly proposed by the Shareholder Group on the Non-Public Submission at the 2017 AGM were elected as directors of Sinovac Antigua at that meeting, an order that those directors be installed as Sinovac Antigua’s board of directors, and a declaration that any actions taken on behalf of Sinovac Antigua at the direction of the board of directors since the 2017 AGM are null and void. Following a trial in early December 2018, the Antigua Court issued a judgment on December 19, 2018 that dismissed 1Globe’s claim and declared that Sinovac Antigua’s shareholder rights agreement (the “Rights Agreement”) was validly adopted as a matter of Antigua law. 1Globe filed notice to appeal the Antigua Court’s judgment on January 29, 2019. 1Globe’s appeal of the Antigua Court’s Judgment was heard on September 18, 2019, and the appeal decision is pending as of the date of this annual report.

On October 8, 2018, Sinovac became aware that unauthorized documents in respect of Sinovac Biotech (Hong Kong) Ltd. (“Sinovac Hong Kong”) had been filed with the Hong Kong Companies Registry to change the directors of Sinovac Hong Kong from Mr. Weidong Yin and Ms. Nan Wang to Mr. Jianzeng Cao and Mr. Pengfei Li. Mr. Yin and Ms. Wang commenced legal proceedings before the High Court of the Hong Kong Special Administrative Region (“Hong Kong High Court”) (“HCMP 1731/2018”). In a hearing before the Hong Kong High Court on October 19, 2018, the judge granted an interlocutory injunction restraining Mr. Li and Mr. Cao from purporting to act or holding themselves out as directors of Sinovac Hong Kong or its subsidiaries, purporting to take any actions as directors of Sinovac Antigua or its subsidiaries, and relying on or using the forged documents in any way whatsoever. On November 28, 2018 at a further hearing in the Hong Kong High Court, the Hong Kong High Court made orders (“November 28 Order”) and held that it is beyond dispute that the documents in respect of Sinovac Hong Kong had been forged and unlawfully filed with the Hong Kong Companies Registry, based on the evidence filed by Mr. Yin and Ms. Wang as Plaintiff, and Mr. Cao and Mr. Li as the Defendants. The Hong Kong High Court therefore declared that Mr. Yin and Ms. Wang were and still are the lawful directors of Sinovac Hong Kong (“Lawful Directors”), and Mr. Li and Mr. Cao were not and are not the lawful directors of Sinovac Hong Kong. The Hong Kong High Court also granted a permanent injunction restraining Mr. Li and Mr. Cao from purporting to act or holding themselves out as directors of Sinovac Hong Kong or its subsidiaries (including but not limited to Sinovac Biotech Co., Ltd. (“Sinovac Beijing”), purporting to take any actions as directors of Sinovac Hong Kong or its subsidiaries, and relying on or using the forged documents in any way whatsoever. Furthermore, the Hong Kong High Court also ordered the Companies Registry to remove the forged documents in respect of Sinovac Hong Kong that had been unlawfully filed. The November 28 Order is effective and enforceable. The Companies Registry has removed the forged documents following the November 28 Order. On November 28, 2018, Mr. Cao and Mr. Li filed a Notice of Appeal with the Hong Kong Court of Appeal, indicating their intention to appeal the orders made by the Hong Kong High Court. The appeal does not operate as a stay on the November 28 Order except to the extent that the Court below, or the Court of Appeal otherwise directs: O.59, r. 13 (1)(a) of the Rules of the High Court. As of the date of this annual report, neither the Court of First Instance nor the Court of Appeal directed that the execution of the November 28 Order should be stayed. So far, Mr. Cao and Mr. Li have taken no further steps in respect of the appeal after the Notice of Appeal was filed on November 28, 2018. No hearing date has yet been fixed to hear the appeal.

On October 8, 2018, Sinovac also became aware that unauthorized documents in respect of Sinovac Beijing had been filed with the Industry and Commerce Bureau of Haidian District of Beijing (“Haidian AIC”) to change the directors of Sinovac Beijing from Mr. Yin, Ms. Wang and Mr. Dawei Mao to Mr. Cao, Mr. Li and Ms. Xiaomin Yang. Mr. Yin and Ms. Wang filed objection to such unlawful change to the Haidian AIC. On March 19, 2020, Haidian AIC issued an official decision (“AIC Decision”) declaring that (i) the unauthorized documents filed are forged and fake documents; (ii) the filing of change of directors with the forged documents is null and void; (iii) the unlawful filing to change the directors will be removed and the registration of Mr. Yin, Ms. Wang and Mr. Mao as directors of Sinovac Beijing will be restored. The parties of material interest concerned in the AIC Decision may raise objection or file a lawsuit within 60 days. No one has filed the objection or lawsuit against the AIC Decision within 60 days thereof.

On May 31, 2019, Heng Ren Investments LP (“Heng Ren”) filed suit against Sinovac and Weidong Yin for alleged breach of fiduciary duties and wrongful equity dilution, in Massachusetts state court. Sinovac removed the matter from state court to the United States District Court for the District of Massachusetts. Heng Ren alleged that Mr. Yin breached fiduciary duties owed to minority shareholders, that Sinovac aided and abetted breaches of fiduciary duties, and that both Sinovac and Mr. Yin engaged in wrongful equity dilution. Heng Ren requested damages, attorneys’ fees, and prejudgment interest. On September 14, 2020, Sinovac filed a motion to dismiss Heng Ren’s claims and the court’s decision on that motion is pending.

We cannot predict the outcome of our ongoing litigation, including whether we will prevail. We also cannot predict how the litigation may affect our stock price, which could be volatile during the pendency of each suit and following its conclusion. Preparing for the litigation, or any related litigation or related matters, has caused us to incur significant costs and we expect these costs to continue until the litigation concludes. In addition, preparing for litigation is time-consuming and may disrupt our operations and divert the attention of management and our employees from

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executing our strategic plan. In addition, the uncertainties as to the composition of the board of directors of Sinovac Antigua may materially and adversely affect business in unpredictable ways, which, in turn, could cause our revenue, earnings and operating cash flows to be materially and adversely affected.

The ongoing litigation regarding the Rights Agreement could have a material adverse effect on the results of our operations and our financial condition.

On March 5, 2018, we filed a lawsuit in the Court of Chancery of the State of Delaware seeking a determination whether the Shareholder Group had triggered the Rights Agreement, by forming a group holding approximately 45% of outstanding shares, in excess of the Right Agreement’s threshold of 15%, and acting in concert prior to the 2017 AGM. The Rights Agreement is intended to promote the fair and equal treatment of all Sinovac shareholders and ensure that no person or group can gain control of Sinovac through undisclosed voting arrangements, open market accumulation or other tactics potentially disadvantaging the interest of all our shareholders.

On April 12, 2018, 1Globe filed an amended answer to our complaint, counterclaims, and a third-party complaint against Mr. Weidong Yin alleging, among other allegations, that the Rights Agreement is not valid, that Mr. Weidong Yin and the Buyer Consortium (described below) had previously triggered the Rights Agreement, and that 1Globe did not trigger the Rights Agreement. The Chiang Li Family and OrbiMed filed similar responses. We, and our board of directors, believe that the actions taken by our board of directors were appropriate under the circumstances and in the interests of our company and all our shareholders. We also believe that the allegations in the counterclaim and third-party complaint are without merit. 1Globe asks for various measures of equitable relief and also includes a claim for its costs, including attorneys’ fees. On March 6, 2019, the Delaware Court entered a status quo order preventing us from distributing Exchange Shares to any shareholders or otherwise take any action pursuant to the Rights Agreement until the conclusion of the Delaware litigation or Court order. The case is stayed pending resolution of parallel litigation in Antigua.

Following a trial on the validity of the Sinovac Antigua’s Rights Agreement, on December 19, 2018, the Antigua Court held that Sinovac Antigua’s Rights Agreement is valid under Antigua law, and found that “there was a secret plan to take control of the Company” at the 2017 AGM by the Shareholder Group. On February 18, 2019, after reviewing the Court’s judgment and considering all additional facts known to the Board, the Board determined that the Shareholder Group, together with their affiliates and associates (collectively, the “Collaborating Shareholders”) became Acquiring Persons on or prior to the 2017 AGM and that their conduct resulted in a “Trigger Event” under Sinovac Antigua’s Rights Agreement. Pursuant to the Rights Agreement, our board of directors elected to exchange (the “Exchange”) each valid and outstanding preferred share purchase right held by Sinovac Antigua’s shareholders (not including the Collaborating Shareholders) for a combination of 0.655 of Sinovac Antigua’s common shares and 0.345 of Sinovac Antigua’s newly created Series B Convertible preferred shares (the “Series B Preferred Shares” and, together, each an “Exchange Share”). On February 22, 2019, the Exchange Shares were issued into the Shareholder 2019 Rights Exchange Trust in the name of Wilmington Trust, National Association, which holds the Exchange Shares for the benefit of Sinovac Antigua’s shareholders (not including the Collaborating Shareholders). 1Globe filed notice to appeal the Antigua Court’s judgment on January 29, 2019. On April 4, 2019, the Eastern Caribbean Supreme Court, Court of Appeal issued an order that restrains Sinovac Antigua from taking further action under its Rights Agreement, including the distribution of the previously issued Exchange Shares, until the conclusion of such appeal. 1Globe’s appeal of the Antigua Court’s Judgment was heard on September 18, 2019, and the appeal decision is pending as of the date of this annual report.

We cannot predict the outcome of the litigation. Preparing for this litigation, or any related litigation or related matters, has caused us to incur significant costs and we expect these costs to continue until the litigation concludes. In addition, preparing for this litigation is time-consuming and may disrupt our operations and divert the attention of management and our employees from executing our strategic plan.

Our ongoing litigation against 1Globe and The Chiang Li Family claiming violations of U.S. federal securities laws could have a material adverse effect on the results of our operations and our financial condition.

On March 5, 2018, Sinovac Antigua filed a lawsuit in the United States District Court for Massachusetts alleging violations of Section 13(d) and Section 13(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) by 1Globe and The Chiang Li Family. The lawsuit alleges, among other things, that the defendant shareholders failed to make required disclosures on Schedule 13D regarding their intentions to attempt to replace Sinovac Antigua’s board of directors. 1Globe counterclaimed to allege violations of securities laws; specifically, abuse of process, negligent misrepresentation, and fraudulent misrepresentation by Sinovac Antigua.

The litigation is currently stayed pending resolution of the parallel litigation in Antigua, and we cannot predict when or how the litigation will be resolved. There can be no assurance that we will prevail in this litigation. Preparing for this litigation, or any related litigation or related matters may result in significant costs to our company or otherwise adversely affect our business.

Disruptive actions taken by the minority shareholder of Sinovac Beijing caused suspension of production, destruction of products and disruption of our website, which may materially and adversely affect our business, financial condition and results of operations.

Sinovac Beijing, our principal operating subsidiary, is a Sino-foreign equity joint venture in which we own a 73.09% interest and Sinobioway Bio-medicine Co., Ltd., formerly named Xiamen Bioway Group Co., Ltd (“Sinobioway Medicine”), owns a 26.91% interest. Recent events suggest that Sinobioway Medicine’s interests are not aligned with our interests. We cannot assure that Sinobioway Medicine will be cooperative with us in handling matters related to the operations of Sinovac Beijing.

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As the minority shareholder of Sinovac Beijing, according to Sinovac Beijing’s articles of association, Sinobioway Medicine has the right to assign a director to the five-director board of Sinovac Beijing, and the director assigned by Sinobioway Medicine is the legal representative of Sinovac Beijing. Accordingly, the representative of Sinobioway Medicine has the ability to take actions that bind Sinovac Beijing or to block any action that requires unanimous board approval. In addition, if we wish to transfer our equity interest in Sinovac Beijing, in whole or in part, to a third party, Sinobioway Medicine has a right of first refusal to purchase our interest in accordance with relevant PRC regulations.

Sinobioway Medicine, the minority shareholder of Sinovac Beijing, has additional rights under the joint venture contract and articles of association of Sinovac Beijing. The joint venture contract and articles of association require the consent of each of Sinovac Beijing’s shareholders and/or unanimous board approval on matters such as a major change in the business line of the company, expansion or amendment of the business scope of the company, transfer of the registered capital by a shareholder, creation of a mortgage or pledge upon the company’s assets, a change in the organizational form of the company and designation or removal of the general manager.

In February 2018, Mr. Aihua Pan, the representative of Sinobioway Medicine, sent letters without the approval of the full board of Sinovac Beijing, to Mr. Weidong Yin, Ms. Nan Wang, and other senior managers of Sinovac Beijing purporting to terminate their employment. The board of directors of Sinovac Beijing subsequently determined, with the advice of PRC legal counsel, that this action did not conform with the joint venture contract and articles of association and was unlawful. On March 5, 2018, Sinovac Biotech announced actions taken to enhance the corporate governance and management of Sinovac Beijing, including the appointment of Mr. Dawei Mao, Chairman of Zhongke Biopharmaceutical Co., Ltd., as a director of Sinovac Beijing. He replaced Ms. Xiaomin Yang, the current President of Sinobioway Group Co., Ltd. In addition, in March 2018, Mr. Weidong Yin, Ms. Nan Wang, and other senior managers of Sinovac Beijing signed new employment agreements with Sinovac Biotech Ltd. and Sinovac Beijing.

On April 17, 2018, Mr. Aihua Pan and dozens of unidentified individuals forcibly entered Sinovac Beijing’s corporate offices and limited the physical movements of employees in Sinovac Beijing’s general manager’s office and finance department in an attempt to wrongfully take control of Sinovac Beijing’s official seal, legal documents, accounting seal, financial documents and financial information systems. In addition, these individuals disrupted Sinovac Beijing’s hepatitis A vaccine production and seasonal flu vaccine production by cutting power, seriously impacting Sinovac Beijing’s production and manufacturing processes and possibly damaging product quality. Due to these disruptive actions, Sinovac Beijing was forced to destroy the affected products. To maintain product safety, Sinovac Beijing temporarily suspended production at the impacted facility, though production has resumed at this facility months later. Sinovac Beijing was also forced to destroy the bacterial seeds intended for use in the production of its 23-valent pneumococcal polysaccharide vaccine (“PPV”) and to suspend all preparations for and ultimately postpone the inspection by NMPA, formerly known as the PRC State Food and Drug Administration, of the manufacturing site necessary for 23-valent PPV production approval. On September 17, 2020, the Fourth Intermediate People’s Court of Beijing issued a judgment holding Sinobioway Medicine and Mr. Aihua Pan liable for torts and breaches of shareholders fiduciary duty under the PRC Company Law and liable for Sinovac Beijing’s losses of RMB 15.4 million caused by their disruptive actions. Sinovac Beijing, Sinobioway Medicine and Mr. Aihua Pan filed notice to appeal to the Higher People’s Court of Beijing Municipality.

These and other actions taken by the representative of Sinobioway Medicine may materially and adversely affect our business, financial condition and results of operations. We also cannot assure you that the representative of Sinobioway Medicine will cease from interfering with our business.

We do not currently intend to hold an annual general meeting of shareholders until after the final determination of the litigation concerning the Rights Agreement, which will delay the ability of our shareholders to vote in an election of our directors.

With the ongoing litigations concerning the Exchange and the Rights Agreement, we have not been able to hold an annual meeting of shareholders since February 2018, and will not be able to hold an annual meeting of shareholders before the final determination of such litigations. Therefore, our shareholders will not have the opportunity to vote in an election of our directors for an indeterminate amount of time. If our shareholders want us to hold an annual meeting prior to the final determination of these ongoing litigations, they may attempt to force us to hold one under Antigua law.

We may not achieve the expected return on our investment in Sinovac (Dalian) Vaccine Technology Co., Ltd. (“Sinovac Dalian”).

In November 2009, we entered into an agreement with Dalian Jin Gang Group to establish Sinovac Dalian. In January 2010, we established Sinovac Dalian to focus on the research, development, manufacturing and commercialization of vaccines, such as mumps and varicella for human use. Pursuant to the joint venture agreement, we made an initial cash contribution of RMB60.0 million ($9.2 million) in exchange for a 30% equity interest in Sinovac Dalian, and Dalian Jin Gang Group made an asset contribution of RMB140.0 million ($21.5 million), including the manufacturing facilities, production lines and land use rights, in exchange for the remaining 70% interest in Sinovac Dalian. In December 2010, we purchased an additional 25% equity interest in Sinovac Dalian from Dalian Jin Gang Group for consideration of RMB50.0 million ($7.7 million). In October 2016, we increased our ownership in Sinovac Dalian to 67.86% by making an additional RMB80.0 million ($12.3 million) capital contribution. In November 2020, we increased our ownership in Sinovac Dalian to 68% by converting RMB46.6 million ($7.0 million) loan into capital. In 2020, 2019 and 2018, we provided a loan of RMB17 million ($2.6 million), RMB30 million ($4.6 million) and RMB30 million ($4.6 million), respectively, to Sinovac Dalian. We cannot assure that Sinovac Dalian’s business, covering the research, development, manufacturing and commercialization of vaccines, such as mumps and varicella, will be successful. As such, we could incur related impairment charges in the future. Any failure to achieve the expected return on our investment in Sinovac Dalian may materially and adversely affect our business, financial condition and results of operations.

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The interests of the minority shareholder of Sinovac Beijing, Sinovac Life Sciences Co., Ltd. (“Sinovac LS”, formerly known as Sinovac Research and Development Co., Ltd.) and Sinovac Dalian may diverge from our own, which may adversely affect our ability to manage these subsidiaries.

We are the majority shareholder of and have equity interests in Sinovac Beijing, Sinovac LS and Sinovac Dalian. If our interests diverge from those of our minority shareholders, they may exercise their rights under the relevant articles of association, shareholder’s agreement or joint venture contracts of each of such subsidiaries and the relevant PRC laws to protect their own interests, which may substantially differ from ours. As a result, our ability to manage these subsidiaries may be adversely affected, which in turn may materially and adversely affect our business, financial condition and results of operations.

Recent disruptive actions taken by Sinobioway Medicine has shown that its interests are not aligned with ours. We cannot assure that Sinobioway Medicine will be cooperative in handling matters related to the operations of Sinovac Beijing in the future.

As of the date of this annual report, Dalian Jin Gang Group has been cooperating with us with respect to the business of Sinovac Dalian, and the minority shareholders of Sinovac LS have been aligned with us with respect to the business of Sinovac LS. We cannot assure, however, that these minority shareholders will continue to act in a cooperative manner in the future.

Our growth may be adversely affected if market demand for our vaccine products and product candidates does not meet our expectations. We may encounter problems of inadequate supply or oversupply, which would materially and adversely affect our financial condition and results of operations and would also damage our reputation and brand.

The production of vaccine products is a lengthy and complex process. As a result, our inability to match our production to market demand may result in a failure to meet market demand, which could materially and adversely affect our financial condition and results of operations and could also damage our reputation and corporate brand. For example, many patients receive their seasonal flu vaccinations in the three-month period from September to November in anticipation of an upcoming flu season and we expect this period to be one of the most significant sales periods for this product each year. In anticipation of the flu season, we intend to build up inventory of our Anflu product in line with what we believe will be the anticipated demand for the product. If actual demand does not meet our expectations, we may be required to write off significant inventory and may otherwise experience adverse consequences in our financial condition. If we overestimate demand, we may purchase more raw materials than required. If we underestimate demand, our third-party suppliers may have inadequate raw material inventories, which could interrupt our manufacturing, delay shipments and result in lost sales.

If we are unable to enroll sufficient subjects and identify clinical investigators for our clinical trials, our development programs could be delayed or terminated.

The rate of completion of our clinical trials significantly depends on the rate of enrollment of volunteers. Patients enrollment is a function of many factors, including:

• efforts of the sponsor and clinical sites involved to facilitate timely enrollment;

• patient referral practices of physicians;

• design of the protocol;

• eligibility criteria for the study in question;

• perceived risks and benefits of the drug under study;

• the size of the patient population;

• availability of competing therapies;

• availability of clinical trial sites; and

• proximity of and access by patients to clinical sites.

We may have difficulty in obtaining sufficient volunteer subjects enrollment or finding qualified investigators to conduct the clinical trials as planned and we may need to expend substantial funds to obtain access to resources or delay or modify our plans significantly. These considerations may lead us to consider the termination of development of a product for a particular indication.

A setback in any of our clinical trials could adversely affect our share price.

Clinical trials are an important part of vaccine research before any vaccine is approved for commercial use in humans. Setbacks in any phase of the clinical trials of our product candidates could have a material adverse effect on our business and prospects and financial results and would

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likely cause a decline in the price of our common shares. We may not achieve our projected development goals in the time frames we announce and expect. If we fail to achieve one or more milestones as contemplated, the market price of our common shares could decline.

We set goals for, and make public statements regarding, our anticipated timing of the accomplishment of objectives material to our success, such as the commencement and completion of clinical trials and other milestones. The actual timing of these events can vary significantly due to factors such as delays or failures in our clinical trials, the uncertainties inherent in the regulatory approval process and delays in achieving manufacturing or marketing arrangements sufficient to commercialize our products. We may not complete our clinical trials or make regulatory submissions or receive regulatory approvals as planned. Also, we may not be able to adhere to our anticipated schedule for the launch of any of our products. If we fail to achieve one or more milestones as contemplated, the market price of our shares could decline.

We rely on third parties to conduct clinical trials, who may not perform their duties satisfactorily.

After we obtain approval to conduct clinical trials for our product candidates, we rely on qualified research organizations, medical institutions and clinical investigators to enroll qualified patients and conduct clinical trials. Our reliance on these third parties for clinical development activities reduces our control over the clinical trial process. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not fulfill their contractual obligations, including failing to meet expected deadlines, we may not succeed or may experience delays in our efforts to obtain regulatory approvals and commercialize our vaccine candidates.

If any of our third-party suppliers or manufacturers cannot adequately meet our needs, our business could be harmed.

While we use raw materials and other key material supplies that are generally available from multiple commercial sources, certain raw materials that we use to cultivate our influenza vaccines, such as embryonated eggs, are in short supply or difficult for suppliers to produce in accordance with our specifications If third-party suppliers were to cease production or otherwise fail to supply us with quality raw materials, and if we were unable to contract on acceptable terms for these materials with alternative suppliers, our ability to deliver our products to the market would be adversely affected.

In addition, if we fail to secure supply sources for some of the raw materials we use, our business could be harmed. For example, we sourced hepatitis B antigens entirely from Beijing Tiantan Biological Products Co., Ltd. (“Beijing Tiantan”) for Bilive production. Although we are developing our own hepatitis B vaccine, before it is approved to be commercialized, we have to rely on the supplier to receive hepatitis B antigen. We and Beijing Tiantan agreed to enter into annual hepatitis B antigens supply agreements after our previous ten-year exclusive supply framework agreement expired in October 2012. Beijing Tiantan supplied hepatitis B antigens to us from July 2013 to June 2015 based on the annual supply agreement. Thereafter, Beijing Tiantan ceased its hepatitis B antigens production due to facilities renovation. We will work closely with Beijing Tiantan to resume production of Bilive. However, we do not have expected timetable to this.

From time to time, concerns are raised with respect to potential contamination of biological materials supplied to us. These concerns can tighten market conditions for materials that may be in short supply or available from limited sources. Moreover, regulatory approvals to market our products may be conditioned upon obtaining certain materials from specified sources. Any efforts to substitute material from an alternate source may be delayed by pending regulatory approval of such alternate source. Although we work to mitigate the risks associated with relying on sole suppliers, material shortages could impact product development and production.

Our business is highly seasonal. This seasonality will contribute to our operating results fluctuating considerably throughout the year.

The seasonality in our business is expected to result in significant quarterly fluctuations in our ongoing operating results. For example, the influenza season generally runs from November through March of the next year and the largest percentage of influenza vaccinations is administered between September and November of each year. As a result, we expect to realize most of our annual revenues from Anflu during this period.

We rely on a limited number of facilities for the manufacturing of our products in accordance with relevant regulatory requirements. Any disruption to our existing manufacturing facilities or in the development of new facilities could reduce or restrict our sales and harm our reputation.

According to the China GMP guidelines, each vaccine product can only be produced in a dedicated production facility. In Beijing, we conduct the primary production of each vaccine in a dedicated production plant at our Shangdi site, Changping site and Daxing Site, and secondary filling and packaging at our Changping site. In Dalian, we manufacture mumps and varicella vaccine at one facility. We do not maintain back-up facilities for our currently available products, so we are dependent on our existing facilities for the continued operation of our business.

As described more fully above, a representative of Sinobioway Medicine, who was the Chairman of the board of directors of Sinovac Beijing, and dozens of unidentified individuals forcibly entered Sinovac Beijing’s corporate offices and disrupted Sinovac Beijing’s hepatitis A vaccine production and seasonal flu vaccine production by cutting power to our Shangdi site, seriously impacting Sinovac Beijing’s production and manufacturing processes and possibly damaging product quality. Due to the actions of the representative of Sinobioway Medicine, Sinovac Beijing was forced to destroy the affected products. To maintain product safety, Sinovac Beijing temporarily decided to stop production at the impacted facility, though production has resumed at this facility months later.

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Natural disasters or other unanticipated catastrophic events, including power interruptions, water shortages, storms, fires, earthquakes and terrorist attacks, could significantly impair our ability to manufacture products and operate business and could also delay our research and development activities. Our facilities and certain equipment located in these facilities would be difficult to replace and could require substantial replacement lead-time. Catastrophic events may also destroy any inventory located in our facilities.

We do not maintain any business interruption insurance to cover lost income as a result of any such events. The occurrence of such events could materially and adversely affect our business. We may build additional manufacturing facilities in the future. There can be no assurance, however, that we will be able to expand our manufacturing capabilities to or realize the anticipated benefits of our new facilities. Any of these factors could reduce or restrict our sales, harm our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects.

We may need additional capital to upgrade or expand our production capabilities, to continue development of our product pipeline and to market existing and future products on a large scale. We cannot guarantee that we will find adequate sources of capital in the future.

In the future, we may need to raise additional funds to finance equipment expenditures, to acquire intellectual property, to further expand the production facility for our pipeline products, to continue the development and commercialization of our product candidates and to fund other corporate purposes. As of December 31, 2020, we had approximately $1,041 million in cash and cash equivalents. We expect to undertake significant future financings in order to:

• establish and expand manufacturing capabilities;

• proceed with the research and development of other vaccine products, including clinical trials of new products;

• commercialize our products, including the marketing and distribution of new and existing products;

• seek and obtain regulatory approvals;

• develop or acquire directly, or indirectly through acquisition of companies, other product candidates or technologies or companies;

• protect our intellectual property; and

• finance general, administrative and research activities that are not related to specific products under development.

In the past, we funded most of our research and development and other expenditures through government grants, working capital, bank loans and proceeds from private placements and public offerings of our common shares. We may raise additional funds in the future because our current operating and capital resources may be insufficient to meet future requirements.

Sinovac Antigua is authorized to issue 100,000,000 common shares, 99,294,743 of which are issued and outstanding. To increase the number of authorized common shares, we must amend Sinovac Antigua’s Articles of Incorporation and By-laws, which requires (i) the majority of common shares be present for a quorum, and (ii) affirmative vote of two thirds of common shares (excluding Series B Preferred Shares) present and voting at the general meeting. We cannot assure that Sinovac Antigua will be able to collect sufficient affirmative votes to amend its Articles of Incorporation and By-laws. If we fail to increase the number of authorized commons shares of Sinovac Antigua, we will lack common shares for future issuance of equity securities.

If we raise additional funds by issuing equity securities, it will result in further dilution to our existing shareholders because the shares may be sold when the market price is low and shares issued in equity financing transactions will normally be sold at a discount to the current market price. Any additional equity securities issued also may provide for rights, preferences or privileges senior or otherwise preferential to those of holders of our existing common shares. Unforeseen problems including materially negative developments relating to, among other things, disease developments, product sales, new product rollouts, clinical trials, research and development programs, our strategic relationships, our intellectual property, litigation, regulatory changes in our industry, the Chinese market generally or general economic conditions, could interfere with our ability to raise additional funds or materially and adversely affect the terms upon which such funding is available.

If we raise additional funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of our common shares, and the terms of the debt securities issued could impose significant restrictions on our operations. If we raise additional funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to certain of our technologies, marketing territories, product candidates or products that we would otherwise seek to develop or commercialize ourselves, or be required to grant licenses on terms that are not favorable to us. In the past, we have received different types of grants from the PRC government to finance the research and development and facility investment of our vaccine products. We may not receive additional grants in the future.

As described above, the actions of the Shareholder Group leading up to and at the 2017 AGM resulted in uncertainties as to the future direction of our company and the composition of our board of directors. As a result of these uncertainties, we do not know whether additional financing will be available to us on commercially acceptable terms when needed. If adequate funds are not available or are not available on commercially

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acceptable terms, we may be unable to continue developing our products. In any such event, our ability to bring a product to market and obtain revenues could be delayed and competitors could develop products sooner than we do. As a result, our business, financial condition and results of operations could be materially and adversely affected.

We issued approximately 27.8 million common shares and 14.6 million Series B Preferred Shares in connection with the Exchange, and could issue additional common shares or Series B Preferred Shares, or one or more additional series of preferred shares with the effect of diluting existing shareholders and impairing their voting and other rights

Our articles of incorporation authorize the issuance of up to 100,000,000 common shares and 50,000,000 preferred shares with designations, rights, privileges, restrictions and conditions as may be determined from time to time by our board of directors. On February 22, 2019, in connection with the Exchange, we issued approximately 27.8 million common shares and 14.6 million Series B Preferred Shares for the benefit of the holders of valid and outstanding Rights as of that date. This issuance had the effect of significantly diluting the holdings of the shareholders that are not entitled to participate in the Exchange.

The Series B Preferred Shares share equally in all dividends and distributions made on our common shares and vote together with the common shares on all matters brought before the shareholders, in each case on an as-converted basis and subject to applicable law. The Series B Preferred Shares are convertible into common shares at our option, or automatically upon a successful shareholder vote to increase the authorized number of Sinovac Antigua’s common shares. Until the Series B Preferred Shares are converted into common shares (or until the Series B Preferred Shares are listed on a nationally recognized securities exchange), they will earn a preferred dividend equal to $0.41 per annum, payable quarterly in arrears. As a result of the ongoing litigation described elsewhere, there can be no assurance that this preferred share dividend will be paid in a timely manner, if at all.

Our board is empowered, without shareholder approval, to issue one or more additional series of preferred shares with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our common shareholders. The issuance of such additional series of preferred shares, or the issuance of additional common shares, could be used as a method of discouraging, delaying or preventing a change in control.

The PIPE Investors (as defined below) may exercise influence over us, including through their ability to influence matters requiring the approval of holders of our Common Stock or Series A Preferred Stock.

On July 2, 2018, we completed a private placement of our common shares (the “PIPE”) with private investors Vivo Capital and Advantech Capital (the “PIPE Investors”), whereby we received gross proceeds of $86.73 million. The proceeds of this offering will be used to increase our capabilities in research relating to quality control and to build additional production facilities to support the development and commercialization of sabin inactivated polio vaccine (“sIPV”) -based combination vaccine and other new vaccine projects. These investments have not yet been made due in part to the disruptive actions of certain of our shareholders and the related litigation, which remains ongoing.

The shares owned by the PIPE Investors currently represent approximately 20.72% of the voting rights in respect of our share capital (after taking into account the shares issued in the Exchange under the Rights Agreement). Further, the PIPE Investors are entitled to appoint a designee and observer to Sinovac Antigua’s board of directors. Accordingly, the PIPE Investors may have the ability to influence the direction of Sinovac Antigua or the outcome of most matters submitted for the vote of our shareholders. In any of these matters, the interests of the PIPE Investors may differ from or conflict with the interests of our other shareholders.

In connection with the PIPE, Sinovac Antigua entered into a shareholders agreement with the PIPE Investors, pursuant to which the PIPE Investors agreed to vote their shares affirmatively in favor of all of the director designees nominated to serve on Sinovac Antigua’s board of directors, and the PIPE Investors agreed to transfer restrictions with respect to their shares and a standstill provision, which, among other things, bars each PIPE Investor and its affiliates from acquiring in excess of 10% of the share capital of Sinovac Antigua.

In addition, the PIPE Investors are in the business of making investments in companies and may, from time to time, acquire interests in businesses that directly or indirectly compete with our business, as well as businesses that are significant existing or potential customers.

If we are unable to attract, train, retain and motivate our third-party marketing agents, sales of our products may be materially and adversely affected.

We rely on our third-party marketing agents, who are dispersed across China, to market our products to CDCs and other healthcare institutions. We believe that our future success will depend on the dedication, efforts and performance of our third-party marketing agents. There are only limited numbers of competent and qualified marketing agents in the China vaccine industry. Our competitors may provide commissions or other economic incentives to third-party marketing agents significantly above the market standard, which may cause such agents to cease marketing our products. If we are unable to attract, train, retain and motivate our marketing agents, sales of our products may be materially and adversely affected.

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Anti-corruption measures taken by the PRC government to correct corruptive practices in the vaccine industry could adversely affect our sales and reputation.

The PRC government has taken anti-corruption measures to correct corrupt practices. In the vaccine industry, such practices include, among others, acceptance of kickbacks, bribery or other illegal gains or benefits by the officials of CDCs in connection with recommendation of a certain vaccine. We do not control the business activities of our third-party marketing agents, who might engage in corrupt practices to promote our products, which may be unknown to us. While we maintain strict anti-corruption policies applicable to our internal sales force and third-party marketing agents, these policies may not be completely effective. If any individual of our sales staff or any of our third-party marketing agents engages in corrupt practices and the PRC government takes enforcement action, our own practices and the market agents’ practices may be checked or investigated. If this occurs, our sales and reputation may be materially and adversely affected.

Some of the predecessor shareholders of Sinovac Beijing were enterprises owning state-owned assets (“EOSAs”). Their failures to comply with PRC legal requirements in asset or share transfers could, under certain circumstances, result in such transfers being invalidated by government authorities. If this occurs, we could lose our ownership of intellectual property rights that are vital to our business as well as our equity ownership in Sinovac Beijing.

Sinovac Beijing is currently owned 73.09% by us and 26.91% by Sinobioway Medicine. The technologies related to our hepatitis A vaccine, hepatitis A and B vaccine and influenza vaccine that are vital to our business were directly or indirectly transferred to us by Tangshan Yian Biological Engineering Co., Ltd. (“Tangshan Yian”). Some of the predecessor shareholders of Sinovac Beijing, including Shenzhen Kexing Biological Engineering Ltd. (“Shenzhen Kexing”), Sinobioway Medicine, Tangshan Medicine Biotech Co., Ltd., Tangshan Yikang Biotech Co., Ltd. and Tangshan Yian, were EOSAs. Under applicable PRC laws, when EOSAs sell, transfer or assign assets or equity investments in their possession or under their control to third parties, they are required to obtain an independent appraisal of the transferred assets or shares and file such appraisal with or obtain approval of such appraisal from PRC government authorities. Since 2004, EOSAs have also been required to make such assets or equity transfers at government-designated marketplaces. Certain of our acquisitions of intellectual property rights and equity interests were subject to these requirements.

Tangshan Yian failed to file with the government authorities the appraisal of the hepatitis A vaccine technology that it transferred to Sinovac Beijing in 2001 as its capital contribution to Sinovac Beijing. Under PRC laws, Tangshan Yian also failed to:

• obtain the appraisal of the hepatitis A and B vaccine technology that it transferred for no consideration to Beijing Keding Investment Co., Ltd. (“Beijing Keding”) in 2002 (Beijing Keding subsequently transferred the technology to Sinovac Beijing as Beijing Keding’s capital contribution to Sinovac Beijing) and to file such appraisal with the government authorities; and

• obtain the appraisal of the influenza vaccine technology that it transferred to Sinovac Beijing in 2004 and to file such appraisal with the government authorities.

These failures subject us to the risk of losing ownership or control of these vaccine technologies.

In addition, before we acquired our 73.09% equity interest in Sinovac Beijing, it had undergone multiple changes in its shareholders and the amounts held by its shareholders. Some of the EOSA shareholders of Sinovac Beijing have sold, transferred or assigned their respective equity interests in Sinovac Beijing without fully complying with laws to appraise the equity interests, to file such appraisals with or obtain regulatory approval of such appraisals from PRC government authorities or to make equity interest transfers at the government-designated marketplaces as required for transactions completed after 2004. Similar to the asset transfers, such failures subject us to the risk of losing the ownership or control of our equity interest in Sinovac Beijing.

PRC government authorities may take court actions to invalidate the transfers of the assets or equity investments discussed above for non-compliance with applicable appraisal, filing, approval and designated marketplace requirements. The government authorities could take such legal actions and such legal actions, if commenced, could be successful. If these transfers are invalidated, we would lose title to these assets and investments. Because we depend on these technologies and because Sinovac Beijing constitutes core part of our operations, our loss of these technologies or equity interest in Sinovac Beijing would materially and adversely affect our operations and financial condition.

The Rights Agreement and certain provisions of our By-laws may discourage a change of control.

In March 2016, we adopted the Rights Agreement that provides for the issuance of one right (a “Right”) for each of our outstanding common shares. We amended and restated the Rights Agreement in February 2019 that provides for the issuance of one Right for each of our outstanding common shares and Series B Preferred Shares. In February 2020, we further amended the amended and restated Rights Agreement to extend its term until February 2021. The Rights are designed to assure that all of our shareholders receive fair and equal treatment in the event of any proposed takeover and to guard against partial tender offers, open market accumulations, undisclosed voting arrangements and other abusive or coercive tactics to gain control of our company or our board of directors without paying all shareholders a control premium. The Rights will cause substantial dilution to a person or group that acquires 15% or more of the aggregate total of common shares and Series B Preferred Shares on terms not approved by our board of directors.

As described above, 1Globe is appealing the judgment of the Antigua Court that the Rights Agreement is valid. If 1Globe is successful, our shareholders will not benefit from the protections of the Rights Agreement and our company may be subject to abusive or coercive tactics by

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certain shareholders to gain control of our company or our board of directors without paying all shareholders a control premium. On April 4, 2019, the Eastern Caribbean Supreme Court, Court of Appeal issued an order that restrains our company from taking further action under the Rights Agreement, including the distribution of the previously issued Exchange Shares, until the conclusion of such appeal. The appeal decision is pending as of the date of this annual report.

On February 21, 2021, we entered into a second amendment to the Rights Agreement to extend the expiration date of the rights contained therein from February 22, 2021 to February 22, 2022.

Some provisions of our By-laws may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders.

These provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many shareholders. As a result, shareholders may be limited in their ability to obtain a premium for their shares.

We depend on our key personnel, the loss of whom would adversely affect our operations. If we fail to attract and retain the talent required for our business, our business will be materially harmed.

We had 1959 full-time employees as of December 31, 2020 and we depend to a great extent on principal members of our management and scientific teams. If we lose the services of any key personnel, in particular Mr. Weidong Yin, the loss could significantly impede the key decision making on strategic choices and operational issues, which in turn will harm our business achievement. We do not have any key man life insurance policies. We have entered into employment agreements with our executive officers, under which they have agreed to restrictive covenants relating to non-competition and non-solicitation. These employment agreements do not, however, guarantee that we will be able to retain the services of all our executive officers in the future.

As described above, a representative of Sinobioway Medicine, who was the Chairman of the board of directors of Sinovac Beijing, sent letters without the approval of the full board of Sinovac Beijing, to Mr. Weidong Yin, Ms. Nan Wang, and other senior managers of Sinovac Beijing purporting to terminate their employment. The board of directors of Sinovac Beijing subsequently determined, with the advice of PRC legal counsel, that this action did not conform with the joint venture contract and the articles of association of Sinovac Beijing and was unlawful. As also described above, the representative of Sinobioway Medicine and dozens of unidentified individuals forcibly entered Sinovac Beijing’s corporate offices and limited the physical movements of employees in Sinovac Beijing’s general manager’s office and finance department in an attempt to wrongfully take control of Sinovac Beijing’s official seal, legal documents, accounting seal, financial documents and financial information systems. As a result of these actions, our ability to attract and retain the talent required for our business may be materially harmed.

In addition, recruiting and retaining additional qualified scientific, technical and managerial personnel and research partners will be critical to our success. Competition among biopharmaceutical and biotechnology companies for qualified employees in China is intense and turnover rates are high. There is a shortage of employees in China with expertise in our areas of research and clinical and regulatory affairs, and this shortage is likely to continue. In addition, we have a limited number of shares available for issuance under our share incentive award plan, which may affect our ability to retain and motivate our employees. We may not be able to retain existing personnel or attract and retain qualified staff in the future. If we fail to hire and retain personnel in key positions, we may be unable to develop or commercialize our product candidates in a timely manner.

We may encounter difficulties in managing our growth, which could adversely affect our results of operations.

We have experienced rapid and substantial growth and, if such growth continues, will place a strain on our administrative and operational infrastructure. We also plan to introduce new products to market that, if successful, could place a strain on our administrative and operational infrastructure. If we are unable to manage this growth effectively, our business, results of operations or financial condition may be materially and adversely affected. Our ability to manage our operations and growth effectively requires us to continue to improve our operational, financial and management controls, reporting systems and procedures and hiring programs. We may not be able to successfully implement these required improvements.

International expansion may be costly, time-consuming and difficult. If we do not successfully expand internationally, our growth strategy and prospects would be materially and adversely affected.

We have entered into selected international markets and intend to continue to expand the sales of our products into new international markets. In expanding our business internationally, we have entered, and intend to continue to enter, markets in which we have limited or no experience and in which our brand may be less recognized. To promote our brand and generate demand for our products to attract distributors in international markets, we expect to spend significantly more on marketing and promotion than we do in our existing domestic markets when appropriate. We may be unable to attract a sufficient number of distributors, and our selected distributors may not be suitable for selling our products.

In new markets, we may fail to anticipate competitive conditions that are different from those in our existing markets. These competitive conditions may make it difficult or impossible for us to effectively operate in these markets. If our expansion efforts in existing and new internal markets are unsuccessful, our growth strategy and prospects would be materially and adversely affected.

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We are exposed to other risks associated with international operations, including:

• political instability;

• economic instability and recessions;

• trade wars and trade disputes;

• changes in tariffs;

• difficulties of administering foreign operations generally;

• limited protection for intellectual property rights;

• obligations to comply with a wide variety of foreign laws and other regulatory approval requirements;

• increased risk of exposure to terrorist activities;

• financial condition, expertise and performance of our international distributors;

• export license requirements;

• unauthorized re-export of our products;

• potentially adverse tax consequences;

• inability to effectively enforce contractual or legal rights; and

• exchange rate fluctuations or devaluation of foreign currencies.

We may undertake acquisitions which may have a material adverse effect on our ability to manage our business and may end up being unsuccessful.

Our growth strategy may involve the acquisition of new production lines, technologies, businesses, products or services or the creation of strategic alliances in areas in which we do not currently operate. These acquisitions and strategic alliances could require that our management develop expertise in new areas or new geographies, manage new business relationships and attract new types of customers. Furthermore, acquisitions may require significant attention from our management, and the diversion of our management’s attention and resources could have a material adverse effect on our ability to manage our business. We may experience difficulties integrating acquisitions into our existing business and operations. Future acquisitions may also expose us to potential risks, including risks associated with:

• the integration of new operations, services and personnel;

• unforeseen or hidden liabilities;

• the diversion of resources from our existing businesses and technologies;

• our inability to generate sufficient revenue to offset the costs of acquisitions;

• potential loss of, or harm to, relationships with employees or customers, any of which could significantly disrupt our ability to manage our business and materially and adversely affect our business, financial condition and results of operations; and

• impairment of intangible assets acquired.

We may be unable to ensure compliance with United States economic sanctions laws, especially when we sell our products to distributors over which we have limited control.

The U.S. Department of the Treasury’s Office of Foreign Assets Control administers certain laws and regulations that impose penalties upon U.S. persons and, in some instances, foreign entities owned or controlled by U.S. persons, for conducting activities or transacting business with certain countries, governments, entities or individuals subject to U.S. economic sanctions (“U.S. Economic Sanctions Laws”). We will not use any proceeds, directly or indirectly, from sales of our common shares, to fund any activities or business with any country, government, entity or individual with respect to which U.S. persons or, as appropriate, foreign entities owned or controlled by U.S. persons, are prohibited by U.S. Economic Sanctions Laws from conducting such activities or transacting such business.

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However, we sell our products in international markets through independent non-U.S. distributors which are responsible for interacting with the end-users of our products. We may not be able to ensure that such non-U.S. distributors fully comply with all applicable U.S. Economic Sanctions Laws. As a result of the foregoing, actions could be taken against us that could materially and adversely affect our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects.

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. Holders of our common shares.

Based on the market price of our common shares and the value of our assets (subject to the discussion below) as well as the composition of our income and assets, we do not believe we were a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes for our taxable year ended December 31, 2020. However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure that we will not be a PFIC for any taxable year. In general, a non-U.S. corporation will be a PFIC for any taxable year if either (i) at least 75% of its gross income for such year is passive income or (ii) at least 50% of the value of its assets (generally based on a quarterly average) during such year is attributable to assets that produce passive income or are held for the production of passive income. We must make a separate determination after the close of each taxable year as to whether we were a PFIC for that year. In particular, under normal circumstances, the value of our assets for purposes of the PFIC test for a particular taxable year would generally be determined by reference to the market price of our common shares at the end of each quarter during such taxable year. As a result, fluctuations in the market price of our common shares (or changes in the composition of our income or assets) may cause us to become a PFIC for any subsequent year. However, as a result of the suspension of trading in our shares, we are unable to reference the actual market prices of our common shares in determining our PFIC status. As a result, we have based our valuation on the market price as of the last date of the last trading day of our common shares as well as on certain financial valuation determinations by third parties in connection with our recent financing transactions. We cannot provide any assurances that the actual value of our shares are not materially different on actual measurement dates and as to whether the IRS will respect our approach. This uncertainty will continue so long as trading in our shares remains suspended. In addition, the composition of our income and assets will be affected by how, and how quickly, we use the cash we generate from our operations or raise in any offering. If we are a PFIC for any year during which a U.S. Holder (as defined in “Item 10. Additional Information — E. Taxation — United States Federal Income Taxation”) holds our common shares, additional reporting requirements and certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. Please see “Item 10. Additional Information — E. Taxation — United States Federal Income Taxation — Passive Foreign Investment Company.”

Negative publicity regarding vaccinations in China may lead to lower demand for vaccination, which could in turn negatively affect our business, financial condition and results of operations.

In December 2013, it was reported that several infants died shortly after receiving inoculations of hepatitis B vaccine produced by a domestic company in China. NMPA and National Health and Family Planning Commission have determined that the inoculated hepatitis B vaccines comply with the applicable regulatory standards. In March 2016, media reported on improperly stored vaccines illegally sold in Shandong province and all across China. The illegal distribution started in 2010 and two suspects were detained by police in 2015. Although experts from the World Health Organization (“WHO”) has confidence in China’s vaccine industry and publicly clarified their position several times since news of this scandal broke, public concerns remain. In July 2018, Changchun Changsheng Life Science Co., Ltd. was found by the government to have falsified production records. Although the government has determined to levy a $1.3 billion fine on the company, such negative publicity has led to lower demand for vaccination in China in 2018, which has in turn negatively affected the whole vaccine industry.

As a foreign private issuer, we are subject to different U.S. securities laws and NASDAQ listing rules than domestic U.S. issuers.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, as an Antigua and Barbuda company listed on the NASDAQ Global Select Market, we are subject to NASDAQ’s corporate governance requirements. However, NASDAQ listing rules permit a foreign private issuer like us to elect to follow home country corporate governance practices in lieu of certain NASDAQ corporate governance standards, subject to certain conditions. Certain corporate governance practices in Antigua and Barbuda, which is our home country, may differ significantly from the NASDAQ standards. As a result of our status as a foreign private issuer, you may not be afforded the same information or protections that would be made available to you were you investing in a domestic U.S. issuer.

Trading of our common shares on NASDAQ has been halted since February 22, 2019.

In connection with the Exchange and the issuance of the Exchange Shares into the Shareholder 2019 Rights Exchange Trust, NASDAQ implemented a halt in trading in Sinovac Antigua’s common shares in order to facilitate the orderly distribution of the Exchange Shares. In light of the ongoing litigation concerning the Rights Agreement, there can be no assurance when or if this halt will be lifted. NASDAQ has continued listing standards that we must maintain on an ongoing basis in order to continue the listing of our common shares. If NASDAQ determines that we fail to meet these continued listing requirements, our common shares may be subject to delisting.

If our common shares are delisted and we are not able to list our common shares on another national securities exchange, we expect our securities would be quoted on an over-the-counter market. If this were to occur, our shareholders could face significant material adverse consequences,

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including limited availability of market quotations for our securities and reduced liquidity for the trading of our securities. In addition, we could experience a decreased ability to issue additional securities and obtain additional financing in the future.

Risks Related to Government Regulation

We may not be able to comply with applicable GMP standards and other regulatory requirements, which could have a material adverse effect on our business, financial condition and results of operations.

We are required to comply with applicable GMP regulations, which include, among other things, requirements relating to personnel, premises and equipment, raw material and products, qualification and validation, document management, production management, quality control and assurance and product distribution and recall. Manufacturing facilities must be approved by governmental authorities before they can be used to commercially manufacture our products and are subject to inspection by regulatory agencies. We had been required to comply with the new GMP standards implemented by NMPA since March 1, 2011 and all vaccine manufacturers were required to meet the new GMP standards and obtain certifications for their manufacturing facilities by December 31, 2013. Any manufacturer that failed to meet the deadline were forced to suspend production.

We have obtained the new GMP certificates for all of our commercial production facilities. However, we cannot assure that we will be able to continue to meet the applicable GMP standards and other regulatory requirements in the future.

In addition, in light of the incident where vaccines were illegally sold and distributed in Shandong province and other provinces around China in 2016, the government has changed policies and regulations related to the vaccine sales and distribution in China. Before the policy was issued, human vaccine sales were halted in China for months. The vaccine purchase and delivery was resumed in second half of 2016. We are not able to estimate whether there will be any other change of policies and regulations on our business in the future, which will negatively impact on business in the future.

The 2020 Chinese Pharmacopoeia came into effect on December 30, 2020. We have made a thorough assessment on the 2020 Chinese Pharmacopeia and updated our operation procedures according to the new regulatory requirements to ensure full compliance.

If we fail to comply with applicable regulatory requirements at any stage during the regulatory process, including following any product approval, we may be subject to sanctions, including:

• fines;

• product recalls or seizures;

• injunctions;

• refusal of regulatory agencies to review pending market approval applications or supplements to approval applications;

• total or partial suspension of production;

• civil penalties;

• withdrawals of previously approved marketing applications; and

• criminal prosecution.

We can only sell products that have received regulatory approvals. Many factors affect our ability to obtain such approvals.

Pre-clinical and clinical trials of our products, and the manufacturing and marketing of our products, are subject to extensive, costly and rigorous regulation by governmental authorities in the PRC and in other countries. Even if we complete pre-clinical and clinical trials successfully, we may not be able to obtain applicable regulatory approvals. We cannot market any product candidate until we have both completed our clinical trials and obtained the necessary regulatory approvals for that product candidate.

Conducting clinical trials and obtaining regulatory approvals are uncertain, time-consuming and expensive processes. The process of obtaining required regulatory approvals from NMPA and other regulatory authorities often takes many years and can vary significantly based on the type, complexity and novelty of the product candidates. For example, it took us approximately ten years to develop and obtain regulatory approval to commercialize Healive, and it took us five and a half years and four and a half years to develop and obtain regulatory approvals to commercialize Bilive and Anflu, respectively. EV71 vaccine took us eight years from 2008 to 2016 to develop and obtain regulatory approvals.

There can be no assurance that all of the clinical trials pertaining to our vaccines in development will be completed within the timeframes currently anticipated by us. We could encounter difficulties in enrolling patients for clinical trials or encounter setbacks while conducting clinical trials that result in delays or cancellation. Data obtained from pre-clinical and clinical studies are subject to varying interpretations that could delay, limit or prevent regulatory approvals, and failure to observe regulatory requirements or inadequate manufacturing processes are examples of other problems that could prevent approvals. In addition, we may encounter delays or rejections in the event of additional regulation from future legislation, administrative action or changes in the NMPA policy or if unforeseen health risks become an issue with the participants of clinical trials.

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Clinical trials may fail at any stage. Results of early trials frequently do not predict results of later trials, and acceptable results in early trials may not be repeated. For these reasons, we do not know whether regulatory authorities will grant approval for any of our product candidates in the future. In addition, production permits for our products are valid for five years and we need to apply for renewal six months prior to their expiration. The process to approve our renewal applications could be lengthy and there is no assurance that we will be granted renewal in a timely manner or at all.

Delays in obtaining NMPA foreign approvals of our products could result in substantial additional costs and adversely affect our ability to compete with other companies. Even if regulatory approval is ultimately granted, we may not maintain the approval and the approval may be withdrawn. Any approval received may also restrict the intended use and marketing of the product we want to commercialize.

Outside the PRC, our ability to market some of our potential products is contingent upon receiving marketing authorizations from the appropriate foreign regulatory authorities. For example, our hepatitis A vaccine, Healive, can be supplied to certain international organizations and is eligible to participate into the tender process in some countries as it has passed the WHO prequalification assessment (“WHO PQ”). However, there are still countries that require additional marketing authorization to sell in such countries despite the WHO PQ status. These foreign regulatory approval processes include the risks associated with the NMPA approval process described above and may include additional risks.

Because the medical conditions that our vaccines are intended to prevent represent significant public health threats, we are at risk of governmental actions detrimental to our business, such as product seizure, compulsory licensing and additional regulations.

In response to a pandemic or the perceived risk of a pandemic, governments in the PRC and other countries may take actions to protect their citizens that could affect our ability to control the production and export of pandemic vaccines or otherwise impose burdensome regulations on our business. For example, an outbreak of influenza and the recent COVID-19 could subject our manufacturing facilities to seizure by the PRC government. The PRC government might grant compulsory licenses to allow our competitors to manufacture products that are protected by our patents or use our technology, using funds received from government agencies.

We deal with hazardous materials that may cause injury to others. These materials are regulated by environmental laws that may impose significant costs and restrictions on our business.

Our research and development programs and manufacturing operations involve the controlled use of potentially harmful biological materials and other hazardous materials. We cannot eliminate the risk of accidental contamination or injury to our employees or others from the use, manufacture, storage, handling or disposal of hazardous materials and certain waste products. In the event of contamination or injury, we could be held liable for any resulting damages, and the liability could exceed our resources or applicable insurance coverage we may have.

We are also subject to PRC laws and regulations governing the construction and operation of production facilities that may have an impact on the environment and the use, manufacture, storage, handling or disposal of hazardous materials and waste products, such as the PRC Environmental Impact Assessment Law, the PRC Prevention and Control of Water Pollution Law and the PRC Environmental Protection Law, as well as waste-disposal standards set by relevant governmental agencies. It is likely that China will continue to adopt stricter pollution controls as the country is experiencing increasingly serious environmental pollution. Although our facilities have passed previous environmental examination conducted by the Beijing Municipal Environment Protection Bureau, we cannot assure that we will continue to pass similar environmental examinations on any future production facilities that we may construct.

We have already obtained the approval of the environmental impact assessment report from relevant regulatory authorities for our relevant construction plan of our facilities, however, we cannot assure that we will continue to obtain the approval on environmental impact assessment report for any future production facilities that we may construct. According to the PRC Environmental Impact Assessment Law, after the approval of previous environmental impact assessment report, if there is any material change in the nature, scale, location, production technology used and measures adopted to prevent damages to ecology, new environmental impact assessment reports need to be filed for approval. Moreover, we do not currently have a pollution and remediation insurance policy to mitigate any risk related to environmental pollution or violation of environmental law.

Failure to commence development of land which we have been granted right to use within the required timeframe may cause us to lose our land use rights.

Sinovac Dalian was granted land use rights to two parcels of land, with an aggregate area of 95,686 square meters (approximately 1,030,000 square feet) located in the Economic and Technical Development Zone of Dalian, Liaoning province by the local government. According to the relevant PRC regulations, a parcel of land may be treated as idle land if development of the land has not been commenced within one year after the commencement date stipulated in the land use rights grant contract or the issuance date of the construction land approval certificate. Land users can extend the deadline for commencing the construction work for one year.

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All of our current facilities of Sinovac Dalian are located at one of the two parcels of the land with an aggregated area of 55,606 square meters (598,582 square feet). However, as of the date of this annual report, we have not commenced development of the other parcel of the land with 40,080 square meters (431,418 square feet) which Sinovac Dalian was granted the right to use. The PRC government may treat the land as idle land, in which case we may be required to pay idle land fees or penalties, change the intended use of the land, find another parcel of land, or even be required to forfeit the land to PRC government, any of which would adversely affect our financial condition.

Negative publicity regarding China-based companies listed in the United States may affect the trading price of our common shares and result in increased regulatory scrutiny of our business.

In the past, litigation and negative publicity surrounding companies with operations in China listed in the United States have resulted in declining stock prices for such companies. Various equity research organizations have published reports on China-based companies after examining their corporate governance practices, related party transactions, sales practices and financial statements that have led to special investigations and stock suspensions on national exchanges. Any similar scrutiny of us, regardless of merit, could result in a diversion of our management’s attention from managing our core business, negative publicity, potential costs to defend ourselves against rumors, volatility and loss in the trading price of our common shares and increased directors’ and officers’ insurance premiums, any of which could materially and adversely affect our business, financial condition and results of operations.

Uncertainties exist with respect to how the PRC Vaccine Administration Law may impact our current operations.

The PRC Vaccine Administration Law became effective on December 1, 2019. It is China’s first legislation dedicated to the regulation of vaccine industry. According to the law, the supervision of vaccines will cover the whole lifecycle from vaccine development, production and distribution to vaccination. Specialized inspection teams of pharmaceutical professionals will be established at the central and provincial levels to conduct the supervision work. An electronic information system will also be set up to make all information on vaccines trackable during vaccine production, distribution and vaccination. The vaccine tracking system requires vaccination data, including vaccine's information, expiry date and use date, the medical workers who issue the vaccines and their recipients, should be recorded and retained for at least five years after its expiry. The law imposes tough punishments on wrongdoers, stipulating that people whose violations constitute a crime shall bear heavier criminal responsibility. The move under the PRC Vaccine Administration Law could be a milestone in vaccine safety, while bringing back market confidence in the regulatory system. The new law is believed to be able to enable the regulators to close loopholes and rein in risks in vaccine management and boost the confidence of the public in vaccine products manufactured in China. Since the Vaccine Administration Law was recently promulgated, no detailed implementing rules have been promulgated so far, and it is unclear how this regulation will be interpreted, amended and implemented by the relevant PRC government authorities. In addition, PRC judicial and administrative authorities have significant discretion in interpreting and implementing statutory and contractual terms. We cannot predict how the new law will affect our business operations or future strategy.

Our Intellectual Property

If we are unable to protect our technologies from competitors with patents or other forms of intellectual property protection, our business may be harmed.

Our success depends, in part, on our ability to protect our proprietary technologies. We try to protect the technology that we consider important to our business by filing patent applications and relying on trade secret and pharmaceutical regulatory protection, including our existing and potential vaccines.

We have a total of 68 issued patents and a number of pending patent applications relating to our vaccines in China. The process of seeking patent protection in China can be lengthy and expensive and we cannot assure you that our pending patent applications, or any patent applications we may make in the future with respect to other products, will result in issued patents, or that any patents issued in the future will be able to provide us with meaningful protection or commercial advantage. Our patent applications might be challenged, invalidated or circumvented.

In addition to patents, we rely on trade secrets and proprietary know-how to protect our intellectual property. We have entered into confidentiality agreements (which include, in the case of employees, non-competition provisions) with many of our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors. These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of our employees, the agreements provide that all of the technology which is conceived by the individual during the course of employment is our exclusive property. These agreements may not provide meaningful protection or adequate remedies in the event of unauthorized use or disclosure of our proprietary information. In addition, third parties could possibly independently develop information and techniques substantially similar to ours or otherwise gain access to our trade secrets.

Our current or potential competitors, many of whom have substantial resources and have made substantial investments in competing technologies, could develop products that compete directly with our products despite our intellectual property rights.

Intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other developed countries. Policing unauthorized use of proprietary technology is difficult and expensive, and we might need to resort to litigation to enforce or defend

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patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. The experience and capabilities of PRC courts in handling intellectual property litigation varies, and outcomes are unpredictable. Further, such litigation may require significant expenditures of cash and management efforts and could harm our business, financial condition and results of operations. An adverse determination in any such litigation could materially impair our intellectual property rights and may harm our business, prospects and reputation.

We may be exposed to infringement or misappropriation claims by third parties which, if determined adversely to us, could cause substantial liabilities to us, or we may be unable to sell some of our products. Please see “Item 4. Information on the Company — B. Business Overview — Intellectual Property and Proprietary Technology.”

Third parties may bring intellectual property infringement claims against us in the future.

Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Even after reasonable investigation, we may not know with certainty whether we have infringed upon a third party’s patent due to the complexity of patent claims, the inadequacy of patent clearance search procedures in the PRC and the fact that a third party may have filed a patent application without our knowledge while that product was under development by us.

Patent applications are maintained in secrecy until their publication 18 months after the filing date. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. China, similar to many other countries, adopts the first-to-file system under which the first party to file a patent application (instead of the first to invent the subject invention) may be awarded a patent. There may also be technologies licensed to us or acquired by us that are subject to infringement, misappropriation or other claims by others which could damage our ability to rely on such technologies.

If a third party claims that we infringe upon its proprietary rights, any of the following may occur:

• we may become involved in time-consuming and expensive litigation, even if the claim is without merit;

• we may become liable for substantial damages for past infringement if a court decides that our technology infringes upon a third- party’s patent;

• a court may prohibit us from selling or licensing our product without a license from the patent holder, which may not be available on commercially reasonable terms, if at all, or which may require us to pay substantial royalties or grant cross licenses to our patents;

• we may have to reformulate our product so that it does not infringe upon others’ patent rights, which may not be possible or could be very expensive and time-consuming; and

• we may be subject to injunctions prohibiting the manufacture and sale of our products or the use of our technologies which are deemed as infringing.

If any of these events occurs, our business will suffer and the market price of our common shares could decline.

The success of our business may depend on licensing vaccine components from, and entering into collaboration arrangements with, third parties. We cannot be certain that our licensing or collaboration efforts will succeed or that we will realize any revenue from them.

The success of our business strategy depends, in part, on our ability to enter into licensing and collaboration arrangements and to effectively manage the resulting relationships. Our ability to enter into agreements with commercial partners depends in part on our ability to convince them of the value of our technology and know-how. This may require substantial time and effort. While we anticipate expending substantial funds and management effort, we cannot assure that strategic relationships will result or that we will be able to negotiate additional strategic agreements in the future on acceptable terms, if at all.

We may incur significant financial commitments to collaborators in connection with potential licenses and sponsored research agreements. In addition, we may not be able to control the areas of responsibility undertaken by our strategic partners and may be adversely affected should these partners prove to be unable to carry a product candidate forward to full commercialization or should they lose interest in dedicating the necessary resources toward developing any such product quickly.

Third parties may terminate our licensing and other strategic arrangements if we do not perform as required under these arrangements. Generally, we expect that agreements for rights to develop technologies will require us to exercise diligence in bringing product candidates to market and may require us to make milestone and royalty payments that, in some instances, could be substantial. Our failure to exercise the required diligence or make any required milestone or royalty payments could result in the termination of the relevant license agreement, which could have a material adverse effect on us and our operations. In addition, these third parties breach or terminate their agreements with us or otherwise fail to conduct their activities in connection with our relationships in a timely manner. If we or our partners terminate or breach any of our licenses or relationships, we may:

• lose our rights to develop and market our product candidates;

• lose patent and/or trade secret protection for our product candidates;

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• experience significant delays in the development or commercialization of our product candidates;

• not be able to obtain any other licenses on acceptable terms, if at all; and

• incur liability for damages.

Licensing arrangements and strategic relationships in our industry can be complex, particularly with respect to intellectual property rights. Disputes may arise in the future regarding ownership rights to technology developed by or with other parties. These and other possible disagreements between us and third parties with respect to our licenses or our strategic relationships could lead to delays in the research, development, manufacture and commercialization of our product candidates. These disputes could also result in litigation or arbitration, both of which are time-consuming and expensive. Moreover, these third parties may pursue alternative technologies or product candidates either on their own or in strategic relationships with others in direct competition with us.

Any cessation or suspension of our collaborations with scientific advisors and academic institutions may increase our costs in research and development, lengthen our new vaccines development process and lower our efficiency in new products development.

We work with scientific advisors and academic collaborators who assist us in some of our research and development efforts. Some of our pre-clinical and research programs rely heavily on such collaborators and we generally benefit considerably from the resources, technology and experience these collaborations can provide. These scientists are not, however, our employees and may have other commitments that limit their availability to us. If a conflict of interest arises between their work for us and their work for another entity, we may lose the services of these scientists and institutions. Any cessation or suspension of our collaborations with scientific advisors and academic institutions may increase our research and development costs, lengthen our new vaccine development process and lower our efficiency in new products development. In addition, although our scientific advisors and academic collaborators generally sign agreements not to disclose our confidential information, valuable proprietary knowledge may become publicly known which would compromise our competitive advantage.

We may lose the right to use “科兴” (Kexing) on our vaccine products and/or as part of our trade name.

Since 2001, Sinovac Beijing has been using “科兴” (Kexing) as part of its Chinese trade name. Sinovac Dalian began to use “科兴” (Kexing) as part of its Chinese trade name in 2010. Shenzhen Kexing successfully registered “科兴” trademark in China for Class 5 (Pharmaceuticals) under the International Classification of Goods and Services in 2001. To protect our interest in using “科兴” in our trade names, we applied to register “科兴” in China for Class 42 (Scientific & Technological Services &Research) in 2006 and the PRC Trademark Office of the State Administration for Industry and Commerce approved our application in 2010.

As of the date of this annual report, the “科兴” trademark registered and owned by Shenzhen Kexing has not been identified as “Well-known Trademark” by the relevant PRC authorities. If the “科兴” trademark owned by Shenzhen Kexing is ever officially identified as a “Well-Known Trademark” in the future, however, we may be subject to trademark infringement claim for the use of “科兴” in our trade names. It is possible that we might lose our ability to use the “科兴” trademark in our trade names due to a successful trademark infringement claim, which may adversely affect our ability to maintain and protect our brands, cause us to incur litigation costs and divert resources and management attention.

Risks Related to Doing Business in China

Adverse changes in political, economic and other policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our products and materially and adversely affect our competitive position.

We conduct a significant part of our operations in China, and generated approximately 71.6% of our sales in China in 2020. Accordingly, our business, financial condition, results of operations and prospects are affected significantly by economic, political and legal developments in China. The Chinese economy differs from the economies of most developed countries in many respects, including:

• the extent of government involvement;

• the level of development;

• the growth rate;

• the control of foreign exchange;

• the allocation of resources;

• an evolving regulatory system; and

• a lack of sufficient transparency in the regulatory process.

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While the Chinese economy has experienced significant growth in the past 30 years, growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.

The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, the Chinese government still owns a substantial portion of the productive assets in China. The PRC government also exercises significant control over Chinese economic growth by allocating of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Efforts by the PRC government to slow the pace of growth of the Chinese economy could result in hospitals spending less, which in turn could reduce demand for our products.

The political relationship among foreign countries and China is subject to sudden fluctuations and periodic tensions. Changes in political conditions in China and changes in the state of foreign relations are difficult to predict and could adversely affect our product export and international collaborations. This could lead to a decline in our profitability in the future.

Although the Chinese economy has grown significantly in the past decade, that growth may not continue, as evidenced by the slowing of the growth of the Chinese economy since 2012. Any adverse change in the economic conditions or government policies in China, including the economic slowdown in 2020 due to the COVID-19 pandemic, could have a material adverse effect on overall economic growth and the level of healthcare investments and expenditures in China, which in turn could lead to a reduction in demand for our products and consequently have a material adverse effect on our businesses.

Future changes in laws, regulations or enforcement policies in China could adversely affect our business.

Laws, regulations and enforcement policies in China, including those regulating our business, are evolving and subject to future change. Future changes in laws, regulations or administrative interpretations, or stricter enforcement policies by the PRC government, could impose more stringent requirements on us, including fines or other penalties. Changes in applicable laws and regulations may also increase our operating costs. Compliance with such requirements could impose substantial additional costs or otherwise have a material adverse effect on our business, financial condition and results of operations. These changes may relax some requirements, which could be beneficial to our competitors or could lower market entry barriers and increase competition. Further, regulatory agencies in China may, sometimes abruptly, change their enforcement practices.

Prior enforcement activity, or lack of enforcement activity, is not necessarily predictive of future actions. Any enforcement actions against us could have a material adverse effect on us and the market price of our common shares. In addition, any litigation or governmental investigation or enforcement proceedings in China may be protracted and may result in substantial costs and diversion of resources and management attention, negative publicity, damage to our reputation and decline in the price of our common shares.

We rely on dividends paid by our PRC subsidiaries for our cash needs. If they are unable to pay us sufficient dividends due to statutory or contractual restrictions on their abilities to distribute dividends to us, our various cash needs may not be met.

We are a holding company, and we rely on the dividends paid by our PRC subsidiaries, including majority-owned subsidiaries Sinovac Beijing, Sinovac Dalian and Sinovac LS and our wholly owned subsidiary Sinovac Biomed Co., Ltd. (“Sinovac Biomed”) for our cash needs, including the funds necessary to pay any dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. The payment of dividends in the PRC is subject to limitations. Regulations in the PRC currently permit payment of dividends by our PRC subsidiaries only out of accumulated profits as determined in accordance with accounting standards and regulations in China. For instance, in accordance with the regulations in China, Sinovac Beijing, Sinovac Dalian, Sinovac LS and Sinovac Biomed are required to set aside at least 10% of its after-tax profits each year to contribute to its reserve fund until the accumulated balance of such reserve fund reaches 50% of the registered capital of each company.

Sinovac Beijing, Sinovac Dalian, Sinovac LS and Sinovac Biomed are also required to set aside, at the discretion of their respective board of directors, a portion of their annual income after taxes to their employee welfare and bonus funds. These funds reduce the ability of the subsidiaries to pay dividends in cash.

In addition, if Sinovac Beijing, Sinovac Dalian, Sinovac LS or Sinovac Biomed incurs debt on its own in the future, the instruments governing the debt may restrict either company’s ability to pay dividends or make other distributions to us.

Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.

We receive over 72% of our revenues in renminbi, which currently is not a freely convertible currency. A portion of our revenues may be converted into other currencies to meet our foreign currency obligations, including, among others, payment of dividends declared by our

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subsidiaries. Under China’s existing foreign exchange regulations, Sinovac Beijing, Sinovac LS, Sinovac Dalian and Sinovac Biomed are able to pay dividends in foreign currencies without prior approval from the State Administration of Foreign Exchange (“SAFE”) by complying with certain procedural requirements. However, the PRC government could take future measures to restrict access to foreign currencies for current account transactions.

Our PRC subsidiaries’ ability to obtain foreign exchange is subject to significant foreign exchange controls and, in the case of amounts under the capital account, requires the approval of and/or registration with PRC government authorities, including SAFE. In particular, if we finance our PRC subsidiaries by means of foreign currency from us or other foreign lenders, the amount is not allowed to exceed the difference between the amount of total investment and the amount of the registered capital as approved by the Ministry of Commerce and registered with SAFE. Such loans must also be registered with SAFE as foreign debts. If we finance our PRC subsidiaries by means of additional capital contributions from offshore, the amount of these capital contributions must first be approved by the relevant government approval authority. These limitations could affect the ability of our PRC subsidiaries to obtain foreign exchange through debt or equity financing.

Fluctuation in the value of the renminbi may have a material adverse effect on your investment.

The value of the renminbi against the U.S. dollar, Euro and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies. The PRC government allows the renminbi to fluctuate within a narrow and managed band against a basket of certain foreign currencies.

Since June 2010, the Renminbi has fluctuated against the U.S. dollar. Since October 1, 2016, the RMB has joined the International Monetary Fund’s basket of currencies that make up the Special Drawing Right, along with the U.S. dollar, the Euro, the Japanese yen and the British pound. Since the fourth quarter of 2016, the RMB depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may announce further changes to the exchange rate system and the RMB could appreciate or depreciate significantly in value against the U.S. dollar.

It is difficult to predict how long such depreciation of the RMB against the U.S. dollar may last and when and how the relationship between the renminbi and the U.S. dollar may change again. The PRC government indicated that it will make the foreign exchange rate of the renminbi more flexible and widen the trading band of renminbi, which increases the possibility of sharp fluctuations in renminbi’s value in the future as well as the unpredictability associated with renminbi’s exchange rate. There remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in further and more significant fluctuations of the renminbi against foreign currencies.

As the majority of our costs and expenses are denominated in renminbi, a resumption of the appreciation of the renminbi against the U.S. dollar would further increase our costs in U.S. dollar terms. In addition, as our operating subsidiaries in China receive revenues in renminbi, any significant depreciation of the renminbi against the U.S. dollar may have a material adverse effect on our revenues in U.S. dollar terms and financial condition, and the value of, and any dividends payable on, our common shares. For example, to the extent that we need to convert U.S. dollars into renminbi for our operations, appreciation of the renminbi against the U.S. dollar would have an adverse effect on the renminbi amount we receive from the conversion. Conversely, if we decide to convert our renminbi into U.S. dollars for the purpose of making payments for dividends on our common shares or for other business purposes, appreciation of the U.S. dollar against the renminbi would have a negative effect on the U.S. dollar amount available to us.

Our business benefits from certain government tax incentives. Expiration, reduction or elimination of these incentives will increase our tax expenses and in turn decrease our net income.

Pursuant to the PRC Enterprise Income Tax Law (the “EIT Law”) and its implementation rules, both domestic companies and the foreign invested enterprises (the “FIEs”) are subject to a unified income tax rate of 25%. Preferential tax treatments will continue to be granted to high and new technology enterprises that conduct business in encouraged sectors, whether FIEs or domestic companies.

Sinovac Beijing reconfirmed its “High and New Technology Enterprises,” or HNTE, status and obtained the corresponding certificate in 2020 for a period of three years. As a result, subject to satisfaction of applicable criteria as confirmed by the competent authorities, Sinovac Beijing was entitled to a reduced enterprise income tax (“EIT”) rate of 15% from 2020 to 2022. Sinovac Dalian reconfirmed its HNTE status in 2020 for another three-year period, which is from 2020 to 2022. Sinovac LS, being confirmed as a HNTE in 2020 for a period of three years, is subject to the preferential EIT of 15% from 2020 to 2022. The PRC government could eliminate any of these preferential tax treatments before their scheduled expiration. Expiration, reduction or elimination of such tax incentives will increase our tax expenses and in turn decrease our net income.

Under the EIT Law, dividends payable by us and gains on the disposition of our shares may be subject to PRC taxation.

If we were considered a PRC resident enterprise under the EIT Law, our shareholders who are deemed non-resident enterprises may be subject to the EIT at the rate of 10% upon the dividends payable by us or upon any gains realized from the transfer of our shares, if such income is deemed derived from China, provided that (i) such foreign enterprise investor has no establishment or premises in China or (ii) it has an establishment or premises in China but its income derived from China has no real connection with such establishment or premises. If we were required under the EIT Law to withhold PRC income tax on our dividends payable to our non-PRC enterprise shareholders, or if any gains

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realized from the transfer of our shares by our non-PRC enterprise shareholders were subject to the EIT, such shareholders’ investment in our shares would be materially and adversely affected.

PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits.

SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles (“SAFE Circular 37”) on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005. SAFE Circular 37 requires PRC residents to register with the local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.”

SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division, or other material events. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary.

Failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls. According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015 by SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015.

Mr. Weidong Yin has made the required SAFE registration with respect to his investments in our company. However, we may not be aware of the identities of all of our beneficial owners who are PRC residents. We do not control our beneficial owners and cannot assure you that all of our PRC-resident beneficial owners will comply with SAFE Circular 37 and subsequent implementation rules. The failure of our beneficial owners who are PRC residents to register or amend their foreign exchange registrations in a timely manner pursuant to SAFE Circular 37 and subsequent implementation rules, or the failure of future beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in SAFE Circular 37 and subsequent implementation rules, may subject such beneficial owners or our PRC subsidiaries to fines and legal sanctions.

Furthermore, since it is unclear how any future regulation concerning offshore or cross-border transactions will be implemented by the relevant PRC government authorities, we cannot predict how these regulations will affect our business operations or future strategy. Failure to register or comply with relevant requirements may also limit our ability to contribute additional capital to our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to our company. These risks may have a material adverse effect on our business, financial condition and results of operations.

Any failure to comply with PRC regulations regarding our employee equity incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies due to their position as director, senior management or employees of the PRC subsidiaries of the overseas companies may submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. Our directors, executive officers and other employees who are PRC residents and who have been granted options and restricted shares were able to follow SAFE Circular 37 to apply for the foreign exchange registration before our company became an overseas listed company.

Since our company has become an overseas listed company, we and our directors, executive officers and other employees who are PRC residents and who have been granted options are subject to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, issued by SAFE in February 2012, according to which, employees, directors, supervisors and other management members participating in any stock incentive plan of an overseas publicly listed company who are PRC residents are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain other procedures.

Failure to complete SAFE registrations may subject them to fines and legal sanctions and may also limit the ability to make payments under our equity incentive plans or receive dividends or sales proceeds related thereto, or our ability to contribute additional capital into our subsidiaries in China and limit such subsidiaries’ ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt additional equity incentive plans for our directors and employees under PRC law.

In addition, the State Administration for Taxation has issued circulars concerning employee share options or restricted shares. Under these circulars, employees working in the PRC who exercise share options, or whose restricted shares or restricted share units, or RSUs, vest, will be subject to PRC individual income tax. The PRC subsidiaries of an overseas listed company have obligations to file documents related to employee

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share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees related to their share options, restricted shares or RSUs. If the employees fail to pay, or the PRC subsidiaries fail to withhold, their income taxes according to relevant laws, rules and regulations, the PRC subsidiaries may face sanctions imposed by the tax authorities or other PRC government authorities.

PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans or additional capital contributions to our PRC operating subsidiaries and affiliated entities.

In funding our PRC subsidiaries, we must comply with PRC legal requirements relating to foreign debt registration and to PRC foreign-investment companies’ “registered capital” and “total investment” ratio. “Registered capital” refers to the capital contributed to or paid into a PRC foreign-investment company in cash or in kind, and “total investment” refers to the estimated amount of the total capital as required to enable and support the full scale operation of a PRC foreign-investment company when the company is initially established. The amounts of a PRC foreign-investment company’s registered capital and total investment are set forth in the company’s articles of association and joint venture contract (in the case of a Sino-foreign joint venture) and approved by the competent government authority in advance. The balance between the required “total investment” and the “registered capital” can be satisfied by borrowings or loans obtained by the company. In another word, such loans cannot exceed the difference between such company’s registered capital and total investment.

Loans by us or Sinovac Hong Kong to Sinovac Beijing, Sinovac LS, Sinovac Dalian or Sinovac Biomed cannot exceed the difference between such company’s registered capital and total investment. The total investment and registered capital can be adjusted after the establishment of a foreign-investment companies with the approvals of all the shareholders or unanimous approvals of the board of directors. In the case of Sinovac Beijing, Sinovac Dalian or Sinovac LS, the approval from its respective minority shareholders is required to increase the amount of total investment. Further, all the loans from the overseas lenders must be registered with SAFE as foreign debts.

We may also decide to finance our PRC subsidiaries by making additional capital contributions. These additional contributions must be approved by the government approval authority and, in the case of Sinovac Beijing or Sinovac Dalian and Sinovac LS, the approval from its respective minority shareholders. We cannot assure you that we will be able to obtain these government registrations or approvals, or the approval of the minority shareholders on a timely basis, if at all, with respect to future loans or additional capital contributions by us to our subsidiaries. If we fail to obtain such registrations or approvals, our ability to capitalize our PRC operations would be negatively affected, which could adversely and materially affect the liquidity of our subsidiaries and our ability to expand the business.

Because we are incorporated under Antigua and Barbuda law, substantially all of our operations, property and assets are located in China and all of our major shareholders, directors and officers and substantially all of their assets are located outside of the United States, you may be unable to protect your shareholder rights under U.S. law in a court in the United States.

We are incorporated in Antigua and Barbuda. Our corporate affairs are governed by our Articles of Incorporation and By-laws and by the International Business Corporations Act and common law of Antigua and Barbuda. The rights of shareholders to take legal action against our directors, officers and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us are to a large extent governed by the International Business Corporations Act and common law of Antigua and Barbuda. The International Business Corporations Act was modelled on Canadian company law and the common law of Antigua and Barbuda is derived from comparatively limited judicial precedent in Antigua and Barbuda, as well as from English common law, which has persuasive, but not binding, authority on a court in Antigua and Barbuda.

The rights of our shareholders and the fiduciary responsibilities of our directors under Antigua and Barbuda law are not as clearly established as they would be under statutes or judicial precedents in the United States. Among other things, Antigua and Barbuda has a less developed body of securities laws as compared to the United States, and provides significantly less protection to investors. Further, Antigua and Barbuda’s body of securities law, and the experience of its courts in addressing corporate and securities law issues of a type often experienced by public companies, is likely less developed than that of some of the other jurisdictions where publicly traded China-based companies are incorporated, such as the Cayman Islands.

It may be difficult or impossible for you to bring an action against us or our directors or officers in Antigua and Barbuda courts or to enforce or protect your rights under U.S. securities laws or otherwise. Even if you are successful in bringing an action of this kind, you may be unable to enforce a judgment against our assets or the assets of our directors and officers under the laws of Antigua and Barbuda.

There is doubt as to whether Antigua and Barbuda courts would enforce judgments of United States courts obtained in actions against us or our directors or officers that are predicated upon the civil liability provisions of the Securities Act, or in original actions brought against us or such persons predicated upon the Securities Act. There is no treaty in effect between the United States and Antigua and Barbuda providing for such enforcement, and there are grounds upon which Antigua and Barbuda courts may not enforce judgments of United States courts. In addition, Antigua and Barbuda corporations may not have standing to initiate a shareholder derivative action before the federal courts of the United States.

PRC courts may recognize and enforce foreign judgments in accordance with the PRC Civil Procedures Law based either on treaties between the PRC and the country where the judgment is made or on reciprocity between jurisdictions. If there are no treaties or reciprocity arrangements between the PRC and a foreign jurisdiction where a judgment is rendered, matters relating to the recognition and enforcement of the foreign judgment in the PRC may be resolved through diplomatic channels. The PRC does not have any treaties or other arrangements with the United States or Antigua and Barbuda that provide for the reciprocal recognition and enforcement of foreign judgments. As a result, it is generally difficult to enforce in the PRC a judgment rendered by a U.S. or Antigua and Barbuda court.

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As a result of all of the above, as well as the fact that substantially all of our property, assets and operations are located in China and all of our major shareholders, directors and officers and substantially all of their assets are located outside of the United States, you may be unable to protect your shareholder interests through actions against us or our officers, directors or major shareholders.

ITEM 4. Information on the Company

A. History and Development of the Company

Our legal and commercial name is Sinovac Biotech Ltd. Our principal executive offices are located at No. 15, Zhi Tong Road, Zhongguancun Science & Technology Park, Changping District, Beijing 102200, PRC. Our telephone number at this address is +86-10-5693-1800. Our registered address is located at the office of APN Corporate and Management Services Limited, Unit #4 Bryson’s Complex, Friars Hill Road, St. John’s, Antigua. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.

We are a holding company and conduct our business through our 73.09% majority-owned subsidiary Sinovac Beijing, our 59.24% majority-owned subsidiary Sinovac LS, our 68% majority-owned subsidiary Sinovac Dalian, and our wholly owned subsidiaries Sinovac Biomed, Sinovac Hong Kong and Sinovac Biotech (Singapore) Pte. Ltd. (“Sinovac Singapore”). Sinovac Beijing was incorporated on April 28, 2001, Sinovac LS was incorporated on May 7, 2009, Sinovac Dalian was established on January 19, 2010, Sinovac Biomed was incorporated on April 16, 2015, Sinovac Hong Kong was incorporated on October 21, 2008 and Sinovac Singapore was incorporated on August 6, 2020.

We were incorporated in Antigua and Barbuda on March 1, 1999 as an Antiguan company with limited liability under the laws of Antigua and Barbuda pursuant to the International Business Corporations Act. Before we adopted our current name on October 21, 2003, we were called Net-Force System Inc. and were primarily engaged in the online gaming business. In September 2003, we issued ten million new shares to Lily Wang, one of our then principal shareholders to acquire a 51% equity interest in Sinovac Beijing. Ms. Wang had contracted to purchase these shares from certain of Sinovac Beijing’s then shareholders for cash immediately before the above 51% share transfer. However, this 51% equity interest in Sinovac Beijing was transferred to us directly from those shareholders and was recorded under applicable PRC law transfer documents as a cash transaction. Lily Wang was responsible for paying the cash to those shareholders. The transfer of the Sinovac Beijing equity interest to us was registered and approved by PRC government authorities in August 2004. In September 2004, we acquired an additional 20.6% equity interest in Sinovac Beijing for approximately $3.3 million in cash. In October 2011, we further acquired an additional 1.53% equity interest in Sinovac Beijing by contributing the dividends declared to Sinovac Hong Kong but unpaid in amount of RMB18.6 million ($2.9 million). We currently own 73.09% of the equity interests in Sinovac Beijing and Sinobioway Medicine owns a 26.91% interest.

In January 2004, we entered into a share purchase agreement with Heping Wang and issued him 3.5 million of our common shares and a promissory note in the amount of $2.2 million to acquire from him a 100% equity interest in Tangshan Yian. Mr. Wang had contracted to purchase these shares from Tangshan Yian’s then two shareholders immediately before the above 100% share transfer. However, this 100% equity interest in Tangshan Yian was transferred to us directly from those shareholders and was recorded under applicable PRC law transfer documents as a cash transaction. Heping Wang was responsible for paying the cash to the two shareholders. The transfer of the Tangshan Yian equity interest by Mr. Wang to us was registered and approved by PRC government authorities in November 2004.

In the first quarter of 2008, we issued and sold an aggregate of 2.5 million common shares at $3.90 per share to Sansar Capital Management. We received approximately $9.75 million in gross proceeds from this private placement of our common shares.

In October 2008, we established Sinovac Hong Kong, a wholly owned subsidiary focused primarily on registering and distributing current and newly-developed vaccine products in Hong Kong and exporting our products abroad. In addition, Sinovac Hong Kong seeks research and development collaboration opportunities with third parties in Hong Kong.

In May 2009, Sinovac LS was incorporated with a registered capital of $5 million. In June 2016, our board of directors approved an additional capital contribution of $4.6 million, which has been fully provided.

In November 2009, we entered into a joint venture agreement with Dalian Jin Gang Group to establish Sinovac Dalian. In January 2010, we established Sinovac Dalian which focuses on the research, development, manufacturing and commercialization of live attenuated vaccines, such as varicella and mumps vaccines for human use. Pursuant to the joint venture agreement, we made an initial cash contribution of RMB60.0 million ($9.2 million) in exchange for a 30% equity interest in Sinovac Dalian and Dalian Jin Gang Group made an asset contribution of RMB140.0 million ($21.5 million), including manufacturing facilities, production lines and land use rights, in exchange for the remaining 70% interest in Sinovac Dalian.

In December 2010, we purchased an additional 25% equity interest in Sinovac Dalian from Dalian Jin Gang Group for consideration of RMB50.0 million ($7.7 million). In 2014, the board of directors passed a resolution to increase our capital contribution to Sinovac Dalian in the amount of RMB80.0 million ($12.3 million), which aimed to increase Sinovac’s equity ownership from 55% to 67.86%. RMB50.0 million ($7.7 million) was initially provided through foreign debt with the expectation of a debt to equity swap of the total amount after the remaining RMB30.0 million ($4.6 million) is provided to Sinovac Dalian. In 2016, an additional RMB30.0 ($4.6 million) million was made to Sinovac Dalian through foreign debt and subsequently the debt to equity swap for a total of RMB80.0 million ($12.3 million) was completed. In October 2016, our equity ownership in Sinovac Dalian increased to 67.86%.

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In February 2010, we closed a public offering of our common shares. We issued and sold 11.5 million common shares at $5.75 per share. We received net proceeds of approximately $61.8 million, after deducting underwriting discounts and commissions and offering expenses payable.

In 2013, we increased the capital investment to Tangshan Yian with the total amount of $4 million, which we lent to Tangshan Yian in 2010. In the same year, we lent Tangshan Yian $1 million to be used for sales and marketing spending and other corporate purposes and operational activities. In December 2015, we entered into an equity interest transfer agreement with Beijing Kuai Le Xing Biotech Co., Ltd. to transfer our 100% equity interest in Tangshan Yian to Beijing Kuai Le Xing Biotech Co., Ltd. for consideration of RMB13.0 million ($2.0 million). The disposal of Tangshan Yian was completed in February 2016.

In April 2015, we established Sinovac Biomed, which is 100% owned by Sinovac Hong Kong. Sinovac Biomed focuses on the distribution of vaccine products as well as providing consulting services in the vaccination industry.

In March 2016, we adopted the Rights Agreement. Pursuant to the Rights Agreement, subject to limited exceptions, upon (i) a person or group obtaining ownership of 15% or more of our common shares or (ii) the commencement or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in the beneficial ownership by a person or group of 15% or more of our common shares, in each case, without the approval of our board of directors, each Right will entitle the holders, other than the Acquiring Person, to buy, at an exercise price of $30.00, one one-thousandth of a share of our newly created series A junior participating preferred shares (the “Series A Preferred Shares”). Holders are entitled to receive, in lieu of each one one-thousandths of a Series A Preferred Share, common shares having a market value at that time of twice the Right’s exercise price. Our board of directors is entitled to redeem the Rights at $0.001 per Right at any time before the Rights are exercisable. We refer to the person who acquired 15% or more of the outstanding common shares of Sinovac Antigua as the “Acquiring Person.” As described above, on March 5, 2018, Sinovac Antigua filed a lawsuit in the Court of Chancery of the State of Delaware seeking a determination whether the Shareholder Group had triggered the Rights Agreement by forming a group holding approximately 45% of Sinovac Antigua’s outstanding shares, in excess of the plan’s threshold of 15%, and acting in concert prior to the 2017 AGM.

On February 18, 2019, after reviewing the judgment of the Antigua Court of December 19, 2018 and considering all additional facts known to the board of directors, our board of directors determined that the Collaborating Shareholders became Acquiring Persons as defined under the Rights Agreement, and that their conduct resulted in a Trigger Event under the Rights Agreement. As a result, the Rights held by the Collaborating Shareholders were deemed void.

Pursuant to the Rights Agreement, the board of directors elected to exchange each valid and outstanding Right held by Sinovac Antigua’s shareholders (not including the Collaborating Shareholders) for an Exchange Share. The total Exchange Shares to be received by any holder will be rounded up to the nearest whole common share and rounded down to the nearest whole Series B preferred share. On February 22, 2019, in order to facilitate the Exchange, approximately 27.8 million Common Shares and approximately 14.6 million Series B Preferred Shares were issued into a trust for the benefit of the holders of the valid and outstanding Rights (not including the Collaborating Shareholders). As of the close of trading in the United States on February 22, 2019, the Rights converted into the right to receive the Exchange Shares and will no longer trade with the common shares, and will not otherwise trade on any securities market.

In February 2019, we amended and restated the Rights Agreement. Pursuant to the amended and restated Rights Agreement, subject to limited exceptions, upon (i) a person or group obtaining ownership of 15% or more of the aggregate total of our common shares and Series B Preferred Shares then issued and outstanding or (ii) the commencement or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the aggregate total of our common shares and Series B Preferred Shares then issued and outstanding, in each case, without the approval of our board of directors, each Right will entitle the holders, other than the acquiring person, to buy, at an exercise price of $20.00, one one-thousandth of a share of our newly created series C junior participating preferred shares (the “Series C Preferred Shares”). Holders are entitled to receive, in lieu of each one one-thousandths of a Series C Preferred Share, common shares and/or Series B Preferred Shares having a market value at that time of twice the Right’s exercise price. Our board of directors is entitled to redeem the Rights at $0.001 per Right at any time before the Rights are exercisable. We refer to the person who acquired 15% or more of the outstanding common shares or Series B Preferred Shares of Sinovac Antigua as the “acquiring person.” In February 2020 and 2021, we further amended the amended and restated Rights Agreement to extend its term until February 2022.

On March 6, 2019, the Delaware Chancery Court entered a status quo order providing that Sinovac Antigua not distribute any of the Exchange Shares from the trust until the final disposition of the pending Delaware litigation or further order of the Court. On April 4, 2019, the Eastern Caribbean Supreme Court, Court of Appeal issued an order that restrains Sinovac Antigua from taking further action under the Rights Agreement, including the distribution of the previously issued Exchange Shares to the holders of valid Rights, until the conclusion of 1Globe Capital, LLC’s appeal of the December 19, 2018 Judgment of the Antigua Court. On April 8, 2019, the Delaware Chancery Court stayed the Delaware litigation pending the outcome of 1Globe’s appeal of the Antigua Judgment. 1Globe’s appeal of the Antigua Court’s Judgment was heard on September 18, 2019, and the appeal decision is pending as of the date of this annual report. See “Legal and Administrative Proceedings” for additional information. 

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In May 2020, Prime Success and Vivo Capital invested $15 million in our wholly owned subsidiary, Sinovac LS, to further the development of CoronaVac. The two investors each loaned $7.5 million in the form of a convertible loan that bore interest, or, at the investor’s election, converted into 7.5% of the total equity interest of Sinovac LS. Later each of Prime Success and Vivo Capital exercised its right to convert its convertible loan into 7.5% of the total equity interests of Sinovac LS. After the investment made by Sino Biopharmaceutical Limited as described below, Prime Success and Vivo Capital each holds approximately 6.3% stake in Sinovac LS.

On August 6, 2020, we established Sinovac Singapore, a wholly owned subsidiary focuses primarily on registering and distributing current and newly-developed vaccine products in Singapore and exporting our products abroad. In addition, Sinovac Singapore seeks research and development collaboration opportunities with third parties in Asia.

In November 2020, we increased our equity ownership of Sinovac Dalian from 67.86% to 68%, by converting RMB46.6 million ($7.0 million) debt into equity.

In December 2020, Sino Biopharmaceutical Limited, an innovative research and development driven pharmaceutical conglomerate in China, through its affiliates, invested approximately $500 million in exchange for approximately 15% equity interest in Sinovac LS in funding for further development, capacity expansion and manufacturing of the CoronaVac. After this investment, our equity ownership of Sinovac LS decreased to 59.24%.

For additional information regarding our principal capital expenditures, see “— D. Property, Plants and Equipment” and “Item 5. Operating and Financial Review and Prospects —B. Liquidity and Capital Resources — Capital Expenditures.”

The SEC maintains an Internet site that contains our reports, proxy and information statements, and other information that we filed electronically with the SEC at http:// www.sec.gov.

Investor inquiries should be directed to us at the address and telephone number of our principal executive offices set forth above. Our website is http://www.sinovac.com. The information contained on our website does not form part of this annual report.

B. Business Overview

We are a fully integrated China-based biopharmaceutical company that focuses on research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases including, without limitation, hepatitis A, hepatitis B, hand foot and mouth disease (“HFMD”) caused by EV71, seasonal influenza, H5N1 and H1N1 pandemic influenza, coronavirus, varicella and mumps. In 2002, we launched our first product, Healive, which was the first inactivated hepatitis A vaccine developed, produced and marketed by a China-based manufacturer. In 2005, we received regulatory approvals for the production of Bilive in China, a combined hepatitis A and B vaccine, and Anflu, a split viron influenza vaccine. In April 2008, we received the regulatory approval for the production in China of our whole viron H5N1 pandemic influenza (avian flu) vaccine, which is the only vaccine approved for sale to the Chinese national vaccine stockpiling program.

In September 2009, we were granted a production license for Panflu.1, which was the first approved vaccine in the world against the influenza A H1N1 virus (swine flu). In December 2011, Sinovac Dalian obtained the production license from NMPA for its mumps vaccine product and launched the mumps vaccine in late 2012. In December 2015, NMPA issued the new drug certificate and production license for Inlive, our EV71 vaccine. In January 2016, NMPA issued the GMP certificate and Inlive, our EV71 vaccine, was commercially launched in China in June 2016. In February 2021, NMPA granted a conditional marketing authorization for CoronaVac, our COVID-19 vaccine in individuals aged 18 and above. As of the date of this annual report, CoronaVac is being used under emergency use approval in Indonesia, Brazil, Turkey and Chile and we are also actively seeking regulatory approval of CoronaVac in other countries and regions around the world in an effort to maximize global accessibility and affordability of the COVID-19 vaccine.

Our pipeline consists of various vaccine candidates in the pre-clinical and clinical development phases in China. We obtained the approvals to conduct clinical trials of PPV, sIPV, and quadrivalent influenza vaccine (“QIV”) in May 2014, November 2015 and November 2016, respectively. And the new drug applications for PPV, sIPV and QIV were received by NMPA in June 2017, January 2019 and March 2019, respectively. NMPA approved and issued a product license for our varicella vaccine, QIV vaccine and PPV vaccine in December 2019, June 2020 and December 2020, respectively. We initiated the development of CoronaVac, an inactivated vaccine against COVID-19, on January 28, 2020 and began rolling submission to NMPA since September 2020 and NMPA carried out rolling reviews when the submission was made. On February 5, 2021, NMPA granted a conditional marketing authorization to us for CoronaVac in individuals aged 18 and above.

Our Products

We specialize in the research, development, manufacturing and commercialization of vaccines for infectious diseases with significant unmet medical need. Set forth below is a chart that outlines our current marketed products and those that we have developed or are developing.

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(1) Our Panflu whole viron pandemic influenza vaccine did not undergo phase III clinical trials because none were required by the relevant authorities in order to receive regulatory approval.

(2) Our Panflu split viron pandemic influenza Vaccine did not undergo phase III clinical trials because none were required by the relevant authorities in order to receive regulatory approval.

(3) Our mumps vaccine did not undergo clinical trials because none were required by the relevant authorities.

(4) Our COVID-19 vaccine, CoronaVac, has been granted the conditional marketing authorization in China. In other countries outside China, CoronaVac has been granted either the emergency use approval or conditional marketing authorization.

• Healive. In May 2002, we obtained the final PRC regulatory approval for the production of Healive, the first inactivated hepatitis A vaccine developed in China. The hepatitis A virus, which is endemic in China and other developing countries, primarily impacts the liver by causing it to swell and preventing it from functioning properly. The disease is highly contagious and can be spread by close personal contact, consuming contaminated food or drinking water that has been contaminated by hepatitis A virus. According to the WHO, as no specific treatment exists for hepatitis A, prevention is the most effective approach against the disease. In February 2008, the PRC government included hepatitis A vaccine into its national immunization program, and announced plans to expand vaccination to newborns nationwide by the end of 2010. Our production line to manufacture our hepatitis vaccines, Healive and Bilive, interchangeably has an aggregate combined production capacity of approximately 10 million doses annually. We are selling Healive in Asia and Latin America and Mediterranean region.

• Bilive. In June 2005, we obtained the final PRC regulatory approval for the production of Bilive, the first combined inactivated hepatitis A and B vaccine developed and marketed in China. Bilive is a combination vaccine formulated with purified inactivated hepatitis A virus antigen, which we manufacture, and recombinant (yeast) hepatitis B surface antigen, which we source from a third-party supplier. Recipients under China’s vaccination program must privately pay for Bilive vaccinations. Bilive is designed for boost immunization or for users in the private-pay market who prefer the convenience of one inoculation rather than two. Similar to hepatitis A, hepatitis B is endemic in China, a major disease worldwide and a serious global public health issue. A substantial percentage of people infected with the hepatitis B virus carry chronic or lifelong infections. The chronically infected are at a high risk of death from cirrhosis of the liver or liver cancer. We are the only supplier in China that produces a combined inactivated hepatitis A and B vaccine. Our production line to manufacture our hepatitis vaccines, Healive and Bilive, interchangeably has an aggregate combined production capacity of approximately 10 million doses annually.

• Anflu. In October 2005, we received the final approval from NMPA to produce Anflu, a vaccine against influenza. We began marketing Anflu in September 2006. The primary influenza vaccine used worldwide is the split viron vaccine, which contains virus particles disrupted by detergent treatment. The market penetration of the seasonal flu vaccine in China is significantly below that in the developed markets. We are the first Influenza Vaccine Supply (“IVS”) taskforce member from a developing country that collaborates with world-class partners in influenza vaccine research. We didn’t supply season flu vaccine in 2018 due to the production disruptions resulting from the actions of the representative of Sinobioway Medicine. Further, Sinovac Beijing was forced to destroy the affected products. To maintain product safety, Sinovac Beijing temporarily suspended production at the impacted facility. The production of Anflu resumed at this facility in 2019. Our production line to manufacture our flu vaccines, Anflu, QIV, Panflu and Panflu.1, interchangeably has an annual production capacity of approximately 15 million doses of Anflu. Our Anflu products are sold to Asia, Africa, and Mediterranean region.

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• Panflu. In April 2008, we were granted a production license for Panflu by NMPA. Panflu is the first and only approved vaccine available in China against the H5N1 influenza virus. The vaccine is approved for supply within China to the Chinese national vaccine stockpiling program and may not be sold directly to the Chinese commercial market. Panflu is also registered for sale in Hong Kong. Our production line to manufacture our flu vaccines, Anflu, Panflu and Panflu.1, interchangeably has an annual production capacity of approximately 20 million doses of Panflu given the yield of virus strain received from the WHO. We produced Panflu for government reservation since 2008, and we started recognizing revenue in 2010.

• Split viron pandemic influenza vaccine. Our split viron pandemic influenza vaccine has been developed in conjunction with our whole viron pandemic influenza vaccine. Split viron vaccines are considered to have a better safety profile than whole viron vaccines, both of which are for the governmental stockpiling program. This product has been developed to address the needs of young children, who may be more susceptible to adverse reactions to whole viron pandemic influenza vaccine than to a split viron vaccine. In November 2011, we were granted the production license of split viron pandemic influenza vaccine that is to be used among the teenagers aged from 12 to 17.

• Panflu.1. In September 2009, we were granted a production license for Panflu.1 by the NMPA. Panflu.1 is the first approved vaccine in the world against the influenza A H1N1 virus. We started to sell Panflu.1 in September 2009 but has not generated revenue since 2011, and Panflu.1 is not likely to generate revenues in the foreseeable future. Panflu.1 is also registered for sale in Mexico.

• Mumps vaccine. Mumps is a viral disease of the human species caused by mumps virus, which poses a significant threat to human health in the developing countries. In September 2012, we were granted a production license for mumps vaccine. We began to sell mumps vaccine in December of 2012.

• Inlive. EV71 causes HFMD among children under ten years old. HFMD is a common and usually mild childhood disease; however, HFMD caused by EV71 has shown a higher incidence of neurologic involvement, and a higher acute fatal incidence. There have been a number of outbreaks of HFMD caused by EV71 in the Asia-Pacific region since 1997 including China, Malaysia, Singapore, Australia, Vietnam and Taiwan. There is no identified treatment for enterovirus infections. We started our research and development of the EV71 vaccine in 2008. In December 2009, NMPA accepted our application to commence human clinical trials and on December 23, 2010, we obtained the approval from NMPA to commence clinical trials. In 2013, we completed all three phases of clinical trials. On December 30, 2015, NMPA issued the new drug certificate and production license for our EV71 vaccine. On January 25, 2016, NMPA issued the GMP certificate for Inlive. We have been granted eleven patents relating to the EV71 vaccine in China. Inlive primarily targets children from six months old to three years old, with each child requiring a total of two doses one month apart from another.

• Varicella vaccine. Varicella is a highly contagious infectious disease caused by the varicella-zoster virus (herpesvirus 3, Human). It usually affects children, is spread by direct contact or respiratory route via droplet nuclei and is characterized by the appearance on the skin and mucous membranes of successive crops of lesions that are easily broken and become scabbed. Varicella is relatively benign in children, but may be complicated by pneumonia and encephalitis in adults. We had completed the pre-clinical studies of a human vaccine against varicella. The clinical trial application was filed with NMPA in January 2013 and obtained the clinical trial license in October 2015. A phase I clinical trial was conducted and completed in 2016 and a phase III trial was completed in 2017. The production license application was filed with NMPA in November 2017. The clinical site inspection was completed in 2018. The technical review on the registration dossier was also conducted in 2018 and supplementary documents were issued and responded to during the year. In December 2019, NMPA approved and issued a product license for our varicella vaccine, and we began to sell varicella vaccine in April 2020.

• Pneumococcal polysaccharide vaccine (“PPV”). PPV is a vaccine used to prevent streptococcus pneumoniae (pneumococcus) infections, such as pneumonia and septicemia among adults aged 65 or older, adults with serious long-term health problems, smokers, and children older than two years with serious long-term health problems. We filed an application for clinical trials to NMPA in February 2011 and obtained the approval to commence clinical trials in May 2014. On December 2, 2020 the NMPA approved and issued a product license for our 23-valent PPV vaccine to prevent the infection by streptococcus pneumonia in adults and children aged two years old and above, which is our first bacterial vaccine product approved so far, broadening the potential of our product portfolio. The commercial production of PPV has started and the first few batches were delivered in the beginning of 2021.

• Quadrivalent influenza vaccine (“QIV”). Different from the trivalent influenza vaccine, which includes an influenza A H1N1 virus, an influenza A H3N2 virus and one influenza B virus, QIV is designed to protect against four different flu viruses; two influenza A viruses and two influenza B viruses. These two very different lineages of B viruses circulate during most seasons. Adding another B virus to the vaccine aims to give broader protection against circulating flu viruses. We initiated the development of a QIV in May 2013. Following the completion of preclinical studies, we applied for the clinical license from NMPA. The approval to conduct human clinical trial was issued by NMPA in November 2016. Phase III clinical trial has been completed. The preliminary results of the phase III clinical trial showed that the vaccine is safe and immunogenic. The site inspection was completed in March 2020. On June 24, 2020, NMPA issued a product license for our QIV vaccine.

• COVID-19 vaccine (“CoronaVac”). We initiated the development of a vaccine against COVID-19 on January 28, 2020. The application for clinical trials was submitted to NMPA on March 13, 2020. NMPA implemented a concurrent review on the full submission and granted the approval for clinical trials on April 13, 2020. The phase I clinical trial commenced on April 16, 2020. The phase I and II human studies on

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healthy adults aged 18 to 59 and elderly adults aged 60 and above were conducted in China and enrolled 144 participants in the phase I trial and 600 participants in the phase II trial, with 743 participants receiving at least one dose of investigational product. Results from the randomized, double-blind, placebo-controlled phase I/II clinical trial on safety, tolerability and immunogenicity of CoronaVac were published in the Lancet Infectious Diseases on November 17, 2020. The phase I trial was conducted in a dose-escalating manner, in which participants were randomly separated 1:1 into two vaccination schedule cohorts, the days 0 and 14 cohort and days 0 to 28 cohort, and then randomly assigned to blocks within each cohort of low-dose CoronaVac (3 μg) or high-dose CoronaVac (6 μg). Within each block, participants were randomly assigned 2:1 to either two doses of CoronaVac or placebo. In the phase II trial, at screening, participants were randomly separated 1:1 into the same two vaccination schedule cohorts and then randomly assigned 2:2:1 to receive two doses of either low-dose CoronaVac, high-dose CoronaVac, or placebo. The study found that two doses of CoronaVac at different concentrations and using different dosing schedules were well tolerated and moderately immunogenic in healthy adults aged 18 to59 years. We started our first phase III trial on CoronaVac on July 21, 2020 in Brazil, and then in Turkey, Indonesia and Chile. In compliance with the principles of Good Clinical Practice (GCP), the trials were conducted with the vaccine candidate produced from the same lot and following the 0, 14 day schedule. There were a total of approximately 30,000 participants enrolled in the trial across those four countries. In Brazil, a phase III efficacy study conducted on healthcare worker only, who directly contact COVID-19 patients, shows an efficacy rate of 100.00% in preventing hospitalized, severe and fatal cases, 83.70% in preventing cases requiring medical treatment, and 50.65% overall efficacy rate. In Turkey, another trial on over 10,000 volunteers mainly among general population shows 100.0% efficacy rate against hospitalized cases and an overall 83.5% efficacy rate. We began rolling submission to NMPA since September 2020 and NMPA carried out rolling reviews when the submission was made. We were granted a conditional marketing authorization (CMA) by NMPA for CoronaVac in individuals aged 18 and above on February 5, 2021. As of March 31, 2021, CoronaVac has been granted either emergency approval or conditional marketing authorization by over 30 countries or regions.

Our pipeline consists of vaccine candidates in the clinical and pre-clinical development phases in China, as follows:

• Sabin Inactivated Polio vaccine (“sIPV”). Poliomyelitis (polio) is a highly infectious viral disease, which mainly affects young children. The virus is transmitted by person-to-person spread mainly through the fecal-oral route or, less frequently, by a common vehicle (e.g., contaminated water or food) and multiplies in the intestine, from where it can invade the nervous system and can cause paralysis. One in 200 infections leads to irreversible paralysis (usually in the legs). Among those paralyzed, 5-10% die when their breathing muscles become immobilized. In developing countries around the globe including China, oral polio vaccine (“OPV”), is widely utilized to eradicate polio. Although OPV is considered safe and effective, in rare instances, the live attenuated vaccine virus in OPV can cause paralysis, resulting in cases of vaccine-associated paralytic polio or circulating vaccine-derived poliovirus. Therefore, to eliminate the risk of such cases, OPV will be phased out from routine immunization programs around the world. According to the Polio Eradication & Endgame Strategic Plan 2013-2018 by WHO, governments should complete inactivated polio vaccine (“IPV”) introduction and OPV withdrawal by 2016, and include IPV and OPV in routine immunization by 2018. OPV will be phased out from routine immunization programs around the world by 2020. sIPV is safer to manufacturers and potentially more affordable as compared to the currently available Salk IPV. The global demand for IPV is increasing as the Global Polio Eradication Initiative has called for IPV to be introduced globally. On April 3, 2014, we entered into a non-exclusive license agreement with The Institute for Translational Vaccinology (“INTRAVACC”) a governmental institute working under the Dutch Ministry of Public Health, Welfare and Sports, to develop and commercialize sIPV for distribution in China and other countries. In collaboration with INTRAVACC, we completed the pre-clinical study and submitted the application for clinical trials to NMPA in October 2014. In November 2015, we obtained a clinical trial license. Phase I/II clinical trials were completed in April 2017, followed by the commencement of a phase III trial, which was completed in 2018. In January 2019, the NDA was submitted to the NMPA. In March 2019, given the high demand for effective polio vaccines, the application was granted fast track review. Currently, the application is under review while planning on consistency study on three consecutive lots, which has started in 2020. We expect the product license to be granted in the middle of 2021. An application of pre-qualification assessment by WHO was filed by us in January 2020 and site-inspection by WHO was conducted in February 2021. We expect a decision of such assessment in 2021.

Research and Development

We have established a leadership position in the research and development of vaccines in China. Since our inception, we have successfully developed and marketed Healive, Bilive, Anflu, Panflu, Panflu.1, mumps vaccine, Inlive, varicella vaccine, QIV and PPV. Please see “— Our Products.” We believe our R&D capabilities provide us with a key competitive advantage. We intend to focus our research and development efforts on developing vaccines for infectious diseases with significant unmet medical needs, as well as the vaccine products with extensive market demand in China and other countries. COVID-19 is spreading globally, and the whole world is facing an unprecedented public health crisis. We commenced the development of the COVID-19 vaccine at the end of January 2020. Our R&D team have completed comprehensive preclinical studies and clinical trials in partnership with leading academic research institutes in China and overseas. Our COVID-19 vaccine has been granted a conditional market authorization by NMPA on February 5, 2021.

In 2008, we restructured our R&D team in Beijing to better utilize our scientific and personnel resources. In 2009, we built an R&D center of approximately 13,300 square feet in the campus of our Beijing headquarters to meet our R&D demand. In 2011, we built a lab of 6,778 square feet, which is focused on maintaining quality control of our pipeline products. In 2021, we plan to conduct pipeline product development in our new site in Daxing District of Beijing, where we produce CoronaVac.

In order to achieve our R&D goal, part of our R&D strategy is to focus on in-house development and to establish collaborations with domestic and international partners on technology and key material licensing, including but not limit to strains and cell lines. We have entered into

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collaborations with a group of leading universities, colleges and research institutes that have strong vaccine research capabilities and proven track records in China. In most cases, we will own the commercial rights to the products that result from our existing R&D strategic collaborations.

The investment in R&D is one of our strategies, which, we believe, will ensure our future growth. Our research and development expenses were $48.8 million, $24.3 million and $21.9 million in 2020, 2019 and 2018, respectively. We have obtained financial support from the PRC government to conduct preclinical and clinical research of vaccines for government-sponsored programs.

Sales and Marketing

Our sales strategy is to increase our market share and enhance our competitive advantage in the private vaccine sales market in China while building on this strength to push government to expand market size in the government-paid market. We also intend to establish our presence, increase our sales to international markets and enhance awareness of our products outside China.

In 2018, our sales model was totally transformed to a collaborative model between our sales team and third-party marketing agents. We have formed a marketing management team, strengthened the compliance management to third-party marketing agents, and expanded market coverage, improved market competition, and improved the quality of customer services through professional and academic promotion activities. As of December 31, 2020, our internal sales and marketing team covered 2,171 district CDC customers in 31 provinces in China, representing an increase of 8.7% as of the end of year 2019. Our sales team is mainly responsible for the maintenance of customer relationship at or above the provincial level, bidding access at the provincial level, the development of the public market, as well as product after-sales services and the support and management of third-party marketing agents. We cooperate with 48 third-party marketing agents, engaging approximately 1,000 marketing and promotional staff. The team of the third-party market agents carries out business with district CDC customers with our support in all aspects. In addition, we have taken the lead in placing commercial insurance compensation mechanism for abnormal response to vaccination nationwide in the private vaccine market to provide more professional services for CDC customers and consumers. We believe these efforts contributed to our reputation for quality and brand awareness in the Chinese vaccine market.

In 2020, 2019 and 2018, our sales in China contributed 71.6%, 92.3% and 93.7%, respectively, of our total sales. As of December 31, 2020, we had already exported our vaccine products to 28 countries. Our products are being registered in 30 countries. In order to speed up the business globalization, as well as strengthening our reputation for quality, we obtained WHO prequalification in December 2017 for hepatitis A vaccine, Healive. As of the date of this annual report, CoronaVac is being used under emergency use approval in Indonesia, Brazil, Turkey and Chile and we are also actively seeking regulatory approval of CoronaVac in other countries and regions around the world in an effort to maximize global accessibility and affordability of the COVID-19 vaccine. We will continue to explore the globalization of our product portfolio and develop products targeting potential international markets where we believe we can be successful.

Seasonality

Our business is highly seasonal. For example, the influenza season generally runs from November through March of the next year, and the largest percentage of influenza vaccinations is administered between September and November of each year. As a result, we expect to realize most of our annual revenues from Anflu during this period. We expect this seasonality in our business to contribute to significant quarterly fluctuations in our operating results. In the first quarter, our strong winter-season sales are usually offset by the slow-down of business during the Chinese New Year holiday season that effectively lasts more than half a month. During this holiday season, many businesses in China, including CDCs and most departments in hospitals, are either closed or substantially reduce the level of their activities. Please see “Item 3. Key Information — D. Risk Factors — Risks Related to Our Company — Our business is highly seasonal. This seasonality will contribute to our operating results fluctuating considerably throughout the year.”

Suppliers

We obtain the raw materials from local and overseas suppliers. We generally maintain at least two suppliers for each key raw material, with the exception of hepatitis B antigens we use for Bilive production. We source hepatitis B antigens entirely from Beijing Tiantan. Please see “Item 3. Key Information — D. Risk Factors — Risks Related to Our Company — If any of our third-party suppliers or manufacturers cannot adequately meet our needs, our business could be harmed.” Raw materials generally are in good supply and the prices we pay for them have remained stable. We target to maintain our gross margin in the event of rising raw materials costs by improving our production processes and technical methods.

Manufacturing, Safety and Quality Assurance

We have four manufacturing bases located in the Haidian, Changping and Daxing districts of Beijing and Dalian of Liaoning province.

We have three upstream production facilities in Haidian District, Beijing for commercialized products. Our Healive and Bilive share the same production line, which has an aggregate annual capacity of 10 million doses. Our Anflu production line has an annual capacity of 15 million doses, which can also be used to produce 20 million doses of Panflu or Panflu.1 annually. Our PPV has an annual capacity of 5 million doses.

We received GMP certificates for our Healive, Bilive and Anflu production facilities initially in March 2002, June 2005 and October 2005, respectively, and renewed their GMP certificates for another five years in 2018. The upstream production plants for our hepatitis vaccines and

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flu vaccines in Haidian District passed the new GMP certification and obtained the new GMP certificate on April 17, 2013, which was renewed on April 13, 2018 for five years. Our hepatitis A vaccine production lines in both Shangdi site and Changping site passed GMP inspection by WHO for prequalification purpose in December 2017. Our upstream production line for PPV, with an annual production capacity of 5.0 million doses, was built in Shangdi site in 2014, which passed the GMP inspection in 2020.. As described above, a representative of Sinobioway Medicine and dozens of unidentified individuals forcibly entered Sinovac Beijing’s corporate offices and cut power to our Shangdi site. Due to the actions of the representative of Sinobioway Medicine, Sinovac Beijing was forced to destroy the affected products of hepatitis A vaccine and influenza vaccine and temporarily suspended production at the impacted facility in order to maintain product safety. Since the influenza vaccine is a seasonal product, there was no supply of Anflu for the flu season of 2018-2019. However, production of the hepatitis A vaccine resumed in fourth quarter of 2018 and production of the influenza vaccine resumed in March 2019. Our PPV production line passed the inspection by NMPA in June 2020 and production license was granted on December 2, 2020.

Our production site in Changping District, Beijing consists of a new filling and packaging line that complies with the new PRC GMP standards, the EV71 production facilities and a warehouse. The EV71 vaccine production line has a designed annual capacity of 20 million doses and was granted the GMP certificate in January 2016 for five years. Our upstream production facilities of sIPV were built in Changping in 2017 with an expected annual production capacity of 20 million doses.

We have built a new production site for CoronaVac in Daxing District, Beijing, in compliance with the new PRC GMP standards, and our CoronaVac production lines have an estimated annual capacity of 2 billion doses.

Our production site in Sinovac Dalian focuses on the research, development, manufacturing and commercialization of live-attenuated vaccines, such as varicella, mumps and combination vaccines containing measles, mumps, rubella, and/or varicella. Sinovac Dalian received its GMP certificate from NMPA for its mumps vaccine in September 2012 and launched mumps vaccine, its first commercial product, in late 2012. The renewed GMP certificate issued by Food and Drug Administration of Liaoning Province was obtained on February 13, 2018, which will remain valid until February 12, 2023. Our varicella vaccine production line was inspected by NMPA and a production license was granted in December 2019.

Each of our subsidiaries has its own quality assurance department. The quality assurance department of each subsidiary plays a role to supervise the R&D, manufacturing, procurement, quality control, sales and marketing, logistics and plant construction of each subsidiary under the guidance of the applicable regulations and guidelines. Regular training or seminars are organized among quality assurance departments of subsidiaries to share and exchange knowledge and experiences.

We have built a pharmacovigilance system, which includes organization structure, documentation, working procedures and SOPs. The organization structure indicates staff organization and their relevant duties and responsibilities. According to the requirements of the regulatory authorities, we regularly report the severe Adverse Event Following Immunization (“AEFI”) in time . We summarize and analyze safety information coming from post-marketing surveillance, phase IV clinical trials, safety studies and literatures, and to submit the Periodic Safety Update Reports to the regulatory authorities regularly. Meanwhile, we are also required to assist the regulatory authorities to investigate on the AEFIs and provide related information as required.

With respect to compliance with environmental laws, we have also obtained the approval of the environmental impact assessment report from the Beijing Municipal Environment Protection Bureau for the construction plan of our facilities in Changping District, Beijing in 2011. We produce Bilive vaccine at our production facility for hepatitis A vaccine and produce Panflu and Panflu.1 vaccines at our production facility for seasonal flu or Anflu vaccine. According to the PRC Environmental Impact Assessment Law, after the approval of previous environmental impact assessment reports, if there is any material change in the nature, scale, location, production technology used and measures adopted to prevent damages to ecology, new environmental impact assessment reports need to be filed for approval. We have canceled the construction plan for our influenza vaccine production facility in Changping. A new environmental impact assessment report regarding the change was submitted to the relevant environment protection authorities and passed the government inspection in 2011. We also added a sIPV production facility to the Changping construction plan in 2016. The relevant environmental impact assessment report was submitted to the relevant government authorities and passed the government evaluation. The approval on such report was already obtained. The construction of sIPV has been completed, and we have completed the clinical trial. In addition, we have also obtained approval for the environmental impact assessment report for PPV production facility at our Shangdi site in 2014. In 2020, we obtained the approval for the environmental impact assessment report for the CoronaVac production facility.

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Collaborations

In September 2015, Sinovac Dalian entered into a technology transfer and supply agreement with GlaxoSmithKline Biologicals SA (“GSK”), to use GSK’s measles seeds to develop combination vaccines containing measles for the China market. Under this agreement, GSK agreed to transfer its measles seeds, and provide reasonable assistance and relevant technical materials to Sinovac Dalian for developing and producing combination vaccines containing measles. We did not make any payment for purchasing measles seeds to GSK during the year ended December 31, 2020, 2019 and 2018.

On April 3, 2014, we entered into a non-exclusive license agreement with INTRAVACC, a governmental institute working under the Dutch Ministry of Public Health, Welfare and Sports, to develop and commercialize sIPV for distribution in China and other countries. We expect to develop and commercialize the vaccine in China first, as well as seeking regulatory approval in other countries at the later stage. The agreement has a term of 50 years. Please see “— Our Products.”

We agreed to pay INTRAVACC a license fee of up to $2,406 million (€1.5 million) net of PRC withholding tax, including an entrance fee and milestone payments upon achievement of specific milestones. We also agreed to pay royalty payments in a single digit percentage of net sales generated worldwide from the product or products developed under the license agreement. We recorded a payment of $35,000 (€30,000) and $0.6 million (€0.5 million) for the year ended December 31, 2020 and 2018, as research and development expense. There was no expense incurred or paid to INTRAVACC for the year ended December 31, 2019.

We licensed from MedImmune, LLC (“MedImmune”) certain rights to use patented reverse genetics technology pertaining to a virus strain used for the production of Panflu (H5N1). We have agreed to pay an upfront license fee and to pay milestone payments of up to an aggregate of $9.9 million upon the achievement of certain amount of cumulative net sales of licensed products in China (including Hong Kong and Macau), as well as royalty payments in single digits of net sales of the licensed products in China (including Hong Kong and Macau). On August 15, 2012, we entered into amendments with MedImmune in respect of four of our patent license agreements with MedImmune to, among other things, extended the effectiveness term of each agreement to reflect revised termination dates between December 2015 and May 2021. We accrued a royalty payment of $9,000 in 2018, which was paid in 2019. We did not accrue any royalty payment in 2020 and 2019.

In March 2009, we entered into a technology transfer agreement (with an amendment agreement entered into on December 14, 2011) with Tianjin CanSino Biotechnology Inc. (“Tianjin Cansino”). According to the agreement, Tianjin Cansino will transfer the technology related to pneumococcal vaccine to us and jointly develop the technology with us. The collaboration term under the technology transfer agreement is from March 12, 2009 to eight years after the first sale of the vaccine developed under the technology transfer agreement in the Chinese market.

Under the terms of the technology transfer agreement, we will make milestone payments of up to $3 million and royalty payments ranging from 6% to 10% of net sales in China. Both parties will work together to develop international markets for the products. On November 17, 2009 and December 14, 2011, two amendment agreements were signed for the payment of $0.3 million for the transfer of an additional six serotypes and related technology. As of December 31, 2020, we made total milestone payments of $1.2 million ($1 million under the agreement dated as of March 12, 2009 and $0.2 million under the amendment agreement dated as of December 14, 2011). The remaining milestone payments will be paid when we achieve each specific milestone, which includes obtaining clinical trials approval, completing clinical trials and achievement of desired results, and achievement of commercial sales.

In January 2015, we entered into the third amendment to the technology transfer agreement dated March 12, 2009, as amended on November 17, 2009 and December 24, 2011, respectively. By entering into this third amendment, the technology transfer agreement was amended to be a licensing agreement. The remaining milestone and royalty payments under the technology transfer agreement have been reduced. Both we and Tianjin Cansino are free to develop pneumococcal vaccines or to collaborate with other companies for the same purpose. We did not make any payment in this regard for the years ended December 31, 2020, 2019 and 2018.

In August 2009, we entered into a patent license agreement with the National Institutes of Health (“NIH”), an agency of the United States Public Health Services within the Department of Health and Human Services. NIH has granted us a non-exclusive license to import and use certain Rotavirus Strains and Monoclonal Antibodies (“Biological Materials”) to develop an oral rotavirus vaccine and produce the vaccine in commercial sales and launch into market. NIH has also granted us the right to use certain documentation associated with the Biological Materials for this research and development project. The term of the license under the patent license agreement is from August 18, 2009 to the later of (a) the expiration of all royalty obligations under the licensed rights where such rights exist and (b) eight years after the first commercial sale by us, unless the agreement is terminated earlier per the provisions included therein.

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We agreed to pay NIH a license royalty of $80,000 upon execution of the agreement and a non-refundable minimum annual royalty of $8,000, and royalty payments on net sales ranging from 1.5% to 4% depending on the sales territory and the customers. We also agreed to pay NIH benchmark royalties of $0.3 million upon achieving each benchmark as specified in the patent license agreement, including completion of clinical trials, obtaining regulatory approval for marketing, and achievement of commercial sales. We recorded a license royalty of $1,000, $1,000 and $16,000 for the year ended December 31, 2020, 2019 and 2018, respectively, as research and development expenses.

In June 2020, we entered into a clinical development collaboration agreement with Instituto Butantan, a leading Brazilian producer of immunobiologic products, to advance the clinical trials of CoronaVac to phase III. Through the collaboration, Instituto Butantan sponsored the phase III clinical trials in Brazil. These series of agreements completed or to be completed between the parties help establish extensive collaboration that includes technology licensing, market authorization and commercialization of CoronaVac. In this way, Instituto Butantan can ensure that the Brazilian population has access to this vaccine.

In August 2020, we signed two agreements with PT Bio Farma, a leading biopharmaceutical company in Indonesia, for the supply, local production and technology licensing in respect of CoronaVac. Under these agreements, we are committed to supply Bio Farma bulk vaccine to enable the latter to produce at least 140 million doses of CoronaVac in Indonesia.

In November 2020, we signed two agreements with KEYMEN Ilac Sanayi. Ve Tic. A.S. (“KEYMEN”), an active in supplier of pharmaceutical products in Turkey, for the supply, local production and technology and know-how licensing of CoronaVac. Under the agreements, our company and KEYMEN will cooperate to enable local filling and packaging from the bulk vaccine supplied by us in designated facilities in Turkey.

Competition

The pharmaceutical, biopharmaceutical and biotechnology industries both within China and globally are intensely competitive and are characterized by rapid and significant technological progress, and our operating environment is increasingly competitive. In 2010, NMPA increased the quality standard of some vaccine products by issuing a new version of Pharmacopeia. As a result, some vaccine products manufactured by multinational companies could no longer be sold in China. According to NMPA, there are approximately 40 vaccine companies in China, of which we believe approximately 10 are our direct competitors.

Even with the advent of private medical and healthcare insurance programs in China and the government vaccine purchase program’s expanded vaccine list, most Chinese citizens must pay for vaccines by their own because these insurance programs do not typically cover vaccines and the government vaccine purchase program covers only infants and young children. We believe the consumer market for conventional products is health conscious yet price sensitive and accordingly would favor our products over both the cheaper vaccines with lower quality provided by local manufacturers and the more expensive vaccines with comparable quality manufactured by international competitors. Our competitors, both domestic and international, include large integrated multinational pharmaceutical, domestic state-owned entities and domestic private companies that currently engage in, have engaged in or may engage in, efforts related to the discovery and development of new biopharmaceuticals and vaccines. Many of these entities have substantially greater research and development capabilities and financial, scientific, manufacturing, marketing and sales resources than we do. They are also more experienced in research and development, clinical trials, regulatory matters, manufacturing, marketing and sales.

Multiple vaccine products have been approved for sales worldwide. Many of these vaccine products are marketed by our major competitors in particular for hepatitis A, hepatitis B, influenza and EV71 vaccine. Specifically, with respect to the inactivated hepatitis A vaccine, we consider Merck Sharp & Dohme Corp. as key competitors in China, and GlaxoSmithKline Biologicals and Merck Sharp & Dohme Corp. for the markets outside China.  The live attenuated hepatitis A vaccine manufacturers include Institute of Medical Biology, Chinese Academy of Medical Sciences Pukang Biological Co., Ltd., and Changchun Institute of Biological Products. With respect to the hepatitis A and B vaccines, we are the only company with this product in China. With respect to the influenza vaccines, we consider Hualan Biological Engineering Inc. and Changchun Institute of Biological Products as key competitors in China, and Sanofi Pasteur S.A. as our major competitor for the markets outside China. With respect to the EV71 vaccines, we considered Institute of Medical Biology, Chinese Academy of Medical Sciences and China National Biotec Group Co., Ltd. as our key competitors in China as well as outside China. With respect to the COVID-19 vaccine, we consider China National Biotec Group, Pfizer and AstraZeneca as our key competitors. With respect to the varicella vaccine, we consider Changchun BCHT Biotechnology Co., Ltd. and Changchun Keygen Biological Products Co., Ltd. as key competitors in China. With respect to the 23-valent pneumococcal polysaccharide vaccine, we consider Chengdu Institute of Biological Products and Walvax Biotechnology Co., Ltd. as the key competitors in China.

We believe we enjoy a number of advantages over the PRC domestic competitors and multinational competitors in China. Generally, we believe that the principal competitive advantage in the markets for our products and product candidates include:

• safety and efficacy profile;

• brand reputation;

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• product supply; and

• after-sales services.

Intellectual Property and Proprietary Technology

Protection of our intellectual property and proprietary technology is important to our business. We rely primarily on a combination of trademark, patent and trade secret protection laws in China and other jurisdictions, as well as employee and third-party confidentiality agreements to safeguard our intellectual property, know-how and brand. Our ability to protect and use our intellectual property rights in the development and commercialization of our technologies and products, operate without infringing the proprietary rights of others and prevent others from infringing our proprietary rights is crucial to our long term success. We will be able to protect our products and technologies from unauthorized use by third parties only to the extent that they are covered by valid and enforceable patents, trademarks or copyrights, or are effectively maintained as trade secrets, know-how or other proprietary information.

We have a total of 68 issued patents and a number of pending patent applications relating to our vaccines in China.

With respect to, among other things, proprietary know-how that is not patentable and processes for which patents are difficult to enforce, we rely on trade secret protection and confidentiality agreements to safeguard our interests. We believe that many elements of our vaccine products, clinical trial data and manufacturing processes involve proprietary know-how, technology or data that are not covered by patents or patent applications. We have taken appropriate security measures to protect such assets. We have entered into confidentiality agreements (which include, in the case of employees, non-competition provisions) with all our employees and many of our consultants, outside scientific collaborators, sponsored researchers and other advisors. These agreements provide that all confidential information developed or made known to the individual or an organization or company during the course of its relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances permitted by such agreements. In the case of our employees, the agreements provide that all of the technology conceived by the individual during the course of employment is our exclusive property and require our employees to assign to us all of their inventions, designs and technologies they develop once the technology is conceived and cooperate with us to secure patent protection for these inventions if we wish to pursue such protection.

In the past, we have relied on the administrative protection afforded to new drugs through the monitoring period provided by NMPA. During the monitoring period, third party applications for manufacturing or importing the same drugs are not accepted by NMPA. The administrative protection for Healive expired in December 2007 and Bilive expired in January 2008. Currently, the administrative protection was no longer implemented in China. Instead, NMPA implements a new drug monitoring period starting from the issuance of production license. Our EV71 vaccine was granted a five-year new drug monitoring period and during the monitoring period, no other company will be approved to enter into a human clinical study of the same kind of vaccine. Therefore, only three products from Kunming, CNBG and Sinovac have been approved in China. The monitoring period of our EV71 vaccine has expired in December 2020.

We maintain 22 registered trademarks in China, including (i) “Sinovac”, (ii) Sinovac’s Chinese name and its logo, (iii) “Healive”, its Chinese name and its logo, (iv) “Bilive” and its Chinese name, (v) “Anflu” and its Chinese name, (vi) “Panflu”, its Chinese name and its logo, (vii) “PANFLU.1” and its Chinese name, (viii) “Inlive” and its Chinese name, (ix) “EV71Vac” , (x) “EntV71” and its Chinese name,  and (xi) “CoronaVac” and its Chinese name.

We have registered and maintain “Sinovac” trademark in Canada, Malaysia, the Philippines, South Korea and Egypt. In the Philippines, we have registered and maintain “Anflu”.

As our brand names “Sinovac” and “科兴” are becoming more recognized in the vaccine market, we are working to maintain, increase and enforce our rights in the trademark portfolio. Since 2001, Sinovac Beijing has been using “科兴” (Kexing) as part of its Chinese trade name. Sinovac Dalian began to use “科兴” (Kexing) as part of its Chinese trade name in 2010. Shenzhen Kexing successfully registered “科兴” trademark in China for Class 5 (Pharmaceuticals) under the International Classification of Goods and Services in 2001. To protect our interest in using “科兴” in our trade names, we applied to register “科兴” in China for Class 42 (Scientific & Technological Services & Research) in 2006 and the PRC Trademark Office of the State Administration for Industry and Commerce approved our application in 2010. As of the date of this annual report, the “科兴” trademark registered and owned by Shenzhen Kexing has not been identified as “Well-known Trademark” by the relevant PRC authorities. If the “科兴” trademark owned by Shenzhen Kexing is ever officially identified as a “Well-Known Trademark” in the future, however, we may be subject to trademark infringement claim for the use of “科兴” in our trade names.

We have registered our own domain names, including www.sinovac.com.cn and www.sinovac.com, with the China Internet Network Information Center.

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Insurance

We maintain property insurance coverage with an annual aggregate insured amount of approximately RMB1,062 million ($162.8 million) in 2020 to cover our property and facilities from claims arising from fire, earthquake, flood and a wide range of other natural disasters. We are carrying worldwide product liability insurance for Healive, Bilive, Anflu, Panflu and Inlive (excluding the United States and Europe) from April 2020 to April 2021. We do not carry liability insurance to cover liability claims that may arise from the incidents relating to the clinical trials of our vaccine products. Our insurance coverage may not be sufficient to cover any claim for product liability or damage to our fixed assets. We do not maintain any business interruption insurance. We are negotiating with the insurance providers for a renewal of our product liabilities insurance policies. See “Item 3. Key Information — D. Risk Factors — Risks Related to Our Company — We could be subject to costly and time-consuming product liability actions and, because our insurance coverage is limited, our exposure to such claims could cause significant financial burden.”

Regulatory Framework of the Pharmaceutical Industry in the PRC

The testing, approval, manufacturing, labeling, advertising and marketing, delivery, post-approval safety reporting, and export of our vaccine products or product candidates are extensively regulated by governmental authorities in the PRC and other countries.

In the PRC, the NMPA regulates and supervises vaccine products under the Pharmaceutical Administration Law, the Implementing Regulations on Pharmaceutical Administration Law, the Vaccine Administration Law, the Administration of Registration of Pharmaceuticals Procedures, and other relevant rules and regulations which are applicable to manufacturers in general. Every step of our vaccine production is subject to the requirements on the manufacture and sale of pharmaceutical products as provided by these laws and regulations, including but not limited to, the standards of clinical trial, approval and transfer of new medicine registrations, applicable industry standards of manufacturing, distribution, packaging, advertising and pricing.

Pre-clinical Studies. Pre-clinical studies include in-vitro laboratory evaluation of the product candidate, as well as in-vivo animal studies to assess the potential safety and efficacy of the product candidate. Non-clinical studies must be conducted in compliance with Good Laboratory Practice for Non-clinical Studies of Pharmaceuticals. With respect to vaccines, the pre-clinical studies should also comply with Technical Guidance for Pre-clinical Studies on Preventive Vaccines. We must submit a file package for investigational new drug application (“IND”) to the Centers for Drug Evaluation. The applicant shall be provided with a decision on whether a consent is granted to conduct clinical study. If no decision is provided within 60 days, it’s regarded as permission granted. We cannot assure that submission of an IND will result in the Centers for Drug Evaluation allowing clinical trials to begin, after these trials commence, issues could arise that result in the suspension or termination of such clinical trials.

Clinical trials. Clinical trials involve the administration of the product candidate to healthy volunteers or patients under the supervision of principal investigators, who are generally physicians or an independent third party not employed by us or under our control. Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. In phase I, the initial introduction of the drug into human subjects, the drug is usually tested for safety (adverse effects), dosage tolerance, and pharmacologic action. phase II usually involves studies in a limited patient population to evaluate preliminarily the efficacy of the drug for specific, targeted conditions and to determine dosage tolerance and appropriate dosage and to identify possible adverse effects and safety risks. Phase III trials generally further evaluate clinical efficacy and test further for safety within an expanded patient population. Clinical trials have to be conducted in compliance with the Good Clinical Trial Practice of Pharmaceuticals.

With respect to vaccines, we also have to comply with the NMPA’s Requirements on Application for Clinical Trial of New Preventive Biological Products. The sample vaccine products must be tested by the NIFDC before they may be used in the clinical trials. We or the NMPA may suspend clinical trials at any time on various grounds, including a finding that subjects are being exposed to an unacceptable health risk.

After three phases of clinical trials, we apply for New Drug Application (“NDA”). We submit to the Centers for Drug Evaluation the NDA file package, which includes a clinical trial research report, pharmaceutical research data, and records of manufacturing and testing of three batches of products, to apply for the marketing authorization. For vaccines, we have to comply with the NMPA’s Guidelines for Clinical Trial Report on Vaccines.

Communication Meeting. In order to improve review process of regulatory approval, NMPA has set up a communication channel between the applicant and reviewing agencies. Applicant can discuss material safety issues during the human clinical study or significant technical issues arise during the development process with regulatory agencies. This kind of meetings can also be held at critical stages in the entire process of drug development, including before IND application, before phase III human clinical studies, or before NDA.

Marketing Authorization. The applicant can submit an application for a marketing authorization with submission of relevant research materials after completing the research on pharmacology, pharmacological toxicology and clinical trials to support the registration of drugs on the market, establishing quality standards, completing the verification of commercial-scale production processes, and preparing to accept the verification and inspection of drug registration. If the application dossiers pass the formal examination, they will be accepted. The Center for Drug Evaluation would organize pharmaceutical, medical and other technicians to evaluate the accepted application of drug marketing authorization according to the requirements. The Center for Drug Evaluation would then initiate the verification and inspection action based on the risks identified during the evaluation and the relevant technical institutes would conduct the verification and inspection within the time limit. NMPA will verify the

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authenticity of submitted document, reliability of submitted data and conduct site inspection on research lab and production site, as well as other inspections as NMPA thinks necessary. For vaccine products, the on-site inspection on production site and the inspection of the quality management on the production of vaccine products shall be conducted. Vaccine products shall be tested before marketing authorizations are issued. The testing includes confirmation on the quality stand and sample testing. Subsequently the Center for Drug Evaluation shall conduct a comprehensive review of the safety, effectiveness and quality controllability of drugs on the basis of the drug registration declaration information, verification results and inspection results, etc., and, if the conclusions of the comprehensive review are adopted, the drug marketing authorization will be approved and a drug registration certificate will be sent.

The marketing authorization is valid for a term of five years and must be renewed before its expiration. During the renewal process, our production facilities will be re-evaluated by the appropriate governmental authorities and must comply with effective standards and regulations.

During or after a public health emergency, the NMPA may decide, in accordance with the law, to apply special approval for the prevention and treatment of medicines necessary for emergency response to public health emergencies. For applications for the registration of drugs subject to special approval, the NMPA shall, organize and carry out the processing, review, verification and inspection of drug registration in a simultaneous manner, following the principles of centralized coordination, early intervention, and rapid, efficient and scientific examination and approval. The circumstances, procedures, time limits and requirements of special approval shall be implemented in accordance with the provisions of the special approval procedure for medicines.

We may also be required to conduct clinical trials prior to commencing the manufacturing of pharmaceutical products for which there are published state pharmaceutical standards.

Batch Approval. Our vaccine products cannot be distributed in the market before receiving batch approval. After we obtain the production permit, we will start commercial production, after which we need to apply for batch release approval by the NIFDC for the commercial lots. For each batch of products, we will provide samples taken from cold rooms by inspectors, together with manufacturing records, self-testing records and other quality control documents. The NIFDC will review the documents and test the samples and issue a batch approval within approximately two months if our manufacture procedures and the quality of our products meet the NMPA standards. With the batch approval, we may distribute the approved batch of vaccines to the market.

Regulatory Framework of the Vaccine Administration in the PRC

On December 1, 2019, the PRC Vaccine Administration Law, China’s first legislation dedicated to vaccine management, became effective.

The new law is expected to enable the regulators to close loopholes and rein in risks in vaccine management. In addition, the strategic position of the vaccine industry to the whole country and its welfare nature concerning the general public have been clearly recognized in the new law. The Chinese government will support the fundamental scientific research and commercialization research of vaccine products to encourage the development of innovation technologies and new vaccine products. The research and development, production and stockpiling of vaccine products preventing serious diseases will be part of the state strategy. The new law also makes it very clear that the PRC government will encourage the further consolidation of the vaccine industry so that manufacturers with large scale production capacities of more quality products, using more advanced technologies, could emerge. All of these new regulatory regimes to be established under the new law may largely boost the confidence of the public in vaccine products manufactured in China.

The new PRC Vaccine Administration Law implements more stringent supervision of the entire process of vaccine development, production, delivery, and inoculation. The legislation mandates both government oversight and the duty of manufacturers to report compliance in all substantial aspects of the whole lifecycle of vaccine products. The sanctions and penalties for the illegal activities have been significantly increased. For instance, the sanctions for production or selling of fake or substandard vaccines extend to include confiscating of all illegal gains obtained from and the materials, equipment and other facilities and resources used for production or selling of fake or substandard vaccines, suspension of business for corrections, revoking of drug registration certificate or production license. The fines can be as high as 15 times to 50 times of the market value of the fake vaccines or 10 times to 30 times of the market value of the substandard vaccines. In the case of serious circumstances, the legal representative, the person in charge or the key personnel who are directly responsible for production or selling of fake or substandard vaccines and the other persons responsible are also subject to sanctions of confiscating their income during the production period of the fake or substandard vaccines, a fine of one time to ten times of the said income. Such persons will be permanently banned from engaging in drug production activities and will be subject to 15 days of confinement in prison.

Classification of Vaccines

Vaccines refer to preventive biological products for human vaccination so as to prevent and control the occurrence and prevalence of diseases, including vaccines under immunization programs (the “Vaccines Under Program”) and vaccines not covered by immunization programs (the “Vaccines Beyond Program”).

• Vaccines Under Program refer to the vaccines that must be inoculated to residents in accordance with government provisions, including vaccines determined in national immunization programs, vaccines added by provincial government in the implementation of national immunization programs, and vaccines used in emergency vaccination or group preventive vaccination organized by governments at the

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county level or above or their competent health departments, which is similar to the Vaccines of Class 1 under the previous classification under the Administrative Regulations on the Circulation of Vaccines and Vaccination of the PRC.

• Vaccines Beyond Program refer to other vaccines voluntarily inoculated by residents, which is similar to Vaccines of Class 2 under the previous classification.

Mandated Manufacturing

Market authorization holder of vaccines refers to the enterprise who obtains both a vaccine registration certificate and a drug manufacturing license. Market authorization holders of vaccines must have adequate vaccines manufacturing capacity. Where the mandated manufacturing is necessary due to inadequate vaccines manufacturing capacity, the market authorization holder of vaccines must obtain an approval of the medical products administration under the State Council for such mandated manufacturing.

Keeping of Sales Records

Market authorization holders of vaccines must keep accurate and complete sales records and keep the same for reference for at least five years after the shelf life of the relevant vaccines.

Electronic Traceability of Vaccines

The PRC government will set up national vaccines electronic traceability collaboration platform and the market authorization holders of vaccines must also establish vaccines electronic traceability system to be linked with the national vaccines electronic traceability collaboration platform, for the purpose of integrating the traceability information on the whole process of vaccine production, circulation and vaccination so as to realize the traceability of vaccines. In case of failure of complying with such obligation, the market authorization holder of vaccines will be imposed a fine up to RMB2 million.

Compulsory Vaccines Liability Insurance

The PRC government will implement the rules for compulsory vaccines liability insurance. The market authorization holders of vaccines must underwrite the compulsory vaccine liability insurance. Specific implementing measures for the compulsory vaccine liability insurance system will be formulated by the medical products administration under the State Council in collaboration with the health administration and insurance regulatory authority under the State Council. In case of failure of complying with such obligation, the market authorization holder of vaccines will be imposed a fine up to RMB2 million.

Post-Market Management of Vaccines

(a) Post-market investigation

The market authorization holders of vaccines must establish the whole-lifecycle quality management system of vaccines, and carry out post-market investigation to further confirm the safety, efficacy and quality controllability of the vaccines put into the market. In case of failure of complying with such obligation, the market authorization holder of vaccines will be imposed a fine up to RMB2 million.

(b) Quality retrospection analysis and risk reporting

The market authorization holders of vaccines must set up a vaccines quality retrospection analysis and risk reporting system, and faithfully report relevant information on vaccine manufacturing, distribution, post-market investigation and risk management to the medical products administration under the State Council on a yearly basis. In case of failure of complying with such obligation, the market authorization holder of vaccines will be imposed a fine up to RMB2 million.

(c) Post-market evaluation

The medical products administration under the State Council has the right to request a market authorization holder of vaccines to conduct post-market evaluation or directly organize post-market evaluation. The medical products administration under the State Council will cancel

the drug registration certificate for vaccines with serious adverse event to vaccination or endangering human health due to other causes.

Information Disclosure

The market authorization holders of vaccines must establish an information disclosure system and promptly disclose vaccine product information, package insert and labels, situations concerning the implementation of quality control, lot release, recall, inspection and punishment imposed and compulsory vaccine liability insurance effected, etc. on its website as required. In case of failure of complying with such obligation the market authorization holder of vaccines will be imposed a fine up to RMB2 million.

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Following the promulgation of the PRC Vaccine Administration Law in June 2019, the Ministry of Industry and Information Technology of the People’s Republic of China (“MIIT”) announced that the thresholds to entry in the Chinese vaccine industry will be raised and they will more strictly control the number of new vaccine manufacturers to be established. MIIT will encourage the centralization and consolidation of the vaccine industry.

C. Organizational Structure

The following diagram illustrates our company’s organizational structure, and the place of incorporation, ownership interest and affiliation of each of our subsidiaries as of the date of this report.

As of December 31, 2020, we held 100% equity interest in Sinovac Biotech (Hong Kong) Limited, our subsidiary incorporated in Hong Kong, Sinovac Biotech (Singapore) Pte. Ltd., our subsidiary established in the Singapore and Sinovac Biomed Co., Ltd., our subsidiary established in the PRC; and we held 73.09% of equity interests in Sinovac Biotech Co., Ltd., our subsidiary established in the PRC, 59.24% of the equity interests in Sinovac Life Sciences Co., Ltd. (formerly known as Sinovac Research & Development Co., Ltd.), our subsidiary established in the PRC and 68% of the equity interests in Sinovac (Dalian) Vaccine Technology Co., Ltd., our subsidiary established in the PRC.

* Dalian Jin Gang Group Co., Ltd. owns the remaining 32% equity interest in Sinovac (Dalian) Vaccine Technology Co., Ltd.

** Sinobioway Bio-medicine Co., Ltd., formerly named Xiamen Bioway Group Co., Ltd, owns the remaining 26.91% equity interest in Sinovac Biotech Co., Ltd.

*** Affiliates of Sino Biopharmaceutical Limited, Keding Investment (Hong Kong) Limited, Vivo Capital Fund IX and Prime Success, L.P. owns 15.38%, 12.69%, 6.345% and 6.345%, respectively, of the remaining equity interest in Sinovac LS, former name of which was Sinovac Research & Development Co., Ltd. Keding Investment (Hong Kong) Limited is holding shares underlying awards granted to officers and employees of Sinovac LS pursuant to its employee share ownership plan.

****The former name is Sinovac Zhong Yi Bio-pharmaceutical Co., Ltd.

D. Property, Plants and Equipment

We are headquartered in the Peking University Biological Industry Park in Haidian District in Beijing in a 48,900-square-foot facility, of which approximately 16,700 square feet are used as office space and approximately 32,200 square feet are used for the production plant for Healive and Bilive. Sinovac Beijing owns the above-described 48,900-square-foot facility in Peking University Biological Industry Park.

In August 2004, we signed two 20-year leases with SinoBioway Biotech Group Co. Ltd. (“SinoBioway”), pursuant to which we leased two buildings of approximately 28,000 and 13,300 square feet, respectively, located at the Peking University Biological Park in Beijing. We house our Anflu manufacturing and R&D center in these two buildings. One of the lease agreements was amended on August 12, 2010 to reflect an increase in the lease rental. In June 2007, we signed another 20-year lease with SinoBioway, in order to expand Sinovac Beijing’s production facilities in our Shangdi site, pursuant to which we lease one building of approximately 37,000 square feet, located at Peking University Biological Park. Part of our administrative offices and filling facilities are located in this building until 2013. The filling facilities have been moved to Changping site since 2013, and the original filling facilities space is set up as the commercial production facility for our pneumococcal vaccines.

In September 2010, we entered into an agreement with SinoBioway, under which we lease a space of 6,778 square feet. The lease term is five years and we use it for our research and development function. On April 8, 2013, we entered into three supplemental agreements with SinoBioway, under which the expiration date of each of the four operating lease agreements was extended to April 7, 2033.

All these offices and production facilities in the Peking University Biological Industry Park are known as our Shangdi site. We have three production lines located at the Shangdi site. The production line to manufacture hepatitis vaccines, Healive and Bilive, interchangeably has an aggregate combined production capacity of approximately 10 million doses annually. The production line to manufacture flu vaccines, Anflu, Panflu and Panflu.1, interchangeably has an annual production capacity of approximately 15 million doses of Anflu (northern hemisphere). We have built a PPV production line at the Shangdi site with designed annual capacity of 5 million doses per year. As described above, a representative of Sinobioway Medicine and dozens of unidentified individuals forcibly entered Sinovac Beijing’s corporate offices and cut power at the Shangdi site. Due to the actions of the representative of Sinobioway Medicine, Sinovac Beijing was forced to destroy the affected products and temporarily

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decided to stop the production at the impacted facility in order to maintain product safety. The production resumed at the Shangdi site in the second half of 2018.

In February 2010, we acquired a right to use approximately 312,400 square feet of land located in Changping District, Beijing (“Changping Site”) with five buildings with a total built-out area of 32,322 square meters (approximately 347,900 square feet) for a total consideration of approximately RMB123.6 million ($17.8 million). We have made all required payments by December 31, 2012. We built a new filling and packaging line, EV71 production facilities and a warehouse at the Changping site. In May 2013, the new filling and packaging line at the Changping site was granted the GMP certificate, following which, we moved all the filling and packaging activities to the Changping site. The five-year GMP renewal at the Changping site for the filling and package line was successfully completed on April 13, 2018. The new warehouse was put into operation in December 2010. The EV71 vaccine production line at the Changping site has a designed annual capacity of 20 million doses and was granted the new GMP certificate in January 2016. In July 2016, we started to build our sIPV plant for bulk production at the Changping site. The expected capacity is approximately 20 million doses.

In November 2009, we entered into an agreement with Dalian Jin Gang Group to establish Sinovac Dalian. In January 2010, we established Sinovac Dalian which focuses on the research, development, manufacturing and commercialization of live-attenuated vaccines, such as varicella, mumps and rubella vaccines for human use. Sinovac Dalian has seven existing buildings with a total built-out area of 20,000 square meters (approximately 215,280 square feet) on a parcel of land of 95,685 square meters (approximately 1,030,000 square feet), located at DD Port, Economic and Technical Development Zone, Dalian City, Liaoning province. Sinovac Dalian received its GMP certificate (2010 version) from the NMPA for its mumps vaccine in September 2012 for five years. The renewed GMP certificate issued by Food and Drug Administration of Liaoning Province was obtained on February 13, 2018, which will remain valid until February 12, 2023. The construction of a varicella vaccine production plant was completed in 2019. The production permit was granted in December 2019 after NMPA’s inspection of our varicella vaccine production line. The annual capacity of the varicella production line is 5 million doses.

In 2009, we established Sinovac LS focusing on R&D. In 2020, Sinovac LS obtained a drug production license. Currently, Sinovac LS is mainly committed to the research and development, production and sales of COVID-19 vaccine, CoronaVac. Sinovac LS Ltd is located in the biomedical industry base in Daxing District, Beijing, which has three existing production bases, Tianfu factory, Yongda factory and Xiangrui factory. Sinovac LS had a rapid growth in 2020. As of the date of this annual report, Sinovac LS has a total of 15 existing and under construction buildings, with a total built-out area of 144,500 square meters and a total construction area of 196,000 square meters. Sinovac LS was granted national and WHO GMP certifications in 2020. When construction is completed and facilities are put to use, the annual production capacity of CoronaVac by Sinovac LS is expected to reach 2 billion doses.

ITEM 4A. Unresolved Staff Comments

Not applicable.

ITEM 5. Operating and Financial Review and Prospects

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information — D. Risk Factors” or in other parts of this annual report on Form 20-F.

A. Operating Results

Overview

We are a fully integrated, China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization of vaccines against infectious diseases. We have successfully developed a portfolio of products, consisting of vaccines against

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hepatitis A, hepatitis B, EV71, influenza viruses, mumps, varicella, pneumococcal and COVID-19. The following table sets forth certain information on our commercialized products.

Products	Date of Approval
Healive	May 2002
Bilive	June 2005
Anflu	October 2005
Inlive	January 2016
Panflu(1)	April 2008
Panflu.1(1)	September 2009
Mumps	September 2012
Varicella	December 2019
Quadrivalent influenza	June 2020
Pneumococcal polysaccharide	December 2020
CoronaVac(2)	February 2021

(1)We sold all of our Panflu and Panflu.1 products to the PRC government. Our sales of Panflu and Panflu.1 depend on the completion of government audit on our fulfillment to the stockpiling order.

(2) CoronaVac was granted conditional marketing authorization in China on February 5, 2021.

Our pipeline consists of various vaccine candidates in the pre-clinical and clinical development phases in China. We obtained the approvals to conduct clinical trials of PPV, sIPV and QIV in May 2014, November 2015 and November 2016, respectively. And the new drug applications for PPV, sIPV and QIV are received by NMPA in June 2017, January 2019 and March 2019. NMPA approved and issued a product license for our varicella vaccine, QIV vaccine and PPV vaccine in December 2019, June 2020 and December 2020, respectively. We initiated the development of an inactivated vaccine (named CoronaVac) against COVID-19 on January 28, 2019 and began rolling submission to the MMPA since September 2020 and the NMPA carried out rolling reviews when the submission was made. On February 5, 2021, NMPA granted a conditional marketing authorization to us for CoronaVac in individuals aged 18 and above.

Our Proprietary Rights

Healive was co-developed by Tangshan Yian and the NIFDC. In April 2001, Tangshan Yian contributed its proprietary rights to Healive to Sinovac Beijing as its capital contribution. In 2002, the NIFDC, Tangshan Yian and Sinovac Beijing agreed that Sinovac Beijing owned the right to market and sell Healive, and that Sinovac Beijing was required to pay the NIFDC approximately $1 million for the Healive technology consulting fee that Tangshan had not paid by that time. We obtained Healive’s new drug certificate from the NMPA in December 1999, the production license in May 2002, and final PRC regulatory approval for production of Healive in May 2002. Production of Healive commenced in July 2002.

Bilive was initially developed by Tangshan Yian. In March 2002, Tangshan Yian and Beijing Keding entered into an agreement under which Tangshan Yian transferred to Beijing Keding its proprietary rights to Bilive at no cost. In August 2002, Sinovac Beijing acquired the proprietary rights to Bilive from Beijing Keding in consideration of a 10.7% equity interest in Sinovac Beijing and a cash payment of $18,000. Beijing Keding is owned by Mr. Weidong Yin and three other senior officers of Sinovac Beijing. We received the production license for Bilive from the NMPA in January 2005. In June 2005, we obtained the final PRC regulatory approval for production of Bilive. The cost of the proprietary rights to Bilive was expensed as purchased in-process research and development. Production of Bilive commenced in June 2005.

In March 2003, Sinovac Beijing acquired the proprietary rights to Anflu from Tangshan Yian at the vendor’s cost. In November 2004, we completed the acquisition of 100% of the shares of Tangshan Yian. We received final PRC regulatory approval for the production of Anflu in October 2005. The cost of the proprietary rights to Anflu was expensed as purchased in-process research and development.

Sinovac Beijing started to research and develop the H5N1 vaccine in 2004. In 2004, Sinovac Beijing entered into an agreement with the National Institute for Biological Standards and Controls (“NIBSC”), an England based laboratory under the WHO, on transferring the H5N1 virus strain. According to the agreement, Sinovac Beijing as the recipient would receive the materials and information from NIBSC. The agreement indicated that Sinovac Beijing can only use received materials and information for academic in-house research purposes and Sinovac Beijing shall negotiate with the owner of reverse genetics technology pertaining to virus strain for any commercial purpose. In April 2008, Sinovac Beijing received a production license for H5N1 from the PRC government and started to produce H5N1 vaccines for the government-stockpiling program in June 2008.

In 2011, we licensed from MedImmune certain rights to use patented reverse genetics technology pertaining to virus strain production for H5N1 influenza vaccine. We have agreed to pay an upfront license fee, milestone payments up to an aggregate of $9.9 million based upon the achievement of cumulative net sales of licensed products in China (including Hong Kong and Macau), as well as royalty payments in single digit

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of net sales of the licensed products in China (including Hong Kong and Macau). On August 15, 2012, we entered into amended agreements with MedImmune to, among other things, extend the effectiveness of each agreement to reflect revised termination dates between December 2015 and May 2021. License fee and royalties of $3.4 million accrued at the end of 2011 was paid in 2012. We accrued a royalty of $9,000 at the end of 2018, which was paid in 2019. No royalties were incurred for the years ended December 31, 2020 and 2019.

No amortization expenses were recorded in 2020, 2019 and 2018 for proprietary rights as they were fully amortized.

Research and Development Programs

The research and development strategy is developed by management and reviewed and approved by the board of directors of our company. Utilizing the resources and platform of each subsidiary, the R&D team of each subsidiary selects a R&D project and develops a feasibility analysis for review and approval by the board of directors. Once the project is approved, the R&D progress as well as the spending of each project will be tracked. Each year all the ongoing R&D projects will be reviewed along with the budgeting for the following year.

We also use our research and development resources, including employees and our technology, across multiple product development programs.

The process of developing, obtaining and maintaining regulatory approvals for new products is lengthy, expensive and uncertain. While the development may take years to complete, the market environment may change from the time when the project is selected, which will have an impact to the expected return of the investment. We anticipate that we will frequently monitor the progress of each key project and determine which of our early stage product candidates is best suited for further development, as well as how much funding to direct to each program, on an on-going basis in response to the scientific and clinical success and commercial potential of each product candidate.

We have completed phase III clinical trials for the PPV, filed an application of GMP inspection in February 2020 and received the product license for our PPV vaccine from NMPA in December 2020. We also completed phase III clinical trials of sIPV in 2018 and file the new drug application in September. We have completed phase III clinical trial on our QIV in 2019, filed the new drug application in March 2020 and received the product license for our QIV vaccine from NMPA in June 2020. We commenced phase I clinical trial on our COVID-19 vaccine in April 2020, commenced phase III clinical trials in July in Brazil, Turkey, Indonesia and Chile, filed for conditional marketing authorization in February 2021 and received a conditional marketing authorization for CoronaVac from NMPA on February 5, 2021.

Government Grants

Deferred government grants represent funding received from the government for research and development, or investment in building or improving production facilities. The amount of deferred government grants as of year-end is net of research and development expenditures or depreciation incurred or those recognized as government grants income. We received government grants that were deferred in the amount of RMB92.4 million ($14.2 million), RMB6.7 million ($1.0 million) and RMB23.4 million ($3.5 million) in 2020, 2019 and 2018, respectively. In addition, we received RMB21.7 million ($3.1 million), RMB3.5 million ($0.5 million) and RMB1.7 million ($0.3 million) in other government grants and subsidies that were recognized in the statements of comprehensive income in 2020, 2019 and 2018, respectively.

Deferred government grants included the following:

Government grants for property, plant and equipment

We have four deferred government grants related to property, plant and equipment. We have fulfilled the conditions attached to one grant and expect to fulfill another one in 2021. RMB3.4 million ($0.6 million) will be amortized in 2021 which was included in the current portion of deferred government grant and RMB11.2 million ($1.7 million) will be amortized after 2021 which was included in the non-current portion of deferred government grants. RMB2.8 million ($0.4 million) was recorded as a reduction to depreciation expense for the year ended December 31, 2020, as compared to $0.4 million and $0.4 million for the years ended December 31, 2019 and 2018, respectively, and RMB0.5 million ($80,000) was recorded as government grant recognized in income for the year ended December 31, 2020, as compared to $79,000 and $82,000 for the years ended December 31, 2019 and 2018. RMB8.4 million ($1.3 million) represents the unamortized portion of one grant where we received but has not fulfilled the conditions attached to the grants. As we do not expect to fulfill the conditions within one year, the grant is recorded as a non-current deferred government grant.

Government grants for research and development

We have ten deferred government grants related to various research and development projects. We expect to fulfil the conditions attached to nine grants in 2021 and recorded RMB95.2 million ($14.6 million) as current portion of deferred government grants, while the remaining one grant’s condition is expected to be fulfilled after 2021 and RMB8 million ($1.2 million) is recorded in the non-current portion of deferred government grants.

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Critical Accounting Policies and Estimates

Our consolidated financial information has been prepared in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (1) the reported amounts of our assets and liabilities, (2) the disclosure of our contingent assets and liabilities at the end of each fiscal period and (3) the reported amounts of revenues and expenses during each fiscal period. We continually evaluate these estimates based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and reasonable assumptions, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

When reviewing our financial statements, you should consider (1) our selection of critical accounting policies, (2) the judgment and other uncertainties affecting the application of those policies and (3) the sensitivity of reported results to changes in conditions and assumptions. We believe the following accounting policies involve the most significant judgment and estimates used in the preparation of our financial statements.

Revenue from Contracts with Customers

We adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”), on January 1, 2018, using the modified retrospective method.

Revenue is recognized when control of promised goods is transferred to our customers in an amount of consideration of which we expect to be entitled to in exchange for the goods, and we can reasonably estimates return provision for the goods.

The product return provisions are estimated based on historical return and exchange data as well as the inventory levels and the remaining shelf lives of the products in the distribution channels.

As of December 31, 2020, sales return provision for our vaccine products was $12.1 million, compared to $3.7 million as of December 31, 2019. Sales return provision as a percentage of sales was 2.4% and 1.5% in 2020 and 2019, respectively.

For the year ended December 31, 2020, we did not have any significant incremental costs of obtaining contracts with customers incurred or costs incurred in fulfilling contracts with customers within the scope of ASC Topic 606, that shall be recognized as an asset and amortized to expenses in a pattern that matches the timing of the revenue recognition of the related contract.

We do not have amounts of contract assets since revenue is recognized as control of goods is transferred. The contract liabilities consist of advance payments from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. All contract liabilities are included in deferred revenue in the Consolidated Balance Sheets.

For the year ended December 31, 2020, we recognized sales of $4.9 million related to contract liabilities at January 1, 2020.

Allowance for Doubtful Accounts

We adopted Accounting Standards Update (ASU) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. We extend unsecured credit to our customers in the ordinary course of business but mitigate the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and recorded based on management’s assessment of the credit history with the customer and current relationships with them.

We also maintain an allowance for doubtful accounts for estimated losses based on our assessment of the collectability of specific customer accounts and the aging of the accounts receivable. We analyze accounts receivable and historical bad debts, customer concentrations, customer solvency, current economic and geographic trends, and changes in customer payment terms and practices when evaluating the adequacy of our current and future allowance. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, a specific allowance for bad debt is estimated and recorded, which reduces the recognized receivable to the estimated amount we believe will ultimately be collected. We monitor and analyze the accuracy of the allowance for doubtful accounts estimate by reviewing past collectability and adjust it for future expectations to determine the adequacy of our current and future allowance. Our reserve levels have generally been sufficient to cover credit losses. Our allowance for doubtful accounts as of December 31, 2020 was $6.7 million, compared to $4.2 million as of December 31, 2019. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Bad debt provision was $2.6 million for the year ended December 31, 2020 as compared with a recovery of $0.3 million for the year ended December 31, 2019.

Inventory Provision

We write off all the unsold seasonal influenza vaccines before the end of the flu season at the end of the fiscal year, except for those distributed after the end of the fiscal year. In addition, we estimate an inventory provision for existing Healive, Bilive, Inlive, Anflu, Mumps, Varicella and CoronaVac products in inventory after considering the sales forecasts, the conditions of the raw material inventory, as well as the expiration dates of these products. The inventory provision in 2020, 2019 and 2018 was $5.8 million, $0.6 million and $2.5 million, respectively.

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Impairment of Long-Lived Assets

Long-lived assets, including property, plant and equipment and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable from the future undiscounted net cash flows expected to be generated by the asset group. An asset group is identified as assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets.

If the asset group is not fully recoverable, an impairment loss would be recognized for the difference between the carrying value of the asset group and its estimated fair value, based on the discounted net future cash flows or other appropriate methods, such as comparable market values. We use estimates and judgments in the impairment tests and the timing and amount of impairment charges could be materially different if different estimates or judgments are utilized. We did not record any impairment charges on long-lived assets in 2020, 2019 and 2018.

Income Tax Valuation Allowance

In 2020, we recorded $26.9 million of deferred income tax assets based on the difference in timing of certain deductions for income tax and accounting purposes. We evaluate our valuation allowance requirements at each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When a change in circumstances causes a change in management’s judgment about the reliability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carry forward period available under applicable tax law.

Recently Issued Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which reduces the number of accounting models for convertible debt instruments and convertible preferred stock that simplifies the accounting for convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of adoption on its consolidated financial statements.

RESULTS OF OPERATIONS

	Year ended December 31,
Consolidated statements of comprehensive income data	2020			2019			2018
	(in thousands except share and per share data)
Sales	$	510,624		$	246,053		$	229,650
Cost of sales(1)		67,180			32,469			24,723
Gross profit		443,444			213,584			204,927
Operating expenses:
Selling, general and administrative expenses(1)		176,534			121,468			137,003
Provision (recovery) for doubtful accounts		2,640			(306	)		820
Research and development expenses(1)		48,760			24,254			21,910
Loss on disposal and impairment of property, plant and equipment		163			294			75
Government grants recognized in income		(297	)		(688	)		(197	)
Total operating expenses		227,800			145,022			159,611
Operating income		215,644			68,562			45,316
Interest and financing expenses		(1,453	)		(650	)		(1,070	)
Interest income		1,930			1,996			2,016
Other income		496			912			321
Income before income taxes		216,617			70,820			46,583
Income tax expenses		(31,438	)		(5,605	)		(10,472	)
Net income		185,179			65,215			36,111
Less: income attributable to non-controlling interests		(74,810	)		(20,286	)		(14,329	)
Net income attributable to the shareholders of Sinovac		110,369			44,929			21,782
Preferred stock dividends		(6,015	)		(5,128	)		—
Net income attributable to common shareholders of Sinovac		104,354			39,801			21,782
Comprehensive income		217,507			62,388			25,115
Less: comprehensive income attributable to non-controlling interests		(82,892	)		(19,681	)		(12,507	)
Comprehensive income attributable to shareholders of Sinovac	$	134,615		$	42,707		$	12,608

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(1) Includes share-based compensation of $10.2 million, $3.0 million and $4.3 million in 2020, 2019 and 2018, respectively.

Sales

Revenues from sales represent: (1) the invoiced value of goods, net of value added taxes, and sales returns. See “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Taxes and incentives.” We recognize revenues when control of promised goods is transferred to our customers in an amount of consideration of which we expect to be entitled to in exchange for the goods, and we can reasonably estimates return provision for the goods.; and (2) the value of goods produced for government stockpiling program. We recognize revenues from the sales of products to the government stockpiling program when cash has been received and the products have expired and passed government inspection or are delivered per government instruction.

Our revenues, growth and results of operations depend on several factors, including the level of acceptance of our products among doctors, hospitals and patients, and our ability to maintain or increase prices for our products at levels that provide favorable margins. The level of acceptance among doctors, hospitals and patients is influenced by the performance, promotion and academic research, and pricing of our products.

We market and sell our vaccine products primarily through provincial and municipal CDCs. We enter into sales agreements with CDCs each time a CDC places a purchase order. Pursuant to these sales agreements, CDCs typically agree not to re-sell our products to regions outside the territory the pertinent CDC covers administratively. Since hepatitis A vaccines were included into government sponsored expended immunization program in 2007, we have actively participated in the tender and bidding organized by various provincial CDCs. We enter into sales agreements with CDCs when we win a bid.

Pricing

In the private market, we set our price based on our production cost, the price of competitive products and acceptance level of CDCs and patients. We also adjust our product price according to changes in the external environment to balance sales volume and gross profit, and ultimately to maximize sales profit margins.

In the public market, the government purchases vaccines for EPI market by issuing government tenders. During the evaluation process, price is a key factor which impacts the result of the tender. Therefore, we need to price our products competitively to win the tenders. We believe that our emphasis on product quality is an advantage and increases our competitiveness.

Cost of sales

Our cost of sales primarily consists of material, direct labor and production overheads. Depreciation of property, plant and equipment attributable to manufacturing activities and license amortization are capitalized as part of inventory, and expensed as cost of sales when product is sold. Cost of goods sold in 2020, 2019 and 2018 amounted to $67.2 million, $32.5 million and $24.7 million, respectively, of which idle capacity amounted to $1.7 million, $3.8 million and $2.7 million, respectively. We produce our products and conduct the final product packaging in-house.

Our production capacity has not been fully utilized. If we successfully commercialized new products and increase sales of existing products, we expect the unit production cost to decrease.

Selling, general and administrative expense

Selling and marketing expenses consist primarily of salaries and related expenses for personnel engaged in sales, marketing and customer support functions and costs associated with marketing activities and shipping. Selling expense increased 51.4% from $91.5 million in 2019 to $138.6 million in 2020, which accounted for 27.1% of total sales revenue of 2020.

General and administrative expense consists primarily of compensation for employees in executive and operational functions, including finance and accounting, business development and human resources. Other significant costs include facilities costs, share-based compensation and professional fees for accounting and legal services.

Research and development expenses

Our research and development expenses consist primarily of:

• salaries and related expenses for personnel;

• fees paid to consultants and clinical research organizations in conjunction with their independent monitoring of our clinical trials and acquiring and evaluating data in conjunction with our clinical trials;

• consulting fees paid to third parties in connection with other aspects of our product development efforts;

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• costs of materials used in research and development;

• depreciation of facilities and equipment used to develop our products; and

• technology license fees and milestone payments paid to third parties before a product receives regulatory approval.

We expense both internal and external research and development costs as incurred, other than capital expenditures that have alternative future uses, such as the build-out of our plant, or license fees and milestone payments made to third parties after regulatory approval is received. We expect our research and development costs will continue to be substantial and that they will increase as we advance our current portfolio of product candidates through clinical trials and move other product candidates into pre-clinical and clinical trials.

Taxes and incentives

Sinovac Beijing, Sinovac LS, Sinovac Dalian and Sinovac Biomed are subject to income taxes in China on their taxable income calculated at a tax rate in accordance with the relevant income tax laws and regulations. Income tax returns filed by our PRC subsidiaries for tax years beginning in 2010 have been subject to examination by tax authorities.

Effective from January 1, 2008, the PRC’s statutory income tax rate is 25%. Our PRC subsidiary Sinovac Biomed is subject to income tax at the statutory rate of 25%. Sinovac Beijing and Sinovac Dalian, have been reconfirmed as a “High and New Technology Enterprise,” or HNTE in 2020 for a period of three years, and Sinovac LS, has been confirmed as a HNTE in 2020 for a period of three years, are subject to a preferential income tax rate of 15% from 2020 to 2022. We determine deferred taxes for each tax-paying entity in each tax jurisdiction. The potential tax benefits arising from the losses incurred by the subsidiaries have been recorded in our financial statements.

We evaluate our valuation allowances requirements at each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When a change in circumstances causes a change in management’s judgment about the ability to realize deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carry forward period available under applicable tax law.

Tax losses of our PRC subsidiaries in the amount of RMB12.6 million ($1.9 million) as of December 31, 2020 will expire from 2021 to 2030, if not utilized.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Sales. Total sales in 2020 increased by 107.5% to $510.6 million from $246.1 million in 2019. The growth was mainly contributed by sales of CoronaVac.

The table below sets forth a breakdown of our sales by market type:

	Year ended December 31,
Sales	2020		2019
	(in thousands)
EPI	$	96,799	$	6,896
Private Pay		268,821		220,217
Export		145,004		18,940
Total sales	$	510,624	$	246,053

Gross Profit. Gross profit in 2020 increased by 107.6% to $443.4 million from $213.6 million in 2019. Gross margin percentage 86.8% was the same compared with last year.

Selling, General and Administrative Expenses. Selling, general and administrative expenses in 2020 increased by 45.3% to $176.5 million from $121.5 million in 2019. The increase was mainly due to higher sales and marketing dedicated for revenue growth.

We recorded total share-based compensation of $10.2 million in 2020, compared to $3.0 million in 2019. As of December 31, 2020 and 2019, we had unrecognized compensation costs of $6.6 million and $9.6 million, respectively. This unearned component will be recognized over a period of 26 months.

Research and Development Expenses. Research and development expenses in 2020, primarily represented expenditures on the advancement of pipeline vaccines, including pneumococcal vaccines, sIPV and COVID-19 vaccines, increased by 101.0% to $48.8 million from $24.3 million in 2019.

Interest and Financing Expenses. Interest and financing expense increased by 123.5% to $1.5 million from $0.7 million in 2019.

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Income Tax Expenses. Income tax expense was $31.4 million in 2020, compared to an income tax expenses of $5.6 million in 2019.

Net Income. Net income was $185.2 million in 2020, compared to $65.2 million in 2019. Net income attributable to shareholders of Sinovac was $110.4 million in 2020, compared to $44.9 million in 2019. Net income attributable to common shareholders of Sinovac was $104.4 million in 2020, compared to $ 39.8 million in 2019.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Sales. Total sales in 2019 increased by 7.1% to $246.1 million from $229.7 million in 2018. Revenue recognition of Panflu under the government stockpiling program in 2019 and 2018 were nil. The growth was mainly contributed by sales of mumps vaccines and Anflu.

The table below sets forth a breakdown of our sales by market type:

	Year ended December 31,
Sales	2019		2018
	(in thousands)
EPI	$	6,896	$	10,357
Private Pay		220,217		204,764
Export		18,940		14,529
Total sales	$	246,053	$	229,650

Gross Profit. Gross profit in 2019 increased by 4.2% to $213.6 million from $204.9 million in 2018. Gross margin percentage decreased to 86.8% in 2019 from 89.2% in 2018. The decrease of gross margin was mainly due to lower gross profit on Anflu in 2019.

Selling, General and Administrative Expenses. Selling, general and administrative expenses in 2019 decreased by 11.3% to $121.5 million from $137.0 million in 2018. The decrease was mainly due to lower professional and consulting fees associated with ongoing litigations.

We recorded total share-based compensation of $3.0 million in 2019, compared to $4.3 million in 2018. As of December 31, 2019 and 2018, we had unrecognized compensation costs of $9.6 million and $12.6 million, respectively. This unearned component will be recognized over a period of 38 months.

Research and Development Expenses. Research and development expenses in 2019, primarily represented expenditures on the advancement of pipeline vaccines, including pneumococcal vaccines, sIPV and varicella vaccine, increased by 10.7% to $24.3 million from $21.9 million in 2018.

Interest and Financing Expenses. Interest and financing expense decreased by 39.3% to $0.7 million from $1.1 million in 2018. There were $nil, $nil and $0.3 million of interest subsidies received in 2019, 2018 and 2017, respectively.

Income Tax Expenses. Income tax expense was $5.6 million in 2019, compared to an income tax expense of $10.5 million in 2018.

Net Income. Net income was $65.2 million in 2019, compared to $36.1 million in 2018. Net income attributable to shareholders of Sinovac was $44.9 million in 2019, compared to $21.8 million in 2018. Net income attributable to common shareholders of Sinovac Antigua was $39.8 million in 2019, compared to $ 21.8 million in 2018.

Cash Flows and Working Capital

The following table sets forth a summary of our net cash flows for the periods indicated:

	Year ended December 31,
	2020			2019			2018
	(in thousands)
Net cash provided by operating activities	$	479,309		$	39,074		$	7,943
Net cash used in investing activities		(204,756	)		(42,454	)		(25,261	)
Net cash provided by financing activities		592,566			1,737			64,180
Effect of exchange rate changes on cash and cash equivalents and restricted cash		27,207			(649	)		(4,656	)
Increase (decrease) in cash and cash equivalents and restricted cash		894,326			(2,292	)		42,206
Cash and cash equivalents and restricted cash at beginning of period		155,878			158,170			115,964
Cash and cash equivalents and restricted cash at end of period	$	1,050,204		$	155,878		$	158,170

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Operating Activities

Net cash provided by operating activities was $479.3 million in 2020, compared to net cash provided by operating activities of $39.1 million in 2019. Net cash provided by our operating activities in 2020 resulted primarily from our net income of $185.2 million and an increase in deferred revenue of $339.3 million, partially offset by an increase of inventory of $77.7 million.

Net cash provided by operating activities was $39.1 million in 2019, compared to net cash provided by operating activities of $7.9 million in 2018. Net cash provided by our operating activities in 2019 resulted primarily from our net income of $65.2 million and an increase in accounts payable and accrued liabilities of $6.8 million, partially offset by an increase of accounts receivable of $40.2 million.

Investing Activities

Net cash used in investing activities was $204.8 million in 2020, compared to $42.5 million in 2019. We invested primarily in short-term investments and property, plant and equipment in 2020.

Net cash used in investing activities was $42.5 million in 2019, compared to $25.3 million in 2018. We invested primarily in short-term investments in 2019

Financing Activities

Net cash provided by financing activities was $592.6 million in 2020, compared to $1.7 million in 2019. In 2020, we received proceeds of $541.0 million from a subsidiary’s financing activities, loan proceeds of $33.2 million and made loan repayments of $6.0 million.

Net cash provided by financing activities was $1.7 million in 2019, compared to $64.2 million in 2018. In 2019, we received loan proceeds of $2.1 million and made loan repayments of $3.3 million.

Accounts Receivable

Our total accounts receivable, including other receivables, increased by 122.9% from $113.7 million as of December 31, 2019 to $253.5 million as of December 31, 2020. Our average accounts receivable turnover time in 2020 was 134 days, compared to 144 days in 2019.

Our maximum exposure to credit risk at the balance sheet dates relating to accounts receivables is summarized as follows:

	Year ended December 31,
	2020		2019
	(in thousands)
Aging within one year, net of allowance for doubtful accounts	$	240,266	$	108,635
Aging greater than one year, net of allowance for doubtful accounts		10,365		3,462
Total trade receivable	$	250,631	$	112,097

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Borrowings

As of December 31, 2020, we had $32.9 million in short-term bank loans, offset by $1,041.0 million in cash and cash equivalents, resulting in a liquid assets balance of $1,008 million, compared with $146.8 million at the end of December 31, 2019. The following tables summarize our short-term and long-term bank borrowings as of December 31, 2020:

Type	Amount	Annual Interest Rate			Interest Payment	Maturity Date	Purpose
Bank loan from Bank of China	RMB7 million ($1.1 million)		5.00	%	monthly	March 13, 2021	operation
Bank loan from Bank of China	RMB6 million ($0.9 million)		4.40	%	monthly	December 9, 2021	operation
Bank loan from SPD Silicon Valley Bank	RMB42.4 million ($6.5 million)		5.10	%	quarterly	On or before August 6, 2021	operation
Bank loan from Guangdong Development Bank	RMB9.0 million ($1.4 million)		5.00	%	monthly	On or before November 29, 2021	operation
Bank loan from China Merchants Bank	RMB0.7 million ($0.1 million)		5.60	%	monthly	December 31, 2021	mortgage
Bank loan from China Merchants Bank	RMB1.6 million ($0.2 million)		5.60	%	monthly	May 26, 2023	mortgage
Bank loan from China Everbright Bank	RMB13.0 million ($2.0 million)		5.88	%	quarterly	November 16, 2028	purchase of property plant and equipment

On November 20, 2019, Sinovac Dalian entered into a maximum credit facility of RMB20 million ($3.1 million) with Bank of China to finance its working capital requirements. RMB7 million ($1.0 million) was drawn on December 24, 2019 and was repaid on December 24, 2020. On March 13, 2020, Sinovac Dalian withdrew RMB7 million ($1.1 million) with an annual interest rate at 95 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.00%. On December 9, 2020, Sinovac Dalian withdrew RMB 6 million ($0.9 million) with an annual interest rate at 55 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 4.40%. Interest is payable monthly and the loans are repayable on March 13, 2021 and December 9, 2021, respectively. Buildings of Sinovac Dalian with a net book value of RMB 16.1 million ($2.5 million) were pledged as a collateral.

On November 25, 2019, Sinovac Dalian entered into a revolving bank loan with SPD Silicon Valley Bank with the aggregate principal of RMB50 million ($7.7 million) to finance its working capital requirements. The revolving loan bears interest at 125 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.1% and interest is payable quarterly. Each withdraw from the revolving loan has a maximum term of 12 months. RMB7.6 million ($1.1 million) was drawn in 2019 and repaid in December 2020. The outstanding balance of RMB42.4 million ($6.5 million) was drawn during 2020 and is payable on or before August 6, 2021.  

On November 5, 2020, Sinovac Dalian entered into a maximum credit facility of RMB9 million ($1.4 million) with Guangdong Development Bank to finance its working capital requirements. RMB9.0 million ($1.4 million) was drawn during 2020 and payable on or before November 29, 2021. The loan bears interest at 115 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5% and interest is payable monthly. Prepaid land lease payments of Sinovac Dalian with a net book value of RMB14.3 million ($2.2 million) were pledged as collateral.

On May 26, 2020, Sinovac Dalian entered into four mortgages in the total amount of RMB2.1 million ($0.3 million) with China Merchants Bank to purchase four apartments. The loans bear annual interest rate at 175 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.6%. Principals and interests are repaid monthly over a term of 36 months. Sinovac Dalian repaid RMB0.4 million ($58,000) in principal and interest in 2020. As of December 31, 2020, RMB0.7 million ($0.1 million) is recorded in bank loans due within one year and RMB1.1 million ($0.2 million) is recorded in long-term bank loans.

On November 17, 2020, Sinovac Dalian entered into a maximum credit facility of RMB 200 million ($30.7 million) is to finance Sinovac Dalian’s purchase of property plant and equipment, with a term from November 17, 2020 to November 16, 2028. The loan bears annual interest rate at 123 basis point above the prime rate of a five year term loan published by the People’s Bank of China, at 5.88%. Interest is payable quarterly and principal installment repayments begin in 2023 and shall be fully paid by November 16, 2028. Certain plant and machinery and equipment of

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Sinovac Dalian with a net book value of RMB150.2 million ($23.1 million) were pledged as collateral. Sinovac Dalian withdrew RMB13 million ($2.0 million) on December 14, 2020 and will be repaid during 2023 to 2028.

Type	Amount	Annual Interest Rate			Interest Payment	Maturity Date	Purpose
Bank loan from Bank of Beijing	RMB30 million ($4.6 million)		3.05	%	quarterly	March 31, 2021	operation
Bank loan from SPD Silicon Valley Bank	RMB49.9 million ($7.7 million)		5.05	%	quarterly	On or before October 15, 2021	operation
Bank loan from SPD Silicon Valley Bank	RMB69.9 million ($10.7 million)		5.05	%	quarterly	On or before October 15, 2021	operation

On March 31, 2020, Sinovac LS entered into a maximum credit facility of RMB30 million ($4.6 million) with Bank of Beijing to finance its working capital requirements. RMB30 million ($4.6 million) was drawn on March 31, 2020 with an annual interest rate of 3.05%. Interest is payable monthly and the loan is payable on March 31, 2021.

On May 14, 2020 and September 3, 2020, Sinovac LS entered into two revolving bank loans with SPD Silicon Valley Bank with the aggregate principal of RMB50 million ($7.7 million) and RMB70 million ($10.7 million), respectively, to finance its working capital requirements. The revolving loan bears interest at 120 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.05% and interest is payable quarterly. Each withdraw from the revolving loans has a maximum term of 12 months. The outstanding balance of RMB119.8 million ($18.4 million) was drawn during 2020 and is payable on or before October 15, 2021.  

Our weighted average effective interest rate on outstanding borrowings was 4.84%, 5.09% and 4.91% for the years ended December 31, 2020, 2019 and 2018, respectively. We have not historically used, and do not expect to use in the future, any derivative financial instruments to manage our exposure to interest risk.

Restrictions on Cash Dividends

We are a holding company, and we rely in part on dividends paid by our subsidiaries, Sinovac Beijing, Sinovac Dalian, Sinovac LS and Sinovac Biomed for our cash needs, mainly our operating expenses. The payment of dividends in China is subject to limitations. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. Our subsidiary is also required to set aside at least a portion of its after-tax profit based on PRC accounting standards each year to fund the statutory surplus reserves.

The reserves can be used to recoup previous years’ losses, if any, and, subject to the approval of the relevant PRC government authority, may be converted into share capital in proportion to their existing shareholdings, or by increasing the par value of the shares currently held by them. Such reserves, however, are not distributable as cash dividends. In addition, at discretion of their board of directors, our subsidiaries may allocate a portion of their after-tax profits based on PRC accounting standards to the employee welfare and bonus funds, which shall be utilized for collective staff benefits. In addition, if Sinovac Beijing, Sinovac Dalian, Sinovac LS or Sinovac Biomed incurs debt on its own behalf in the future, the instruments governing the debt may restrict the ability of one or more of our PRC subsidiaries, as the case may be, to pay dividends or make other distributions to us.

The ability of our subsidiary to convert renminbi into U.S. dollars and make payments to us is subject to PRC foreign exchange regulations. Under these regulations, the renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Conversion of renminbi for capital account items, such as direct investment, loan, security investment and repatriation of investment, however, is still subject to the approval of SAFE. See “Item 10. Additional Information — D. Exchange Controls.”

Capital Expenditures

We made capital expenditures of $127.7 million, $10.6 million and $5.6 million in 2020, 2019 and 2018, respectively. As of December 31, 2020, our commitments related to capital expenditures of approximately $45.3 million were primarily for the construction of our COVID-19 vaccine production facilities. We will finance such commitments through cash generated from operations.

C. Research and Development, Patents and Licenses, Etc.

See discussions under “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Research and Development Programs.”

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D. Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2020 to December 31, 2020 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

E. Off-Balance Sheet Arrangements

We do not, and did not, have any interest in variable interest entities or any other off-balance sheet arrangements that require disclosure.

F. Tabular Disclosure of Contractual Obligations

The following table summarizes our estimated contractual obligations and commitments as of December 31, 2020 for the periods indicated:

	Total		Less than 1 year		2-3 years		4-5 years		More than 5 years
	(in thousands)
Debt obligations including amount owing to related    party (including interest)	$	50,282	$	40,878	$	7,134	$	851	$	1,419
R&D expenses, liabilities and commitment		3,886		3,886		—		—		—
Operating lease obligations		114,403		7,700		21,366		21,907		63,430
Purchase of facilities commitments		45,306		45,306		—		—		—
Accounts payable and accrued liabilities		211,428		211,428		—		—		—
Total	$	425,305	$	309,198	$	28,500	$	22,758	$	64,849

G. Safe Harbor

This annual report on Form 20-F contains forward-looking statements that relate to future events, including our future operating results and conditions, our prospects and our future financial performance and condition, all of which are largely based on our current expectations and projections. The forward-looking statements are contained principally in the sections entitled “Item 3. Key Information — D. Risk Factors,” “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects.” These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “may,” “will,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “is/are likely to” or other and similar expressions. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following:

• our ability to maximize sales of our existing products within the Chinese market;

• our ability to develop new vaccines;

• our ability to improve our existing vaccines and lower our production costs;

• our ability to expand our manufacturing facilities to meet the needs of the growing Chinese market and other geographic markets;

• our ability to acquire new technologies and products;

• uncertainties in and the timeliness of obtaining necessary governmental approvals and licenses for marketing and sale of our vaccines in certain overseas markets;

• our ability to compete successfully against our competitors;

• risks associated with our corporate structure and the regulatory environment in China;

• ongoing litigation between our Company and certain of our shareholders; and

• other risks outlined in our filings with the Securities and Exchange Commission including this annual report on Form 20-F.

The forward-looking statements made in this annual report on Form 20-F relate only to events or information as of the date on which the statements are made in this annual report on Form 20-F. Except as required by law, we undertake no obligation to update or revise publicly any

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forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this annual report on Form 20-F completely and with the understanding that our actual future results may be materially different from what we expect.

ITEM 6. Directors, Senior Management and Employees

A. Directors and Senior Management

The following table sets forth information regarding our directors and executive officers as of the date of this annual report:

Directors and Executive Officers	Age	Position/Title
Weidong Yin	57	Chairman, President, Chief Executive Officer
Simon Anderson(1) (2) (3)	59	Independent Director
Yuk Lam Lo(1) (2) (3)	71	Independent Director
Kenneth Lee(2) (3)	52	Independent Director
Meng Mei(1) (2) (3)	66	Independent Director
Shan Fu	54	Independent Director
Nan Wang	54	Chief Financial Officer, Vice President
Qiang Gao	44	Vice President, Chief Operating Officer
Jing Li	47	Vice President, Quality and Production

(1) Member of the audit committee.

(2) Member of the corporate governance and nominating committee.

(3) Member of the compensation committee.

Mr. Weidong Yin has served as our chairman, president, chief executive officer and secretary since September 2003. He previously worked as a medical doctor in infectious disease at the China Center for Disease Control and Prevention, Tangshan City, Hebei province. Mr. Yin has been dedicated to hepatitis research for over 20 years and was instrumental in the development of Healive. In addition, Mr. Yin has been appointed as the principal investigator by the Chinese Ministry of Science and Technology for many key governmental R&D programs such as Inactivated Hepatitis A Vaccine R&D, Inactivated SARS Vaccine R&D and New Human Influenza Vaccine (H5N1) R&D. He is also the president of Zhongguancun Listed Companies Association. He obtained his MBA from the National University of Singapore.

Mr. Simon Anderson has served as an independent director of our company since July 2004. He is a member of our audit, compensation, and corporate governance and nominating committees. Mr. Anderson advises companies listed on North American stock exchanges and private businesses in the areas of regulatory compliance, exchange listings and financial operations. He is a member of the Chartered Professional Accountants of British Columbia, having qualified as a Chartered Accountant in 1986. Mr. Anderson serves as a director of IBC Advanced Alloys Corp., which manufactures and processes alloys at its U.S. plants.

Mr. Yuk Lam Lo has served as an independent director of our company since March 2006. Mr. Lo is a member of the audit, compensation and corporate governance and nominating committees. Currently Mr. Lo is serving as the Founding President of HK BioMed Innotech Association and the Honorary Founding Chairman of Hong Kong Biotechnology Organization. In the educational area, Mr. Lo has been elected as an Honorary Fellow of the Hong Kong University of Science and Technology. He is also the Honorary Professor of several universities in China. Mr. Lo was heavily involved in several committees of the HKSAR Government. Previously he served as the Chairman of the Advisory Council for Food Safety of the Food and Health Bureau HKSAR, Director of the Hong Kong Applied R&D Fund Co. Ltd., Chairman of the Biotechnology Committee of the Hong Kong Industry & Technology Development Council, and Chairman of Biotechnology Projects Vetting Committee of the Innovation and Technology Fund, HKSAR. In Mainland China, Mr. Lo is a member of Chinese People’s Political Consultative Conference in Jilin Province. He previously served as a consultant of the Centre for Disease Control and Prevention of China. In the business sector, he is an Independent Director of Luye Pharma Group Limited (2186.HK), Chairman of GT Healthcare Capital Partners, and Partner & Investment Committee Member of Hangsen Investment Management Limited. In recognition of his leadership in the community and dedication to his field, Mr. Lo has received many awards, such as the “Pericles International Prize” in 2019. He is the second Asian and the first person from Hong Kong to be awarded the Prize since it was founded in 1986. In 2020, Mr. Lo was awarded the Bronze Bauhinia Star from the HKSAR government for his outstanding services over the past decades.

Mr. Kenneth Lee is an independent director of Sinovac. He has served on our board of directors since May 2011. In July 2012, the board appointed him as a member of the compensation committee and corporate governance and nominating committee. Mr. Lee has more than 20 years of experience across private equity investments, corporate finance, and business development in China. He is a non-executive director on the board of another Chinese company listed on the Stock Exchange of Hong Kong. Mr. Lee was a partner at SAIF Partners. He graduated from Amherst College.

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Mr. Meng Mei has served as an independent director of our company since March 2012. Mr. Mei is the chairman of compensation committee, and member of the audit and corporate governance and nominating committees. Mr. Mei founded TusPark, a science park established by Tsinghua University in 1994, to incubate high growth companies. He has been the director of TusPark’s development center since its inception. Mr. Mei is also the Chairman of TusHoldings Co., Ltd., which is engaged in the development, construction, and management of TusPark and is providing services to enterprises based in TusPark. TusHoldings Co., Ltd. is also involved in venture capital investments in China. Mr. Mei sits on the judging expert panel of China’s National Science & Technology Award. He has developed courses on entrepreneurship and new venture formation as a Tsinghua University professor and an entrepreneur. Mr. Mei holds a bachelor’s degree in automation from Tsinghua University, PRC.

Mr. Shan Fu has served as an independent director since July 2018, when he was appointed as a director by the PIPE Investors in connection with the PIPE transaction described above. Mr. Fu is a Managing Partner at Vivo Capital. Vivo Capital is a healthcare focused investment firm formed in 1996 with over $3 billion under management. Prior to joining Vivo in 2013, Mr. Fu was Senior Managing Director in the Private Equity group and the Chief Representative of Blackstone’s Beijing Office. Additionally, Mr. Fu’s qualifications include experience in the Department of Foreign Investment in China’s National Development and Reform Commission, the State Economic and Trade Commission, the Office of Economic and Trade in State Council, and the Office of Production in State Council. Mr. Fu is currently a director on the boards of 4 biopharma companies, 1 medical consumable company, and 1 healthcare service company.

Ms. Nan Wang has served as our chief financial officer since June 2013. Ms. Wang served as the vice president of Sinovac Beijing from 2001 and the board director since 2009. Ms. Wang oversaw business development, investment and clinical research. Ms. Wang also served as the first general manager of Sinovac Dalian since establishment of this company. During her 19 years of service, Ms. Wang was responsible for our business development, investment and clinical research. She has been actively promoted our foreign cooperation, leading domestic and international cooperation negotiations on a number of projects including equity, technology and market, and successfully achieving a number of foreign cooperation. Ms. Wang has led clinical research on many important projects including SARS vaccine (phase I), inactivated H5N1 influenza (avian flu) vaccine, influenza, H1N1 influenza vaccine and EV71 vaccine (Vero Cell), inactivated, and has actively promoted the listing of new products. Ms. Wang received her bachelor’s degree in biology from Peking University and her master’s degree from University of International Business and Economics, PRC. Ms. Wang also received a diploma in financial management from Beijing College for Entrepreneurs, PRC in 2003.

Mr. Qiang Gao has served as our chief operating officer since April 2020. Mr. Gao joined Sinovac Beijing in 2002 and has served as quality control manager, quality assurance manager, R&D manager and R&D director at Sinovac Beijing in the past years, the general manager of Sinovac LS since 2010, and our vice president since April 2016. Mr. Gao has participated in the development of several vaccine varieties, including influenza vaccine, SARS vaccine, inactivated H5N1 influenza (avian flu) vaccine, EV71 vaccine, COVID-19 vaccine, ongoing sIPV vaccine and declared 23-valent pneumonia vaccine. Under his leadership, we successfully passed the WHO assessment and were selected to be eligible to import inactivated polio vaccine technology from the Netherlands and participate in the global polio eradication project. This project makes China become one of only six developing countries eligible for the technology transfer. Mr. Gao is currently a member of the Beijing Virus Society, Master of Engineering Supervisor of Institute of Microbiology (Chinese Academy of Sciences), and a subject review expert of the Beijing Municipal Science and Technology Commission. Mr. Gao received a master’s degree and a bachelor’s degree in microbiology from the University of Agriculture, PRC.

Ms. Jing Li has served as our vice president since April 2016. Ms. Li was named as quality person of Sinovac Beijing in March 2015. Since she joined Sinovac Beijing in 2003, she has worked in different roles in production and quality function, including quality assurance vice manager, department manager of hepatitis A vaccine production and director of vaccine production at Sinovac Beijing. Ms. Li has successively organized and completed the production and site inspection of EV71 vaccine, the commercial production and application of 23-valent pneumococcal polysaccharide vaccine. As the project leader, she organized and led the effort to pass WHO pre-certification assessment of hepatitis A vaccine, which significantly promoted the export sales of hepatitis A vaccine. Ms. Li received a master’s degree in physiology from the University of Agriculture, PRC.

No family relationship exists among any of our directors or members of our executive officers named above and no arrangement or understanding exists between any of our major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or executive officers.

B. Compensation

In 2020, the aggregate cash compensation paid to our directors and executive officers was approximately $8.3million.

We have not set aside or accrued any amount of cash to provide pension, retirement or other similar benefits to our officers and directors. Our PRC subsidiaries and consolidated affiliated entities as well as their subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her retirement benefits, medical insurance benefits, housing funds, unemployment and other statutory benefits.

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INDEMNIFICATION AGREEMENTS

We have entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we may agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.

EMPLOYMENT AGREEMENTS; NON-DISCLOSURE, NON-COMPETITION AND PROPRIETARY INFORMATION AGREEMENT

We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period. We may terminate the employment of any officers for cause, at any time, without notice or remuneration, for certain acts of such officer, such as conviction of or plea of guilty to a felony or to an act of fraud, misappropriation or embezzlement, gross negligence or dishonest acts to our detriment, gross misconduct or a failure to perform agreed duties, death or disability (physical or mental impairment). We may also terminate his or her employment without cause, at any time, upon a one month’s written notice. Our officers may terminate their employment, at any time, with a one-month prior written notice to our company for good reason, including material diminution in their authority, duties, responsibilities or cash compensation as detailed in their employment agreements, or in event of any action or inaction that constitutes a material breach by our company under the employment agreement, in the manner set forth in their employment agreements. Upon termination of his or her employment with us by our company without cause or by him or her for good reason, such executive officer is entitled to receive severance benefits including cash payment equal to the amount set forth in his or her employment agreement. In addition, all the share options and restricted share award granted to him or her under our stock/share incentive plans will become fully vested on the employment termination date and such share options will remain exercisable for eighteen months following the employment termination date. In addition, each of our executive officer has entered into a non-disclosure, non-competition and proprietary information agreement and agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year and four years, respectively, following the last date of employment.

The bonus plan of the executive officers is made based on our annual performance in different functions and the respective key result areas of these functional teams. Each vice president’s bonus is determined based on the key corporate development objectives and key performance index set by the compensation committee and approved by the board at the beginning of the year. The bonus payoff plan is approved by the board.

Our shareholders have authorized the board of directors to administer two share incentive plans which in aggregate provide for the issuance of up to 9,000,000 shares of common stock, including 5,000,000 shares reserved under the 2003 Stock Option Plan and 4,000,000 shares reserved under 2012 Share Incentive Plan. As of December 31, 2020, an aggregate of 42,800 shares, consisting 42,800 shares under the 2003 Stock Option Plan and no shares under the 2012 Share Incentive Plans, are still available for any future grant of incentive awards under the two share incentive plans. The following tables summarize, as of December 31, 2020, the outstanding options and regular shares that we granted to several of our directors, executive officers, principal shareholders and to other individuals as a group, all of which were made under our 2012 Share Incentive Plan.

Name	Number of Options		Exercise Price($/Share)		Grant Date	Expiration Date
Weidong Yin		120,000		4.98	May 1, 2015	April 30, 2023
Simon Anderson		40,000		4.98	May 1, 2015	April 30, 2023
Yuk Lam Lo		40,000		4.98	May 1, 2015	April 30, 2023
Meng Mei		10,000		4.98	May 1, 2015	April 30, 2023
Kenneth Lee		40,000		4.98	May 1, 2015	April 30, 2023
Nan Wang		60,000		4.98	May 1, 2015	April 30, 2023
Xiaomei Yin		—		4.98	May 1, 2015	April 30, 2023
Qiang Gao		—		4.98	May 1, 2015	April 30, 2023
Jing Li		—		4.98	May 1, 2015	April 30, 2023
Others as a group		70,000		4.98	May 1, 2015	April 30, 2023
Subtotal		380,000		4.98	May 1, 2015	April 30, 2023

Name	Restricted Shares		Grant Date
Weidong Yin		160,000	March 7, 2018
Nan Wang		160,000	March 7, 2018
Xiaomei Yin		120,000	March 7, 2018
Qiang Gao		120,000	March 7, 2018
Jing Li		120,000	March 7, 2018
Others as a group		1,283,000	March 7, 2018
Subtotal		1,963,000	March 7, 2018

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2003 STOCK OPTION PLAN

Our board of directors adopted the 2003 Stock Option Plan (the “2003 Plan”) on November 1, 2003. The purpose of the plan is to attract and retain the best available personnel for positions of substantial responsibility, provide additional incentive to employees, directors and consultants and promote the success of our business. Our board of directors believes that our company’s long-term success depends on our ability to attract and retain superior individuals who, by virtue of their ability, experience and qualifications, make important contributions to our business.

Set forth below is a summary of the principal terms of the 2003 Plan.

• Size of plan. We have reserved an aggregate of 5,000,000 of our common shares for issuance under the 2003 Plan. As of December 31, 2020 an aggregate of 4,699,700 common shares have been issued pursuant to options issued under the 2003 Plan.

• Administration. The 2003 Plan is administered by our board of directors. The board will determine the provisions, terms and conditions of each option grant, including without limitation the option vesting schedule or exercise installment, the option exercise price, payment contingencies and satisfaction of any performance criteria.

• Vesting schedule. The vesting schedules of options granted will be specified in the applicable option agreements.

• Option agreement. Options granted under the 2003 Plan are evidenced by option agreements that contain, among other things, provisions concerning exercisability and forfeiture upon termination of employment or consulting arrangements by reason of death or otherwise, as determined by our board. In addition, the option agreement also provides no option shares will be issued under the plan unless the Securities Act has been fully complied with.

• Option term. The term of options granted under the 2003 Plan may not exceed ten years from the date of grant.

• Termination of options. Where the option agreement permits the exercise of the options granted for a certain period of time following the recipient’s termination of services with us, the options will terminate to the extent any options are not exercised or purchased on the last day of the specified period or the last day of the original term of the options, whichever occurs first.

• Change of control. If a third-party acquires us through the purchase of all or substantially all of our assets, a merger or other business combination, all outstanding stock options will become fully vested and exercisable immediately prior to such transaction.

• Termination of plans. Unless terminated earlier, the Plan will expire in 2023. Our board of directors has the authority to terminate the 2003 Plan prior to the expiry of the plan provided that such early termination shall not affect the options then outstanding under the plan.

2012 SHARE INCENTIVE PLAN

In August 2012, our shareholders adopted a 2012 Share Incentive Plan, or the 2012 Plan. The maximum aggregate number of common shares which may be issued pursuant to all awards under the 2012 Plan is 4,000,000 shares. As of December 31, 2020, 3,073,700 common shares were issued under the 2012 Plan. The following paragraphs describe the principal terms of the 2012 Plan.

Types of Awards

The types of awards we may grant under the plan include the options to purchase our common shares at a specified price and in a specified period determined by our board. Under the 2012 Plan, we may also grant awards of our (1) restricted shares, (2) restricted share units, (3) dividend equivalents, (4) deferred shares, (5) share payments and (6) share appreciation rights under the terms and conditions determined by our board of directors.

Eligibility

We may grant awards to the directors, officers, advisors and employees of us and our wholly owned subsidiaries and any entity which may thereafter be established.

Plan Administration

Our board of directors will administer the 2012 Plan. The board will determine the terms and conditions of each grant, including but not limited to, the exercise, grant or purchase prices, any reload provision, any restrictions or limitations on the awards, vesting schedules, restrictions on the exercisability of the awards, any accelerations or waivers, and any provision related to non-competition and recapture of gain on the awards.

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Award Agreement

Awards granted under the plan will be evidenced by an award agreement that will set forth the terms, conditions and limitations for each award. The award agreement should be signed by the employee and a director or an officer of us. Share awards may be evidenced by way of an issuance of certificates or book entries with appropriate legends. The certificates and book entry procedures may be subject to counsels’ advice, stop-transfer orders or other conditions or restrictions where the plan administrator deems necessary to comply with the required laws and regulations.

Vesting

The 2012 Plan provides that the administrator may set the period during which an option or a share appreciation right can be exercised and may determine that an option or a share appreciation right may not be exercised for a specified period after it is granted. Such vesting can be based on criteria selected by the administrator. At any time after the grant of an option or a share appreciation right, the administrator may, in its sole discretion and subject to the terms and conditions it determines, accelerate the period during which an option or a share appreciation right vests. No portion of an option or a share appreciation right exercisable at the termination of service of an option or a share appreciation right holder with our company or subsidiaries can become exercisable afterwards, unless otherwise provided by the administrator.

Exercise Price and Term of Awards

The exercise price per share of options granted under the 2012 Plan is determined by the plan administrator in the award agreement. The price may be fixed or variable related to the fair market value of our ordinary shares. The term of any option granted should not exceed ten years. However, in the case where our incentive option is granted to an individual who, at the date of grant, owns more than ten percent of the total voting power of all classes of our shares, the price granted shall not be less than 110% of the fair market value on the date of grant and the option is exercisable for no more than five years from the date of grant.

For common share awards granted under the 2012 Plan, namely (1) restricted shares, (2) restricted share units, (3) dividend equivalents, (4) deferred shares, and (5) share payments, the consideration shall not be less than the par value of the shares purchased. The terms of the share awards are set by the plan administrator in its sole discretion.

The exercise price of share appreciation right under the 2012 Plan is determined by the plan administrator and set forth in the award agreement which may be a fixed or variable price related to the fair market value of the shares. The term of the share appreciation right will not exceed ten years.

The approval of shareholders is required for downward adjustment of the exercise prices of options or share appreciation rights. A downward adjustment of the exercise prices of options or share appreciation rights means (i) lowering the exercise price of outstanding options or share appreciation rights, or (ii) cancelling outstanding options or share appreciation rights in exchange for cash, other awards, or options or share appreciation rights with an exercise price that is less than the exercise price of the original options or share appreciation rights.

Transfer Restrictions

The awards granted under the 2012 Plan may not be sold, pledged, assigned or transferred other than by will or the laws of descent and distribution or, subject to the consent of the plan administrator, as required under the applicable laws.

Amendments or Termination

The 2012 Plan provides that in the event of any changes affecting our common shares or our share price, the plan administrator can make proportional and equitable adjustments to reflect such changes. Upon or in anticipation of a corporate transaction, including acquisition, disposal of substantially all or all assets, reverse takeover, dissolution, the plan administrator should in its discretion provide for replacement or assumption of such award. In the event of other changes, the board of directors should in its discretion make adjustments in the number and class of shares subject to awards outstanding on the date of such change to prevent dilution or enlargement of rights. The 2012 Plan will expire and no further awards may be granted after the tenth anniversary of the date the plan was adopted.

C. Board Practices

Board of Directors

Our Articles of Incorporation prescribe that we should have a minimum of one and a maximum of 15 directors. Currently, our board of directors comprises six board members, five of whom are independent. A director is not required to hold any shares in the company by way of qualification. A director may vote with respect to any contract, proposed contract or arrangement in which he is materially interested provided that such director must disclose his interest in the contract or arrangement. There is no age limit requirement for directors. Under Antigua law, our directors have a duty of loyalty to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our Articles of Incorporation and By-laws, as amended and re-stated from time to time. A shareholder has the right to seek damages if a duty owed by our directors is breached.

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The functions and powers of our board of directors include, among others:

• convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings;

• declaring dividends and distributions;

• appointing officers and determining the term of office of officers;

• exercising the borrowing powers of our company and mortgaging the property of our company; and

• approving the transfer of shares of our company, including the registering of such shares in our share register.

As described above, on March 5, 2018, we announced the re-election of the members of our board of directors—Mr. Weidong Yin, Mr. Yuk Lam Lo, Mr. Simon Anderson, Mr. Kenneth Lee, and Mr. Meng Mei—at the 2017 AGM. We also announced that we had determined, after consultation with our Antigua legal counsel, that an alternative, pre-printed ballot not made available to all our shareholders and purportedly submitted at our 2017 AGM by the Shareholder Group was invalid. On March 13, 2018, 1Globe filed a complaint against our company in the Antigua Court to dispute the results of the election. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal and Administrative Proceedings” for additional information. In July 2018, Mr. Shan Fu was appointed to our board of directors in connection with the PIPE transaction.

Terms of Directors and Executive Officers

Our officers are elected by and serve at the discretion of the board of directors. Our directors are not subject to a term of office and hold office until a successor is elected at the next annual shareholders’ meeting. A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors or (ii) dies or is found by our company to be or becomes of unsound mind. None of our directors has a service contract with us or any of our subsidiaries providing for benefits upon termination of employment.

Committees of the Board of Directors

Our board of directors has established an audit committee, a compensation committee and a corporate governance and nominating committee.

Audit Committee

Our audit committee consists of Messrs. Simon Anderson, Yuk Lam Lo and Meng Mei, and is chaired by Simon Anderson, all of whom satisfy the “independence” requirements of Rule 5605 of the NASDAQ Listing Rules and Rule 10A-3 under the Securities Exchange Act of 1934. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

• selecting our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors;

• reviewing with our independent auditors any audit problems or difficulties and management’s response;

• reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;

• discussing the annual audited financial statements with management and our independent auditors;

• reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies;

• annually reviewing and reassessing the adequacy of our audit committee charter;

• such other matters that are specifically delegated to our audit committee by our board of directors from time to time;

• meeting separately and periodically with management and our internal and independent auditors; and

• reporting regularly to the full board of directors.

In 2020, our audit committee held meetings or passed resolutions by unanimous written consent five times.

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Compensation Committee

Our compensation committee consists of Messrs. Meng Mei, Simon Anderson, Yuk Lam Lo, and Kenneth Lee, and is chaired by Mr. Meng Mei, all of whom satisfy the “independence” requirements of Rule 5605 of the NASDAQ Listing Rules and Rule 10C-1 under the Securities Exchange Act of 1934. Our compensation committee assists the board in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. Members of the compensation committee are not prohibited from direct involvement in determining their own compensation. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:

• approving and overseeing the compensation package for our executive officers;

• reviewing and making recommendations to the board with respect to the compensation of our directors;

• reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives, and setting the compensation level of our chief executive officer based on this evaluation; and

• reviewing periodically and making recommendations to the board regarding any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.

In 2020, our compensation committee held meetings or passed resolutions by unanimous written consent three times.

Corporate Governance and Nominating Committee

Our corporate governance and nominating committee consists of Messrs. Yuk Lam Lo, Simon Anderson, Kenneth Lee and Meng Mei, and is chaired by Mr. Yuk Lam Lo, all of whom satisfy the “independence” requirements of Rule 5605 of the NASDAQ Listing Rules. The corporate governance and nominating committee assists the board of directors in identifying individuals qualified to become our directors and in determining the composition of the board and its committees. The corporate governance and nominating committee is responsible for, among other things:

• identifying and recommending to the board nominees for election or re-election to the board, or for appointment to fill any vacancy;

• reviewing annually with the board the current composition of the board in light of the characteristics of independence, age, skills, experience and availability of service to us;

• identifying and recommending to the board the directors to serve as members of the board’s committees;

• advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations and making recommendations to the board on all matters of corporate governance and on any corrective action to be taken; and

• monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.

In 2020, our corporate governance and nominating committee held meetings or passed resolutions by unanimous written consent three times.

Interested Transactions

A director may vote in respect of any contract or transaction in which he or she is interested, provided that the nature of the interest of any directors in such contract or transaction is disclosed by him or her at or prior to its consideration and any vote in that matter.

Remuneration and Borrowing

The directors may determine remuneration to be paid to the directors. The compensation committee assists the directors in reviewing and approving the compensation structure for the directors. The directors may exercise all our powers to borrow money and to mortgage or charge its undertaking, property and uncalled capital, and to issue debentures or other securities whether outright or as security for any debt obligations of our company or of any third party.

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D. Employees

As of December 31, 2020, 2019 and 2018, we had 1,959, 910 and 735 full-time employees, respectively. Of our workforce as of December 31, 2020, about 190 employees are primarily engaged in research and development, 93 employees are engaged in sales and marketing, 1,497 employees in production related and 179 employees in administration. As of December 31, 2020, we have a total of 253 temporary employees. We consider our relationship with our employees to be good.

E. Share Ownership

The following table sets forth information with respect to the beneficial ownership of our common shares, as of March 31, 2021, by:

• each of our directors and executive officers; and

• each person/organization known to us to own beneficially more than 5% of our common shares.

The calculations in the table below are based on 71,517,402 common shares outstanding as of March 31, 2021 before taking into account the issuance of the Exchange Shares in the Exchange and 113,925,556 shares, including 99,294,743 common shares and 14,630,813 Series B Preferred Shares, after taking into account the issuance of the Exchange Shares in the Exchange. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person. Additionally, for purposes of this item, share counts and calculations in the table below do not reflect the issuance of the Exchange Shares into the Shareholder 2019 Rights Exchange Trust in connection with the Exchange.

		before issuance of the Exchange Shares				after issuance of the Exchange Shares
		Number		%		Number		%
Directors and Executive Officers:
Weidong Yin		6,359,500		8.89		12,569,000		11.03
Simon Anderson		*		*		*		*
Yuk Lam Lo		*		*		*		*
Meng Mei		*		*		*		*
Kenneth Lee		*		*		*		*
Shan Fu		—		—		—		—
Nan Wang		*		*		*		*
Ming Xia		*		*		*		*
Xiaomei Yin		*		*		*		*
Qiang Gao		*		*		*		*
Jing Li		*		*		*		*
All directors and executive officers as a group		7,536,847		10.54		14,599,714		12.82
Principal Shareholders
SAIF Partners IV(1)		10,780,820		15.07%		21,561,640		18.93%
Prime Success, L.P.(2)		5,900,000		8.25%		11,800,000		10.36%
Vivo Capital(3)		5,900,000		8.25%		11,800,000		10.36%
CDH Utopia Limited(4)		6,000,000		8.39%		6,000,000		5.27%
1Globe Capital LLC(5)		3,353,092		4.69%		3,353,092		2.94%
Total share outstanding		71,517,402		100.00%		113,925,556		100.00%

* Less than 1% of our common shares.

(1) According to the Amendment No. 6 to Schedule 13D filed with the SEC on June 27, 2017 by SAIF Partners IV L.P., SAIF IV GP, L.P. and SAIF IV GP Capital Ltd.

(2) According to the Schedule 13G filed with the SEC on July 10, 2018 by Prime Success, L.P., Green Vision Partners Limited and Advantech Capital Partners Ltd.

(3) According to the Amendment No. 2 to Schedule 13D filed with the SEC on August 27, 2018 by Vivo Capital, LLC, Vivo Capital VIII, LLC and Vivo Capital IX, LLC.

(4) According to the Schedule 13D filed with the SEC on December 22, 2020 by CDH Utopia Limited, CDH Fund VI, L.P., CDH VI Holdings Company Limited and CDH Griffin Holdings Company Limited.

(5) According to the Schedule 13D filed with the SEC on July 7, 2017, the Amendment No. 1 to the Schedule 13D filed with the SEC on March 23, 2018 and the Amendment No. 2 filed with the SEC and the Amendment No. 3 filed with the SEC on December 22, 2020 by 1Globe Capital LLC.

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None of our existing shareholders has different voting rights from other shareholders. Holders of our Series B Preferred Shares vote together with the common shares on an as-converted basis on all matters presented to the shareholders for a vote, subject to applicable law. Except for the complaint against filed by 1Globe against Sinovac Antigua in the Antigua Court, as disclosed in “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal and Administrative Proceedings” or elsewhere in this annual report, we are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.

As of December 31, 2018, 71,139,402 of our common shares were issued and outstanding. On February 22, 2019, 27,777,341 of Sinovac Antigua’s common shares and 14,630,813 of Sinovac Antigua’s Series B preferred shares were issued into the Shareholder 2019 Rights Exchange Trust in connection with the Exchange. As described below under “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal and Administrative Proceedings”, courts in Antigua and Delaware have enjoined the Company from issuing Exchange Shares from the Trust until final resolution of such matters. Taking into account issuance of the Exchange Shares, immediately following such issuance, 98,918,243 of common shares and 14,630,813 of Series B Preferred Shares were issued and outstanding. As of December 31, 2020, 99,294,743 of common shares and 14,630,813 of Series B Preferred Shares were issued and outstanding. Approximately 89% of the aggregate total of common shares and Series B Preferred Shares issued and outstanding were held by the record shareholders in the United States.

To our knowledge, except as disclosed elsewhere in this annual report, we are not directly or indirectly owned or controlled by another corporation, any foreign government or any other natural or legal person, severally or jointly.

For the options granted to our directors, officers and employees, please refer to “— B. Compensation.”

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

Please refer to “Item 6. Directors, Senior Management and Employees — E. Share Ownership.”

B. Related Party Transactions

Transaction with Yuk Lam Lo

Sinovac Hong Kong is using part of the office of Mr. Yuk Lam Lo, one of our independent directors, as its office. We do not pay any rent to Mr. Lo and only pay our share of the utilities and property management fees, which totaled $3,998, $10,267 and nil in 2020, 2019 and 2018, respectively.

Transactions with Certain Directors and Affiliates

We entered into two operating lease agreements with SinoBioway, the non-controlling shareholder of Sinovac Beijing, with respect to Sinovac Beijing’s production plant and laboratory in Beijing, China with annual lease payments totaling RMB 1.4 million ($0.2 million). The leases commenced on August 12, 2004 and have a term of 20 years. One of the lease agreements was amended on August 12, 2010 with the rent increasing from RMB 0.5 million ($76,628) to RMB 1.4 million ($0.2 million) per year.

In June 2007, we entered into another operating lease agreement with SinoBioway, with respect to the expansion of Sinovac Beijing’s production plant in Beijing, China, for an annual lease payment of RMB2.0 million ($0.3 million). The lease commenced in June 2007 and has a term of 20 years.

In September 2010, we entered into another operating lease agreement with SinoBioway with respect to expansion of Sinovac LS’ business in research and development activities for an annual lease payment of RMB 1.0 million ($0.1 million). The lease commenced on September 30, 2010 and has an initial term of five years.

On April 8, 2013, we entered into four supplemental agreements with SinoBioway, under which the expiration date of all operating lease agreements was extended to April 7, 2033.

In 2019, we entered into an operating lease agreement with Dalian Jin Gang Group, the non-controlling shareholder of Sinovac Dalian, to rent refrigeration storage with the space of 2,000 sq.m. with an annual rent amounted RMB0.3 million ($49,000). The lease commenced on January 1, 2019 and had a term of five years. On June 30, 2019, the lease agreement was amended. The term of the lease was changed to from July 1, 2019 to December 31, 2024, and the annual rent was changed to RMB0.2 million ($22,000) as the space of the leased refrigeration storage was reduced to 1,000 sq.m. In 2019, we also entered into a management service agreement with Dalian Jin Gang Group, pursuant to which it provided us with management service related to the operating lease agreement with an annual management service fee of RMB100,000 ($14,000). The management service agreement was amended on June 30, 2019, and the annual management service fee was changed to RMB44,000 ($6,000).

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Loan from a non-controlling shareholder

We have four loans due to Dalian Jin Gang Group, the non-controlling shareholder of Sinovac Dalian, with a total amount of RMB 80 million ($12.3 million), of which two loans totalling RMB 40 million ($6.1 million) were borrowed in August 2020 and are repayable on August 18, 2021. RMB 10 million ($1.5 million) was borrowed in September 2019 and is repayable on September 19, 2022. RMB 30 million ($4.6 million) was borrowed in August 2020 and is repayable on August 9, 2023. These four loans are unsecured, bearing interest at 6.5% per year and payable monthly.

Share Options

See “Item 6. Directors, Senior Management and Employees — B. Compensation — 2003 Stock Option Plan” and “Item 6. Directors, Senior Management and Employees — B. Compensation — 2012 Share Incentive Plan.”

Indemnification Agreements

“Item 6. Directors, Senior Management and Employees — B. Compensation — Indemnification Agreements.”

Employment Agreements; Non-Disclosure, Non-Competition and Proprietary Information Agreement

“Item 6. Directors, Senior Management and Employees — B. Compensation — Employment Agreements; Non-Disclosure, Non-Competition and Proprietary Information Agreement.”

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. Financial Information

A. Consolidated Statements and Other Financial Information

We have appended consolidated financial statements filed as part of this annual report.

Legal and Administrative Proceedings

We may be subject to legal proceedings, investigations and claims relating to the conduct of our business from time to time.

DOJ and SEC Investigations and NASDAQ Inquiry

The Beijing People’s Court issued five judgments in 2016 and 2017. These judgments were related to corrupt conduct allegedly engaged in by a former official of the Center for Drug Evaluation in NMPA, his wife and his son. These judgments found that the official and his wife had engaged in a practice of improperly soliciting and accepting payments from various individuals involved in the vaccine products industry. According to the judgments, one of the individuals solicited by the official was Mr. Weidong Yin, our chairman, president and chief executive officer. It was asserted in the judgments that Mr. Weidong Yin made three payments, and arranged for a loan, to the official and his wife, in the total amount of RMB550,000 ($77,000) between 2002 and 2011. Mr. Weidong Yin was not charged with any offense or improper conduct and he cooperated as a witness with the procuratorate. To our knowledge, the Chinese authorities have not commenced any legal proceedings or government inquiries against Mr. Yin. In December 2016, our audit committee authorized the commencement of an internal investigation into the allegations made in the judgments. The audit committee engaged Latham & Watkins LLP as independent counsel to assist with the investigation.

In 2017 and 2018, we became aware of certain judgments based on bribery charges issued by Chinese courts in four provinces against various officials of the CDC. While these judgments appear to reflect an industry-wide investigation focused on CDC officials, they also referenced nine of our former salespersons, together with sales personnel from several other Chinese vaccine companies and distributors. These judgments did not name, and no charges were brought against, our company or any of our directors or officers as defendants. To the best of our knowledge, the nine referenced employees cooperated with the procuratorate. The procuratorate did not contact us for cooperation. Upon becoming aware of these judgments, our Audit Committee expanded its internal investigation to review matters related to these judgments and our sales practices and policies, and further engaged Latham & Watkins LLP to continue the independent investigation with the expanded scope. One of the nine former sales employees has been convicted for giving bribes. The judgment states that this former sales employee took these actions without knowledge of our company. His criminal penalty was waived by the court.

After we publicly announced the internal investigation arising from the allegations in a research report in December 2016, we were notified by the SEC in February 2017 of an enforcement inquiry related to the matters discussed in the report, and in April 2017 we received a subpoena from the SEC requesting documents. In September 2017, we received an inquiry from the DOJ and we have been cooperating with the DOJ. The SEC and DOJ requested information regarding the judgments discussed above, and we cooperated with these requests.

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Also in February 2017, we received an inquiry from NASDAQ related to the same matter. Further, in May 2018, we received an inquiry from NASDAQ requesting information related to the actions by Sinobioway Medicine and their impact on our operations and financial reporting. We cooperated with both of these NASDAQ inquiries.

On August 14, 2018, the SEC notified us that the SEC had concluded its investigation and would not recommend an enforcement action against us at this time. On September 12, 2018, the DOJ notified us that it had closed its investigation, with no charges. With the closure of the DOJ’s investigation, we are not aware of any pending U.S. government investigations of us related to these matters. 

US Litigation

Delaware Chancery Court Action

On March 5, 2018, we filed a lawsuit in the Court of Chancery of the State of Delaware seeking a determination whether 1Globe, The Chiang Li Family, OrbiMed and other shareholders of Sinovac Biotech Ltd. had triggered the Rights Agreement by forming a group holding approximately 45% of outstanding shares of Sinovac Biotech Ltd., in excess of the plan’s threshold of 15%, and acting in concert prior to the 2017 AGM. The Rights Agreement is intended to promote the fair and equal treatment of all Sinovac shareholders and ensure that no person or group can gain control of Sinovac through undisclosed voting arrangements, open market accumulation or other tactics potentially disadvantaging the interest of all shareholders.

On April 12, 2018, 1Globe filed an amended answer to Sinovac Antigua’s complaint, counterclaims, and a third-party complaint against Mr. Weidong Yin alleging, among other allegations, that the Rights Agreement is not valid, that Mr. Weidong Yin and the Buyer Consortium had previously triggered the Rights Agreement, and that 1Globe did not trigger the Rights Agreement. Sinovac Antigua and its board of directors believes that the actions taken by the board of directors were appropriate under the circumstances and that the allegations of the counterclaims and third-party complaint are without merit. 1Globe asks for various measures of equitable relief and also includes a claim for its costs, including attorneys’ fees.

On July 31, 2018, following Sinovac Antigua motions for partial summary judgment and an expedited trial date, the Delaware Chancery Court effectively stayed the action pending receipt of a post-trial decision from the Antigua Court in the matter captioned 1Globe Capital, LLC and Sinovac Biotech Ltd., Claim No. ANUHCV 2018/0120. On December 19, 2018, the Antigua Court issued a judgment affirming the validity of Sinovac Antigua’s Rights Agreement under Antigua law, and finding that “there was a secret plan to take control” of Sinovac Antigua at the 2017 AGM.

Based upon the Antigua Court’s judgment and other facts known to the board of directors, our board of directors determined that the Collaborating Shareholders became Acquiring Persons on or prior to the 2017 AGM and their conduct resulted in a Trigger Event under Sinovac Antigua’s Rights Agreement. As a result of becoming Acquiring Persons, the approximately 28.7 million Rights held by the Collaborating Shareholders automatically became void under the terms of the Rights Agreement. Pursuant to the Rights Agreement, our board of directors elected to exchange the approximately 42.4 million valid and outstanding Rights held by Sinovac Antigua’s shareholders (not including the Collaborating Shareholders) for a combination of approximately 27.8 million common shares and approximately 14.6 million Series B preferred shares, all of which Sinovac Antigua issued into a trust on February 22, 2019 for the benefit of the holders of the valid and outstanding Rights. See “History and Development of the Company” for additional information.

On March 6, 2019, the Delaware Chancery Court entered a status quo order providing that Sinovac Antigua not distribute any of the Exchange Shares to rights holders until the final disposition of the pending Delaware litigation or further order of the Court. On April 4, 2019, the Eastern Caribbean Supreme Court, Court of Appeal issued an order that restrains Sinovac Antigua from taking further action under its Rights Agreement, including the distribution of the previously issued Exchange Shares to the holders of valid Rights, until the conclusion of 1Globe Capital, LLC’s appeal of the December 19, 2018 Judgment of the Antigua Court. On April 8, 2019, the Delaware Chancery Court stayed the Delaware litigation pending the outcome of 1Globe’s appeal of the Antigua Judgment. We cannot predict whether an ultimate outcome will be favorable or unfavorable, nor estimate the amount or range of potential loss (if any) at this time.

Massachusetts District Court Actions

On March 5, 2018, Sinovac Antigua also filed a lawsuit in the United States District Court for Massachusetts alleging violations of Section 13(d) of the Securities Exchange Act of 1934 by 1Globe and The Chiang Li Family. The lawsuit alleges, among other things, that the defendant shareholders failed to make required disclosures on Schedule 13D regarding their intentions to attempt to replace Sinovac Antigua’s board of directors.

On April 9, 2018, we received a document request from the SEC requesting all of our documents concerning 1Globe, the Chiang Li Family, OrbiMed, certain other shareholders, and their affiliates. We have been cooperating with the SEC. We understand the SEC is investigating whether 1Globe, and possibly other shareholders, violated the U.S. securities laws. We do not have any information to suggest the SEC is investigating the actions of Sinovac Antigua or its officers and directors.

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On May 21, 2018, 1Globe answered and filed counterclaims against Sinovac Antigua and certain of its executives, alleging violations of Section 10(b) of the Exchange Act and various state law claims. In response to Sinovac Antigua motion to dismiss 1Globe’s counterclaims, on August 1, 2018, 1Globe filed amended counterclaims against Sinovac Antigua and certain of its executives, alleging violations of Section 10(b) of the Exchange Act and Rule 10b-5, as well as state law claims of abuse of process, fraudulent misrepresentation, negligent misrepresentation, and aiding and abetting such violations, primarily arising out of allegedly false and/or misleading statements made by us regarding our business, operational, and financial results.

On August 17, 2018, the Massachusetts Court granted a consent motion to extend the deadline for Sinovac Antigua’s response to 1Globe’s counterclaims (and for any subsequent opposition by 1Globe) until after the Antigua Court issued a ruling in the matter captioned 1Globe Capital, LLC and Sinovac Biotech Ltd., Claim No. ANUHCV 2018/0120. On December 19, 2018, the Antigua Court issued a judgment, which 1Globe appealed on January 29, 2019. Per the Massachusetts Court’s order, the parties have filed periodic status reports regarding the pending court proceedings in Antigua. No date for Sinovac Antigua’s response to 1Globe’s counterclaims has been set. We are vigorously pursuing this lawsuit; however, we cannot predict whether an ultimate outcome will be favorable or unfavorable, nor estimate the amount or range of potential loss (if any) at this time.

Also on August 1, 2018, 1Globe filed a motion for preliminary injunction seeking to enjoin Sinovac Antigua from, inter alia, altering its capital structure. On October 15, 2018, the Massachusetts Court denied 1Globe’s motion. On November 14, 2018, 1Globe filed an appeal of the denial of its motion for preliminary injunction to the United States Court of Appeals for the First Circuit. On January 10, 2019, 1Globe filed a motion to hold its appeal in abeyance pending the outcome of its separate appeal of the Antigua Court’s judgment, which Sinovac Antigua opposed. In October 2019, 1Globe voluntarily dismissed the appeal.

Separately, Heng Ren Investments LP (“Heng Ren”) filed suit against Sinovac Antigua and Weidong Yin for alleged breach of fiduciary duties and wrongful equity dilution on May 31, 2019, in Massachusetts state court. Sinovac Antigua removed the matter from state court to the United States District Court for the District of Massachusetts. Heng Ren alleged that Mr. Yin breached fiduciary duties owed to minority shareholders, that Sinovac Antigua aided and abetted breaches of fiduciary duties, and that both Sinovac Antigua and Mr. Yin engaged in wrongful equity dilution. Heng Ren requested damages, attorneys’ fees, and prejudgment interest. On September 14, 2020, Sinovac Antigua filed a motion to dismiss Heng Ren’s claims and the court’s decision on that motion is pending as of the date of this annual report.

Antigua Litigation

On March 13, 2018, 1Globe filed a complaint against Sinovac Antigua in the Antigua Court. The complaint seeks a declaration that the five persons purportedly proposed on the Non-Public Submission at the 2017 AGM were elected as directors of Sinovac Antigua at that meeting, an order of the Antigua Court that those directors be installed as Sinovac Antigua’s board of directors, and a declaration that any actions taken on behalf of Sinovac Antigua at the direction of the board of directors since the 2017 AGM are null and void. On April 10, 2018, 1Globe filed a notice of application in the Antigua Court seeking an order declaring the result of the disputed election, an urgent order restraining Sinovac Antigua’s board of directors from acting, pending determination of the dispute, including acting to initiate or continue litigation against the Shareholder Group, and other related relief. We attended the first hearing on May 9, 2018. In July 2018, the Antigua court heard an application by 1Globe for interim injunctive relief preventing Sinovac Antigua from exercising its rights under the Rights Agreement. This application was unsuccessful, but the judge set an expedited timetable to trial. The trial of the matter took place from December 3 to 5, 2018. On December 19, 2018, the judge handed down his judgment, finding in Sinovac Antigua’s favor in full, dismissing 1Globe’s claim and declaring that the Rights Agreement was validly adopted as a matter of Antigua law. On January 29, 2019, 1Globe filed a Notice of Appeal. On March 4, 2019, 1Globe filed an application for urgent interim relief, seeking an injunction to prevent Sinovac Antigua from continuing to implement its Rights Agreement until the resolution of the appeal. This urgent interim relief application was heard on April 4, 2019, at which the Court of Appeal made an order restraining Sinovac Antigua in similar terms to the Delaware Court order of March 6, 2019, together with restraint from operating the Rights Agreement in any way that affects 1Globe’s rights or shareholding until determination of the appeal. 1Globe’s appeal of the Antigua Court’s Judgment was heard on September 18, 2019, and the appeal decision is pending as of the date of this annual report. We cannot predict or estimate an outcome or economic burden for this case at this time.

Hong Kong Litigation

On October 8, 2018, Sinovac became aware that unauthorized documents in respect of Sinovac Hong Kong had been unlawfully filed with the Hong Kong Companies Registry to change the directors of Sinovac Hong Kong from Mr. Weidong Yin and Ms. Nan Wang to Mr. Jianzeng Cao and Mr. Pengfei Li. On October 15, 2018, Mr. Yin and Ms. Nan Wang commenced proceedings HCMP 1731/2018 before the Hong Kong High Court.

In a hearing before the Hong Kong High Court on October 19 2018, the Lawful Directors asked the court to grant an urgent interim injunction order to restrain Mr. Li and Mr. Cao from taking further unlawful actions against Sinovac HK and its subsidiaries. At the hearing, the judge granted an interlocutory injunction in the same terms sought by the Lawful Directors restraining Mr. Pengfei Li and Mr. Jianzeng Cao from purporting to act or holding themselves out as directors of Sinovac Hong Kong or its subsidiaries, purporting to take any actions as directors of Sinovac Hong Kong or its subsidiaries, and relying on or using the forged documents in any way whatsoever.

On November 28, 2018 at a further hearing in the Hong Kong High Court, the Hong Kong High Court made the November 28 Order and held that it is beyond dispute that the documents in respect of Sinovac Hong Kong had been forged and unlawfully filed with the Hong Kong Companies Registry, based on the evidence filed by Mr. Cao, Mr. Li and the Lawful Directors. The Hong Kong High Court therefore declared

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that Mr. Yin and Ms. Wang were and still are the lawful directors of Sinovac Hong Kong, and Mr. Li and Mr. Cao were not and are not the lawful directors of Sinovac Hong Kong. The Hong Kong High Court also granted a permanent injunction restraining Mr. Li and Mr. Cao from purporting to act or holding themselves out as directors of Sinovac Hong Kong or its subsidiaries (including but not limited to Sinovac Beijing), purporting to take any actions as directors of Sinovac Hong Kong or its subsidiaries, and relying on or using the forged documents in any way whatsoever. Furthermore, the Hong Kong High Court also ordered the Companies Registry to remove the forged documents in respect of Sinovac Hong Kong that had been unlawfully filed.

On November 28, 2018, Mr. Cao and Mr. Li filed a Notice of Appeal with the Hong Kong Court of Appeal, indicating their intention to appeal the orders made by the Hong Kong High Court. No hearing date has yet been fixed to hear the appeal. Mr. Yin and Ms. Wang intends to vigorously contest the appeal filed by Mr. Cao and Mr. Li. Pending the determination of the appeal, the November 28 Order remains effective and enforceable. Pursuant to the November 28 Order, the Hong Kong Companies Registry has removed the purported Sinovac Hong Kong documents from the Companies Register and updated Sinovac Hong Kong’s register of director such that the directors on record are Mr. Yin, Ms. Wang and Mr. Yuk Lam Lo.

As of the date of this annual report, neither the Court of First Instance nor the Court of Appeal directed that the execution of the November 28 Order should be stayed. So far, Mr. Cao and Mr. Li have taken no further steps in respect of the appeal after the Notice of Appeal was filed on November 28, 2018.

PRC Litigation

On May 16, 2018, Sinovac Hong Kong filed a complaint against Sinobioway Medicine, Mr. Aihua Pan, and Shandong Sinobioway Biomedicine Co., Ltd. in the Fourth Intermediate People’s Court of Beijing (“Beijing Fourth Court”). The complaint sought to hold the defendants jointly and severally liable for the torts they committed during an attempt of the defendants to take physical control of our facility in Shangdi site in Beijing on April 17, 2018. Later, Sinovac Hong Kong made an application to the court to add Sinovac Beijing as a third party to participate in the proceedings. The court has granted an order, permitting Sinovac Beijing to participate in the proceedings as a third party. At the hearing held on July 2, 2019, Sinovac Hong Kong, the defendants and Sinovac Beijing cross-examined the evidences submitted by each party. Based on the result of the cross-examination, the court declared that an independent evaluation firm shall be engaged by both the defendants and Sinovac Hong Kong to evaluate the losses and damages sustained by Sinovac Beijing as the result of the actions taken by the defendants on April 17, 2019. An independent evaluation firm was selected by the court and the evaluation was conducted accordingly. On September 17, 2020, the Fourth Intermediate People’s Court of Beijing issued a judgment holding Sinobioway Medicine and Mr. Aihua Pan liable for torts and breaches of shareholders fiduciary duty under the PRC Company Law and liable for Sinovac Beijing’s losses of RMB 15.4 million caused by their disruptive actions. Sinovac Beijing, Sinobioway Medicine and Mr. Aihua Pan filed notice to appeal to the Higher People’s Court of Beijing Municipality.

On September 13, 2018, Sinovac Beijing filed a complaint against Mr. Aihua Pan in the Haidian District Court of Beijing (the “Haidian Court”). The complaint sought to request Mr. Pan return a business license of Sinovac Beijing which was reissued by the Haidian Branch of Beijing Administration for Industry and Commerce on May 10, 2018 based on the false reporting made by Mr. Pan and the seals of Sinovac Beijing which are forged by Mr. Pan. Sinovac Beijing filed a preservation application to the court. The court supported Sinovac Beijing’s preservation application and prohibited Mr. Pan from using or authorizing others to use the above-mentioned license and seals during the case hearing. The court held a preliminary and brief hearing on November 18, 2019. At the hearing, the court has decided and declared to suspend the proceedings until the final verdict of the September 5 Board Resolution Case (as described below) is given by the Beijing Fourth Court. As of the date of this annual report, the case is still pending.

On October 8, 2018, Sinovac also became aware that unauthorized documents in respect of Sinovac Beijing had been filed with the Industry and Commerce Bureau of Haidian District of Beijing (“Haidian AIC”) to change the directors of Sinovac Beijing from Mr. Weidong Yin, Ms. Nan Wang and Mr. Dawei Mao to Mr. Jianzeng Cao, Mr. Pengfei Li and Ms. Xiaomin Yang. Mr. Yin and Ms. Wang filed an objection to such unlawful change with the Haidian AIC. On March 19, 2020, Haidian AIC issued an official decision (“AIC Decision”) declaring that (i) the unauthorized documents are forged and fake documents; (ii) the filing of change of directors made based on the forged documents is null and void; (iii) the unlawful filing to change the said directors will be removed and (iv) the registration of directors of Sinovac Beijing will be restored. The parties of material interest in the AIC Decision may raise objection or file a lawsuit within 60 days. No one had filed the objection or lawsuit against the AIC Decision within 60 days thereof.

On December 24, 2018, Sinobioway Medicine filed a complaint against Sinovac Beijing in the Haidian Court. The complaint sought a declaration that all the board resolutions dated September 5, 2018, including the composition of the board, the appointment of the senior managers and the management of the corporate seals, are invalid (“September 5 Board Resolution Case”). Sinovac Hong Kong has filed an application for adding itself as the third party in this lawsuit. The court decided to accept its application. As a result of Sinovac Hong Kong, which is deemed as a foreign entity under the PRC Civil Procedural Law, participating in the litigation, the Haidian Court does not have the jurisdiction over the case and has transferred the case to the Beijing Fourth Court. In January 2020, the Beijing Fourth Court requested all the participants in the litigation to submit evidence. Both Sinovac Beijing and Sinovac Hong Kong submitted all the valid evidence to the court in February and March 2020. Then, Sinobioway Medicine filed a request to the Beijing Fourth Court to voluntarily withdrew the case on November 2, 2020. The Beijing Fourth Court supported such voluntary withdraw and made a ruling to dismiss the case on November 6, 2020.

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On July 25, 2019, Sinobioway Medicine filed a complaint against Sinovac Beijing in the Haidian Court. The complaint sought to request Sinovac Beijing to provide (i) all the corporate documents of Sinovac Beijing, including the Articles of Association and board resolutions (ii) all the books and the related accounting vouchers and records of Sinovac Beijing, created from the date of January 1, 2017, and (iii) the monthly financial reports of Sinovac Beijing for the lawyers and auditors of Sinobioway Medicine to review and/or copy. The complaint also sought to request Sinovac Beijing to agree the auditors of Sinobioway to audit its annual and quarterly financial reports. On October 28, 2019, one judge of the Haidian Court held a preliminary and brief hearing and declared that the simplified procedures shall not apply to this case, which shall be heard by a panel of three judges. On August 25, 2020, the Haidian Court issued a judgment only supporting Sinobioway Medicine’s request for inspecting and copying the Articles of Association and board resolutions of Sinovac Beijing and inspecting books and related accounting vouchers and records of Sinovac Beijing, and dismissing the rest of Sinobioway Medicine’s claims. Sinobioway Medicine filed a notice to appeal to Beijing First Intermediate Court on September 7, 2020. Neither party provided any new evidence nor questioned the procedures applied by Haidian Court. On March 15, 2021, after a hearing, the Beijing First Intermediate Court made a ruling after a hearing, rejecting the appeal made by Sinobioway Medicine and endorsing the judgment made by Haidian Court. The lawsuit was closed.

Dividend Policy

We have never declared or paid any dividends, nor do we have any present plan to pay any cash dividends on our common shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Our board of directors has complete discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. Cash dividends on our common shares, if any, will be paid in U.S. dollars.

We are a holding company, and we rely on the dividends paid by our majority-owned subsidiaries, Sinovac Beijing, Sinovac Dalian and Sinovac LS, and our wholly owned subsidiary Sinovac Biomed through Sinovac Hong Kong, for our cash needs, including the funds necessary to pay any dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. The payment of dividends in China is subject to limitations. Regulations in the PRC currently permit payment of dividends by our PRC subsidiaries only out of accumulated profits as determined in accordance with accounting standards and regulations in China. In accordance with the regulations in China, Sinovac Beijing, Sinovac Dalian, Sinovac LS and Sinovac Biomed are required to set aside at least 10% of its after-tax profits each year to contribute to its reserve fund until the accumulated balance of such reserve fund reaches 50% of the registered capital of each company. Sinovac Beijing, Sinovac Dalian, Sinovac LS and Sinovac Biomed are required to set aside, at the discretion of their respective board of directors, a portion of its after-tax profits to their employee welfare and bonus funds.

Furthermore, pursuant to the double tax arrangement between Hong Kong and PRC, dividends paid by a foreign-invested enterprise in China to its direct holding company in Hong Kong will be subject to withholding tax at a rate of no more than 5% (if the foreign investor owns directly at least 25% of the shares of the foreign-invested enterprise for a period greater than 12 months), or otherwise 10%. Prior to May 2012, whether the favorable rate will be applicable to dividends received by Sinovac Hong Kong from our PRC subsidiaries is subject to the approval of the PRC tax authorities. The PRC tax authorities have discretion to assess whether a recipient of the PRC-sourced income is only an agent or a conduit, or lacks the requisite amount of business substance, in which case the application of the tax arrangement may be denied. This withholding tax imposed on dividends paid to us by our PRC subsidiaries would reduce our net income attributable to the shareholders. In May 2012, Sinovac Hong Kong was granted by the local tax bureau the preferential dividend withholding tax rate of 5% on dividends declared by Sinovac Beijing for three years from 2012 to 2014. The preferential dividend withholding tax rate expired in 2014. Subsequent to May 2012, the preferential dividend withholding tax rate no longer needed to be approved by the PRC tax authorities, instead companies can apply the 5% rate if a self-assessment determined the recipient of the PRC-sourced income qualify for the preferential rate. However, such self-assessment could be overturned upon an inspection by the PRC tax authorities. We will make such self-assessment when necessary and use the appropriate withholding tax rate based on the result of the assessment.

B. Significant Changes

Except with respect to the Exchange and the related issuance of common shares and Series B Preferred Shares pursuant to Sinovac Antigua’s Rights Agreement, as well as the related ongoing litigation, in each case disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

ITEM 9. The Offer and Listing

A. Offer and Listing Details

See “—C. Markets.”

B. Plan of Distribution

Not applicable.

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C. Markets

Our common shares have been listed on the NASDAQ Global Select Market since January 3, 2011 under the symbol “SVA.” In connection with the Exchange and the issuance of the Exchange Shares into the Shareholder 2019 Rights Exchange Trust, trading of our common shares on Nasdaq has been halted since February 22, 2019.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. Additional Information

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

We are an Antiguan company (Company No. 11949) with limited liability and our affairs are governed by our Articles of Incorporation, By-laws and the International Business Corporations Act. The following are summaries of material provisions of our Articles of Incorporation, By-laws and the International Business Corporations Act.

General

All of our outstanding common shares are fully paid and non-assessable. The common shares are issued in registered form. Holders of common shares are entitled to receive share certificates. Our shareholders who are non-residents of Antigua may freely hold and vote their common shares.

Corporate Purpose

The objects for which the Company is established are set forth in the Company’s Articles of Incorporation, as follows:

1. To conduct any and all business activities permitted by the laws of the State of Antigua and Barbuda as an International Business Corporation.

2. To acquire and deal with any property, real or personal, to erect any buildings, and generally to do all acts and things which, in the opinion of Sinovac Antigua or the Directors, may be conveniently, or profitably, or usefully, acquired and dealt with, carried on, erected or done by Sinovac Antigua in connection with said property.

3. To generally have and exercise all powers, rights and privileges necessary and incident to carrying out properly the objects herein mentioned.

Sinovac Antigua shall not engage in International banking, Trust, Insurance, Betting and Bookmaking or any other activity which requires a License under the International Business Corporations Act.

Sinovac Antigua shall be primarily engaged in research, development and commercialization of human vaccines for infectious diseases.

Dividends; Rights to Share Profits

The holders of our common shares are entitled to such dividends as may be declared by our board of directors subject to the International Business Corporations Act. For example, under the International Business Corporations Act, a company shall not declare or pay a dividend if this would results in the company’s inability to pay its liabilities as they become due or the realizable value of the company’s assets less than the aggregate of its liabilities and stated capital of all class. In addition, a company shall not pay a dividend out of unrealized profits.

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Voting Rights

Each common share is entitled to one vote on all matters upon which the common shares are entitled to vote.

A quorum required for a meeting of shareholders consists of shareholders who hold at least a majority of our shares at the meeting present in person or by proxy. Shareholders’ meetings are held annually and may be convened by our board of directors on its own initiative or upon a request to the directors by shareholders holding in aggregate at least five percent of our issued share capital. Advance notice of at least 21 days is required for the convening of our annual general meeting and other shareholders meetings.

Unless the International Business Corporations Act otherwise requires, resolutions to be passed by the shareholders require a simple majority vote. Important matters such as changes to our By-laws require a resolution passed by a vote of shareholders holding a majority of all the outstanding and issued shares.

Transfer of Common Shares

Our shareholders may transfer common shares by endorsing the relevant share certificates, completing a share transfer form or by other proper evidence of succession, assignment or authority to transfer.

Liquidation

On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of common shares), assets available for distribution among the holders of common shares shall be distributed among the holders of the common shares on a pro rata basis. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders proportionately.

Reserve Fund

Subject to the provisions of the International Business Corporations Act, as amended, we may by special resolution reduce any capital redemption reserve fund or any share premium account.

Redemption, Repurchase and Surrender of Shares

Subject to the provisions of the International Business Corporations Act, as amended, we may by special resolution reduce our share capital, any capital redemption on reserve fund or any share premium account. However, in accordance with the International Business Corporations Act, we must not make any payment to purchase or redeem any redeemable issued by it if there are reasonable grounds for us believing that

(a) we are unable or would, after that payment, be unable to pay its liabilities as they become due; or

(b) the realizable value of our assets would, after that payment, be less than the aggregate of

(i) our liabilities; and

(ii) the amount that would be required to pay the holders of the shares that have a right to be paid, on a redemption or in a liquidation, rateable with or before the holders of the shares to be purchased or redeemed.

Calls on Shares and Forfeiture of Shares

There are no provisions in our Articles of Incorporation and By-laws, as amended, governing the calls on shares and forfeiture of shares.

Limitations on the Rights to Own Shares

There are no provisions in our Articles of Incorporation and By-laws, as amended, governing the limitations on the rights to own shares in the Corporation.

Ownership Threshold

There are no provisions in our Articles of Incorporation and By-laws, as amended, governing the ownership threshold above which shareholder ownership must be disclosed. Shareholders will, however, be required to disclose shareholder ownership in accordance with applicable laws and regulations.

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Inspection of Books and Records

Holders of our common shares will have no general right under Antigua law to inspect or obtain copies of our list of shareholders or our corporate records. They may, however, access such corporate information as is publicly available in the Companies Registry in St. John’s, Antigua. We will also provide our shareholders with annual audited consolidated financial statements.

Changes in Capital

We may from time to time by a resolution passed by a majority of the shares entitled to vote:

• increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution may prescribe;

• consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;

• sub-divide our existing shares, or any of them into shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived;

• designate and issue any number of new series of preferred shares; and

• cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of our share capital by the amount of the shares so cancelled.

We may by special resolution reduce our share capital and any capital redemption reserve in any manner authorized by law.

Director’s Powers and Qualification

Pursuant to the International Business Corporation Act, a director or officer of the corporation, (a) who is a party to a material contract or proposed material contract with the corporation; or (b) who is a director or an officer of any body, or has material interest in any body, that is a party to a material contract or proposed material contract with the corporation, must disclose in writing to the corporation or request to have entered in the minutes of meetings of directors the nature and extent of his interest. The disclosure must be made, in the case of a director of a corporation, (a) at the meeting at which a proposed contract is first considered; (b) if the director was not then interested in the proposed contract, at the first meeting after he becomes so interested; (c) if the director becomes interested after a contract is made at the first meeting after he becomes so interested; or (d) if a person who is interested in a contract later becomes a director of the corporation, at the first meeting after he becomes a director. A director of the corporation may vote on any resolution to approve a contract that he has an interest in, if the contract (a) is an arrangement by way of a security for money loaned to or obligation undertaken by him for the benefit of the corporation or an affiliate of the corporation; (b) is a contract that relates primarily to his remuneration as a director, officer, employee or agent of the corporation or affiliate of the corporation; (c) is a contract for indemnity or insurance under section 99 to 101 of the International Business Corporation Act; (d) is a contract with an affiliate of the corporation; or (e) is a contract other than one referred to in (a) to (d) above. But, in the case of a contract described in paragraph (e), no resolution is valid unless it is approved by not less than two-thirds of the votes of the shareholders of corporation to whom notice of the nature and extent of the director’s interest in the contract is declared and disclosed in reasonable details. A general notice to the directors of the corporation by a director or an officer of the corporation declaring that he is a director or officer of or has a material interest in another body and is to be regarded as interested in any contract with that body is a sufficient declaration of interest in relation to any such contract.

There are no provisions in our Articles of Incorporation and By-laws, as amended, governing the directors’ powers to vote compensation to themselves or any members of their body.

Pursuant to the International Business Corporation Act, unless the articles or by-laws, or any unanimous shareholder agreement relating to, the corporation otherwise provide, the articles of a corporation are presume to provide that the directors of the corporation may, without authorization of the shareholders, (i) borrow money upon the credit of the corporation; (ii) issue, re-issue, sell or pledge debenture of the corporation; (iii) give guarantee on behalf of the corporation to secure performance of an obligation of any person; and (iv) mortgage, charge, pledge, or otherwise create to secure any obligation of the corporation a security interest in all or any property of the corporation that is owned or subsequently acquired by the corporation. “Security interest” means any interest in or charge upon any property of a corporation, by way of mortgage, bond, lien, pledge or other mean, that is created or taken to secure the payment of an obligation of the corporation. Notwithstanding, when circumstances prejudicial to the corporation exist, the corporation shall not directly or directly, give financial assistance by means of a loan, guarantee or otherwise to a shareholder, director, officer or employee of the corporation or affiliated corporation; or to any person for the purpose of or in connection with a purchase of a share issued or to be issued by the corporation or a corporation with which it is affiliated. Unless the articles or by-laws, or any unanimous shareholder agreement relating to, the corporation otherwise provide, the directors of the corporation may by resolution delegate the powers mentioned above to a director, a committee of directors or an officer of the corporation.

There are no provisions in our Articles of Incorporation and By-laws, as amended, governing the directors’ powers as it relates to retirement or non-retirement of directors under the age limit requirement.

There are no provisions in our Articles of Incorporation and By-laws, as amended, that make provisions for number of shares required for director’s qualification.

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General Meetings of Shareholders

We must hold an annual shareholders’ meeting every year. The meeting must take place within Antigua and Barbuda at a place and time prescribed by our board of directors. As it relates to a special shareholders’ meeting, the board of directors may, whenever it thinks fit, convene a special shareholders’ meeting. Our board of directors shall also on the requisition of the holders of not less than one-twentieth of our issued share capital proceed to convene a special shareholders’ meeting. No business shall be transacted at any shareholders’ meeting unless a quorum of shareholders is present at the time when the meeting proceeds to business. Shareholders present in person or by proxy representing a majority of the our shares shall constitute a quorum. All meetings shall be chaired by a director appointed by our board of directors to act as the chairman. Minutes of the proceedings of every annual shareholders’ meeting shall be kept, and shall be signed by the chairman of the same meeting, or by the chairman of the next succeeding meeting, and the same, when so signed, shall be conclusive evidence of all such proceedings and of the proper election of the chairman.

Subject to any rights or restrictions for the time being attached to any class or classes of shares, every shareholder shall have one vote for each share of which he is the holder. All elections for director shall be decided by majority vote; all other questions shall be decided by majority vote except as otherwise required by the International Business Corporations Act, as amended. Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. Votes may be given either personally or by proxy. The instrument appointing a proxy shall be in writing under the hand of the appointer of his attorney duly authorized in writing, or if the appointer is a corporation, either under seal or under the hand of an officer or attorney duly authorized. A proxy need not be our shareholder.

Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purpose for which the meeting is called, shall be delivered not less than 21 days before the date of the meeting, either personally by mail or facsimile, to each shareholder on record entitled to vote at such meeting. If mailed such notice is deemed to be delivered when deposited in the mail, addressed to the shareholder at his address as it appears on our share transfer books, with postage thereon prepaid.

Series B Preferred Shares

Ranking. The Series B Preferred Shares rank senior to Sinovac Antigua’s common shares, Series A Junior Participating Preferred Shares, par value $0.001 per share, and Series C Junior Participating Preferred Shares, par value $0.001 per share, and junior to all series or any other class of Sinovac Antigua’s Preferred Shares, except to the extent that any such other series or class specifically provides that it will rank on a parity with or junior to the Series B Preferred Shares.

Dividends. Holders of Series B Preferred Shares are entitled to receive (i) the same aggregate amount per share (on an as-converted basis) of all dividends (cash or in-kind) declared on the common shares and (ii) cumulative preferential dividends, payable quarterly in arrears, at an annual rate of $0.41 per annum in cash until the earlier of (a) the conversion of the Series B Preferred Shares into the common shares or (b) the listing of the Series B Preferred Shares on a nationally recognized securities exchange.

Voting Rights. Holders of Series B Preferred Shares are entitled to vote with the holders of common shares, voting together as a single class, on all matters submitted for a vote of the shareholders of Sinovac Antigua, subject to applicable law. Each Series B Preferred Share entitles the holder to a number of votes equal to the number of common shares issuable upon the conversion of such Series B Preferred Share to which such share is entitled as of the applicable record date.

Conversion. Either (i) at our option or (ii) within 90 days of approval by the shareholders of Sinovac Antigua of an increase in the number of Sinovac Antigua’s authorized but unissued common shares to such number as would be sufficient to effect the conversion of all or any portion of the outstanding Series B Preferred Shares (a “Common Share Increase”), all or such portion of the Series B Preferred Shares will be convertible into common shares on a one-for-one basis, subject to customary anti-dilution adjustments.

Listing. In the event the shareholders of Sinovac Antigua do not vote to approve a Common Share Increase at the next annual general meeting following the initial issuance of any Series B Preferred Shares, Sinovac Antigua will use its best efforts to list the Series B Preferred Shares for trading on a nationally recognized securities exchange within 180 days of such annual general meeting.

Consolidation, Merger, etc. In case Sinovac Antigua shall enter into any consolidation, amalgamation, merger, combination or other transaction in which the common shares are exchanged for or changed into other shares or securities, cash and/or any other property, then in any such case each Series B Preferred Share shall at the same time be similarly exchanged or changed into an amount per share (on an as-converted basis) equal to the aggregate amount of shares, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each common share is changed or exchanged.

Liquidation. Upon any liquidation, dissolution or winding up of Sinovac Antigua, voluntary or otherwise, the holders of Series B Preferred Shares shall be entitled to receive a preferential payment of $0.01 per share, plus an aggregate amount per share (on an as-converted basis) equal to the aggregate amount to be distributed per share to holders of common shares.

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Differences in Corporate Law

The International Business Corporations Act is modeled after Canadian corporate law and differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the International Business Corporations Act applicable to us and the laws applicable to companies incorporated in the State of Delaware and their stockholders.

Mergers and Similar Arrangements

Antigua and Barbuda law does not provide for mergers as that expression is understood under United States corporate law. However, there are statutory provisions for amalgamation that facilitate the consolidation of companies, provided that the arrangement is approved by a majority number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent two-thirds in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement may be, but is not required to be, sanctioned by the High Court of Antigua and Barbuda. While a dissenting shareholder has the right to express to the court his view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:

• the statutory provisions as to the dual majority vote have been met;

• the shareholders have been fairly represented at the meeting in question;

• the arrangement is such that a businessman would reasonably approve; and

• the arrangement is not one that would more properly be sanctioned under some other provision of the International Business Corporations Act.

When a take-over offer is made and accepted (within four months) by holders of 90% of the shares affected, the offeror may, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the High Court of Antigua and Barbuda but this is unlikely to succeed unless there is evidence of fraud, bad faith or collusion.

If the arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of United States corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

Shareholders’ Suits

We are not aware of any reported class action or derivative action having been brought in a court in Antigua and Barbuda. In principle, the company itself will normally be the proper claimant in actions against directors, and derivative actions may not generally be brought by a minority shareholder. However, Canadian authorities provide exceptions to the foregoing principle, including when:

• a company acts or proposes to act illegally or ultra vires;

• the act complained of, although not ultra vires, required a special resolution, which was not obtained; and

• those who control the company are perpetrating a “fraud on the minority.”

Directors’ Fiduciary Duties

Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally.

In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation. As a matter of Antigua and Barbuda law, a director of an Antigua and Barbuda company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company — a duty to act bona fide in the best interests of the company, a duty not to make a profit out of his position as director (unless the company permits him to do so) and a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third-party.

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A director of an Antigua and Barbuda company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, Canadian and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in Antigua and Barbuda.

Shareholder Action by Written Consent

Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Antigua and Barbuda law and our By-laws provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.

Shareholder Proposals

Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings. Antigua and Barbuda law and our By-laws allow our shareholders holding not less than five per cent of the paid up voting share capital of the company to requisition a shareholder’s meeting. We are obligated under our By-laws and the International Business Corporations Act to call shareholders’ annual general meetings. See “Risk Factors — We do not currently intend to hold an annual general meeting of shareholders until after the final determination of the litigation concerning the Rights Agreement, which will delay the ability of our shareholders to vote in an election of our directors.”

Cumulative Voting

Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director. As permitted under Antigua and Barbuda law, our By-laws will not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

Removal of Directors

Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our By-laws, directors can be removed by a majority vote of the shareholders.

Transactions with Interested Shareholders

The Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware public corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.

Antigua and Barbuda law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Antigua and Barbuda law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.

Dissolution; Winding Up

Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under the International Business Corporations Act, our company may be dissolved, liquidated or wound up only by the vote of holders of two-thirds of our shares voting at a meeting or the unanimous written resolution of all shareholders.

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Variation of Rights of Shares

Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Antigua and Barbuda law and our By-laws, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class only with the vote at a class meeting of holders of two-thirds of the shares of such class or unanimous written resolution.

Amendment of Governing Documents

Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Antigua and Barbuda law, our By-laws may only be amended with the vote of holders representing a majority of all our shares voting issued and outstanding or the unanimous written resolution of all shareholders. By-laws can be amended by a vote or unanimous written resolution of the directors.

Indemnification of Directors and Executive Officers and Limitation of Liability

Antigua and Barbuda law does not limit the extent to which a company’s by-laws may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Antigua and Barbuda courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our By-laws permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from negligence or illegal action of such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law to a Delaware corporation. In addition, we have entered into indemnification agreements with our directors and senior executive officers that provide such persons with additional indemnification beyond that provided in our By-laws.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable as a matter of United States law.

We have obtained directors and officers insurance providing indemnification for our directors for certain liabilities.

Anti-takeover Provisions in the By-laws

Some provisions of our By-laws may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders.

However, under Antigua and Barbuda law, our directors may only exercise the rights and powers granted to them under our By-laws for what they believe in good faith to be in the best interests of our company.

Rights of Non-resident or Foreign Shareholders

There are no limitations imposed by our By-laws on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our By-laws governing the ownership threshold above which shareholder ownership must be disclosed.

Rights Agreement

In March 2016, we adopted the Rights Agreement that provides for the issuance of one Right for each of our outstanding common shares. In February 2019, we amended and restated the Rights Agreement that provides for the issuance of one Right for each of our outstanding common shares or Series B Preferred Shares. In February 2020 and 2021, we further amended the amended and restated Rights Agreement to extend its term until February 2022. The Rights are designed to assure that all of our shareholders receive fair and equal treatment in the event of any proposed takeover and to guard against partial tender offers, open market accumulations, undisclosed voting arrangements and other abusive or coercive tactics to gain control of our company or our board of directors without paying all shareholders a control premium. The Rights will cause substantial dilution to a person or group that acquires 15% or more of the aggregate total of our common shares and Series B Preferred Shares on terms not approved by our board of directors.

Rights agreements are allowable under Delaware law. Additionally, as discussed above, on December 19, 2018, the Antigua Court held that Sinovac Antigua’s Rights Agreement is valid under Antigua law. 1Globe filed notice to appeal the Antigua Court’s judgment on January 29, 2019. 1Globe’s appeal of the Antigua Court’s Judgment was heard on September 18, 2019, and the appeal decision is pending as of the date of this annual report.

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C. Material Contracts

We have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company” or elsewhere in this annual report on Form 20-F.

D. Exchange Controls

Foreign Currency Exchange

Pursuant to the Foreign Currency Administration Rules promulgated in 1996 and amended in 1997 and various regulations issued by SAFE and other relevant PRC government authorities, renminbi is freely convertible only to the extent of current account items, such as trade related receipts and payments, interest and dividends. Capital account items, such as direct equity investments, loans and repatriation of investment, require the prior approval from SAFE or its local counterpart for conversion of renminbi into a foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC.

Payments for transactions that take place within PRC must be made in renminbi. Unless otherwise approved, PRC companies must repatriate foreign currency payments received from abroad. Foreign-invested enterprises may retain foreign exchange in accounts with designated foreign exchange banks subject to a cap set by SAFE or its local counterpart. Unless otherwise approved, domestic enterprises must convert all of their foreign currency receipts into renminbi.

E. Taxation

Antigua and Barbuda Taxation

We and our securities holders, other than those resident in Antigua and Barbuda, are exempt from Antigua and Barbuda income, corporation or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax. We are not subject to stamp or other similar duty on the issuance, transfer or redemption of our common shares. Under Section 276 of the International Business Corporations Act of Antigua and Barbuda, the tax exemption we and our securities holders currently enjoy will continue in effect for a period of 50 years from our date of incorporation, which is March 1, 1999. No reciprocal income tax treaty affecting us exists between Antigua and Barbuda and the United States.

United States Federal Income Taxation

The following discussion describes the material U.S. federal income tax consequences to U.S. Holders (as defined below) under current law of an investment in our common shares. The effects of any applicable state or local laws and other U.S. federal tax laws such as estate and gift tax laws, and the impact of the alternative minimum tax and the Medicare contribution tax on net investment income, are not discussed. This discussion applies only to U.S. Holders that hold our common shares as capital assets (generally, property held for investment) and have the U.S. dollar as their functional currency. This discussion is based on the tax laws of the United States as in effect on the date of this annual report and on U.S. Treasury regulations in effect or, in some cases, proposed as of the date of this annual report, as well as judicial and administrative interpretations thereof available on or before such date. All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below. The following discussion does not address all U.S. federal income tax consequences relevant to a U.S. Holder’s particular circumstances or to holders subject to particular rules, including:

• banks and other financial institutions;

• insurance companies;

• regulated investment companies;

• real estate investment trusts;

• broker-dealers;

• traders that elect to use a mark-to-market method of accounting;

• U.S. expatriates and certain former citizens or long-term residents of the United States;

• tax-exempt entities;

• persons holding a common share as part of a straddle, hedging, conversion or integrated transaction;

• persons that actually or constructively own 10% or more of our stock by vote or value;

• persons subject to special tax accounting rules as a result of any item of gross income with respect to our common shares being taken into account in an “applicable financial statement” (as defined in the U.S. Internal Revenue Code of 1986, as amended) (the “Code”));

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• persons that hold our common shares through a permanent establishment or fixed base outside the United States;

• partnerships or other pass-through entities, or persons holding our common shares through such entities; or

• persons who acquired our common shares pursuant to the exercise of any employee share option or otherwise as compensation.

INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE ESTATE AND GIFT, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON SHARES.

The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to you if you are a beneficial owner of our common shares and you are, for U.S. federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia;

• an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

• a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more ”United States persons” (within the meaning of Section 7701(a)(30) of the Code) for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person for U.S. federal income tax purposes.

If a partnership (or other entity taxable as a partnership for U.S. federal income tax purposes) is a beneficial owner of our common shares, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. If you are a partner in such partnership, you should consult your tax advisor.

Taxation of Dividends and Other Distributions on Our Common Shares

Subject to the PFIC rules discussed below, the gross amount of any distributions we make to you with respect to our common shares generally will be includible in your gross income in the year received as dividend income to the extent the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent the amount of the distribution exceeds our current and accumulated earnings and profits, such excess amount will be treated first as a tax-free return of your tax basis in your common shares, and then, to the extent such excess amount exceeds your tax basis, as capital gain. We currently do not, and we do not intend to, calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will generally be reported as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above. Any dividends we pay will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from U.S. corporations.

With respect to certain non-corporate U.S. Holders, including individual U.S. Holders, dividends may constitute “qualified dividend income” eligible to be taxed at the preferential rate applicable to capital gains, provided that (1) our common shares are readily tradable on an established securities market in the United States, or we are eligible for the benefits of a qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are neither a PFIC nor treated as such with respect to you (as discussed below) for the taxable year in which the dividend is paid or the preceding taxable year and (3) certain holding period requirements are met. Under U.S. Internal Revenue Service authority, common shares are considered for the purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on the NASDAQ Global Select Market, as are our common shares. There can be no assurance our common shares will continue to be readily tradable on an established securities market in the future. Consequently, there can be no assurance dividends paid on our common shares will continue to qualify for the reduced tax rates. If we are treated as a “resident enterprise” for PRC tax purposes under the EIT Law (see “Item 10. Additional Information — E. Taxation — PRC Taxation”), we may be eligible for the benefits of the income tax treaty between the United States and the PRC. You should consult your tax advisors regarding the availability of the lower capital gains rate applicable to qualified dividend income for dividends paid with respect to our common shares.

Dividends generally will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the U.S. foreign tax credit limitation generally will be limited to the gross amount of the dividend, multiplied by the reduced tax rate applicable to qualified dividend income and divided by the highest tax rate that would be applicable to dividends if not for the reduced tax rate applicable to qualified dividend income. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our common shares generally will constitute “passive category income.”

If PRC withholding taxes apply to dividends paid to you with respect to the common shares (see “Item 10. Additional Information — E. Taxation — PRC Taxation”), subject to certain conditions and limitations, such PRC withholding taxes may be treated as foreign taxes eligible for credit against your U.S. federal income tax liability. The rules relating to the determination of the foreign tax credit are complex, and you should consult your tax advisors regarding the availability of a foreign tax credit in your particular circumstances.

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Taxation of Disposition of Our Common Shares

Subject to the PFIC rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a common share equal to the difference between the amount realized for the common share and your tax basis in the common share. The gain or loss generally will be capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the common share for more than one year, you will be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations.

Any gain or loss you recognize on a disposition of our common shares generally will be treated as U.S. source income or loss for foreign tax credit limitation purposes. However, if we are treated as a PRC resident enterprise for PRC tax purposes and PRC tax is imposed on any gain from the disposition of the common shares, a U.S. Holder that is eligible for the benefits of the income tax treaty between the United States and the PRC (see “Item 10. Additional Information — E. Taxation — PRC Taxation”) may elect to treat the gain as PRC source income under such treaty. You should consult your tax advisors regarding the proper treatment of gain or loss in your particular circumstances.

Passive Foreign Investment Company

Based on our estimates of the fair market value of our assets, and the composition of our income and assets, we do not believe we were a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2020. However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure that we will not be a PFIC for any taxable year.

In general, a non-U.S. corporation will be a PFIC for any taxable year if either:

• at least 75% of its gross income for such year is passive income, or

• at least 50% of the value of its assets (generally based on a quarterly average) during such year is attributable to assets that produce passive income or are held for the production of passive income.

For this purpose, passive income generally includes, among other things, dividends, interest, royalties, rents, annuities, and net gains from certain commodity and foreign currency transactions, subject to certain exceptions. Passive income generally does not include rents and royalties derived from the active conduct of a trade or business (other than from a related person). We will be treated as owning our proportionate share of the assets and receiving our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.

We must make a separate determination after the close of each taxable year as to whether we were a PFIC for that year. In particular, under normal circumstances, the value of our assets for purposes of the PFIC test for a particular taxable year would generally be determined by reference to the market price of our common shares at the end of each quarter during such taxable year. As a result, fluctuations in the market price of our common shares (or changes in the composition of our income or assets) may cause us to become a PFIC for any subsequent year. However, as a result of the suspension of trading in our shares, we are unable to reference the actual market prices of our common shares in determining our PFIC status. As a result, we have relied on the market price as of the last date of the last trading day as well as implied valuations based on recent financings in our determination. We cannot provide any assurances that the actual value of our shares are not materially different on actual measurement dates and as to whether the IRS will respect our approach. This uncertainty will continue so long as trading in our shares remains suspended. In addition, the composition of our income and assets will be affected by how, and how quickly, we use any cash we generate from our operations or raise in any offering. If we are a PFIC for any taxable year during which you hold our common shares, we generally will continue to be treated as a PFIC with respect to you for that year and for all succeeding years during which you hold our common shares, regardless of whether we continue to meet the income or asset tests described above, unless we cease to be a PFIC and you make a “deemed sale” election with respect to our common shares. If such election is made, you will be deemed to have sold common shares you hold at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain from such deemed sale would be subject to the rules described in the following two paragraphs. After the deemed sale election, your common shares with respect to which such election was made will not be treated as shares in a PFIC unless we subsequently become a PFIC. You are urged to consult your tax advisor about this election.

For each taxable year we are treated as a PFIC with respect to you, you will be subject to additional reporting requirements as well as special tax rules with respect to any “excess distribution” you receive and any gain you realize from a sale or other disposition (including a pledge) of the common shares, unless (i) you make a “mark-to-market” election as discussed below or (ii) we have ceased to be a PFIC and you have previously made the deemed sale election described above. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the common shares before the current taxable year will be treated as excess distributions. Under these special tax rules:

• the excess distribution or recognized gain will be allocated ratably over your holding period for the common shares;

• the amount allocated to the current taxable year, and any taxable years in your holding period prior to the first taxable year in which we became a PFIC, will be treated as ordinary income; and

• the amount allocated to each other year will be subject to tax at the highest income tax rate in effect for individuals or corporations, as applicable, for each such year, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

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Gains (but not losses) from a sale or other disposition of the common shares are not taxed at reduced tax rates, even if you hold the common shares as capital assets.

If we are treated as a PFIC with respect to you for any taxable year, to the extent any of our subsidiaries are also PFICs or we make direct or indirect equity investments in other entities that are PFICs, you will be deemed to own shares in such lower-tier PFICs directly or indirectly owned by us in the proportion that the value of the common shares you own bears to the value of all of our common shares, and you may be subject to the rules described in the preceding two paragraphs with respect to the shares of such lower-tier PFICs that you would be deemed to own. You should consult your tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the PFIC rules described above regarding excess distributions and recognized gains. If you make a mark-to-market election for the common shares, you will include in income for each taxable year that we are a PFIC an amount equal to the excess, if any, of the fair market value of the common shares as of the close of your taxable year over your adjusted basis in such common shares. You will be allowed a deduction for the excess, if any, of the adjusted basis of the common shares over their fair market value as of the close of the taxable year. However, deductions will be allowable only to the extent of any net mark-to-market gains on the common shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain from the actual sale or other disposition of the common shares will be treated as ordinary income. Ordinary loss treatment will apply to the deductible portion of any mark-to-market loss on the common shares, as well as to any loss from the actual sale or other disposition of the common shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such common shares. Your basis in the common shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, any distributions we make would generally be subject to the tax rules discussed above under “— Taxation of Dividends and Other Distributions on Our Common Shares,” and the lower capital gains rate applicable to qualified dividend income would not apply.

The mark-to-market election is available only for “marketable stock,” which generally is defined as stock that is traded in greater than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a “qualified exchange or other market,” as defined in applicable U.S. Treasury regulations. Any trades that have as their principal purpose satisfying this requirement will be disregarded. Our common shares are listed on the NASDAQ Global Select Market, which is a qualified exchange or other market for these purposes. Consequently, if the common shares remain listed on the NASDAQ Global Select Market and are regularly traded, and you are a holder of common shares, we expect the mark-to-market election would be available to you if we are or become a PFIC. There can be no assurance the common shares are or will be “regularly traded” for purposes of the mark-to-market election. Once made, the election cannot be revoked without the consent of the U.S. Internal Revenue Service unless the common shares cease to be marketable stock. Because a mark-to-market election cannot be made for equity interests in any lower-tier PFICs that we own, a U.S. Holder may continue to be subject to the PFIC rules described above regarding excess distributions and recognized gains with respect to its indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes. You should consult your tax advisors as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any lower-tier PFICs.

Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such corporation to elect out of the PFIC rules described above regarding excess distributions and recognized gains. A U.S. Holder that makes a qualified electing fund election with respect to a PFIC will generally include in income such holder’s pro rata share of the corporation’s income on a current basis. However, you may make a qualified electing fund election with respect to your common shares only if we furnish you annually with certain tax information, and we currently do not intend to prepare or provide such information.

Each U.S. shareholder of a PFIC is required to file an annual report containing such information as the U.S. Treasury requires. If we are or become a PFIC, you should consult your tax advisors regarding any reporting requirements that may apply to you.

You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our common shares.

Information Reporting and Backup Withholding

Dividend payments with respect to our common shares and proceeds from the sale, exchange or redemption of our common shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate of 24%. Backup withholding will not apply, however, to a U.S. Holder that furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or that is otherwise exempt from backup withholding. U.S. Holders that are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. We do not assume responsibility for backup withholding.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information in a timely manner. You should consult your tax advisors regarding the application of the U.S. information reporting and backup withholding rules.

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Additional Reporting Requirements

Certain U.S. Holders who are individuals are required to report information relating to an interest in our common shares, subject to certain exceptions (including an exception for common shares held in accounts maintained by certain financial institutions). U.S. Holders should consult their tax advisors regarding the effect, if any, of these rules on their ownership and disposition of our common shares.

PRC Taxation

Under the EIT Law, enterprises established under the laws of non-PRC jurisdictions but whose “de facto management body” is located in China are considered “resident enterprises” for PRC tax purposes. Under the implementation regulations issued by the State Council relating to the EIT Law, “de facto management bodies” are defined as the bodies that have material and overall management control over the business, personnel, accounts and properties of an enterprise. In 2009, the State Administration of Taxation issued a circular, known as Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled offshore incorporated enterprise is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the State Administration of Taxation’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholders minutes, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. Substantially all of our management are currently based in China, and may remain in China in the future. If we were treated as a “resident enterprise” for PRC tax purposes, we would be subject to PRC income tax on our worldwide income at a uniform tax rate of 25%. Dividends received by us from our PRC subsidiaries may be exempt from PRC withholding tax.

Under the EIT Law and its implementation regulations, dividends paid to a non-PRC investor are generally subject to a 10% PRC withholding tax, if such dividends are derived from sources within China and the non-PRC investor is considered to be a non-resident enterprise without any establishment or place of business within China or if the dividends paid have no connection with the non-PRC investor’s establishment or place of business within China, unless such tax is eliminated or reduced under an applicable tax treaty. Similarly, any gain realized on the transfer of common shares by such investor is also subject to a 10% PRC withholding tax if such gain is regarded as income derived from sources within China, unless such tax is eliminated or reduced under an applicable tax treaty.

If we were considered a PRC “resident enterprise,” it is possible that the dividends we pay with respect to our common shares, or the gain you may realize from the transfer of our common shares, would be treated as income derived from sources within China and be subject to income tax at 10%.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year. You can access the reports that we file with the SEC at the SEC’s web site at www.sec.gov, which contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

We will furnish the transfer agent of our common shares, with our annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders. The transfer agent will make such notices, reports and communications available to holders of our common shares and, upon our request, will mail to all record holders of our common shares the information contained in any notice of a shareholders’ meeting received by the transfer agent from us.

In accordance with the NASDAQ Rules, we will post this annual report on Form 20-F on our website www.sinovac.com. In addition, we will provide hardcopies of our annual report free of charge to shareholders upon request.

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I. Subsidiary Information

For a listing of our subsidiaries, see “Item 4. Information on the Company — C. Organizational Structure.”

ITEM 11. Quantitative and Qualitative Disclosures about Market Risk

Foreign Exchange Risk

Substantially all of our revenues and most of our costs and our expenses are denominated in renminbi. Our exposure to foreign exchange risk primarily relates to cash and cash equivalents denominated in U.S. dollars as a result of our past issuances of common shares through a private placement and proceeds from our public offering of common shares. Furthermore, the renminbi prices of some of the materials and supplies for reagent kits that are imported from companies in the United States, Sweden and United Kingdom may be affected by fluctuations in the value of renminbi against the currencies of those countries. We also incur professional, investor relations, director compensation and miscellaneous fees related to our operations as a public company that are denominated in U.S. dollars.

The value of the renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The conversion of renminbi into foreign currencies, including U.S. dollars, has been based on rates set by the People’s Bank of China. In July 2005, the PRC government changed its decades-old policy of pegging the value of renminbi to U.S. dollars, and renminbi appreciated more than 20% against U.S. dollars over the following three years. Between July 2008 and June 2010, this appreciation subsided and the exchange rate between renminbi and U.S. dollars remained within a narrow band. Since June 2010, renminbi has fluctuated against U.S. dollars, at times significantly and unpredictably. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between renminbi and U.S. dollar in the future. The PRC government has indicated that it will make effort to widen the trading band of the renminbi exchange rate, which increases the possibility of sharp fluctuations in renminbi’s value in the future as well as the unpredictability associated with renminbi’s exchange rate. By way of example, assuming we had converted a U.S. dollar denominated cash balance of $1.0 million as of December 31, 2020 into renminbi at the noon buying rate of $1.00 for RMB6.5250 as of December 31, 2020, such a cash balance would have been RMB6.52 million. Assuming a 1% appreciation/depreciation of the renminbi against the U.S. dollar, such a cash balance would have decreased/increased by RMB65,250 as of December 31, 2020.

Our financial statements are expressed in U.S. dollars but our subsidiaries’ functional currency is renminbi. The value of our shares will be affected by the foreign exchange rate between U.S. dollars and renminbi. To the extent we hold assets denominated in U.S. dollars, any appreciation of the renminbi against the U.S. dollar could result in a change to our statements of comprehensive income and a reduction in the value of our U.S. dollar denominated assets. On the other hand, a decline in the value of renminbi against the U.S. dollar could reduce the U.S. dollar equivalent amounts of our financial results, the value of your investment in our company and the dividends we may pay in the future, if any, all of which may have a material adverse effect on the prices of our shares.

Interest Rate Risk

Our exposure to interest rate risk relates primarily to the interest expense associated with our short-term and/or long-term bank borrowings as well as interest income provided by excess cash invested in demand and term deposits. Such borrowing and interest-earning instruments carry a degree of interest rate risk. We have not historically used, and do not expect to use in the future, any derivative financial instruments to manage our exposure to interest risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. The weighted effective interest rate on our outstanding loans was 4.84%, 5.09% and 4.91% for the years ended December 31, 2020, 2019 and 2018. A hypothetical increase or decrease in interest rates of 1% would increase or decrease our annual interest and financing expenses by $351 based on our outstanding indebtedness as of December 31,2020.

ITEM 12. Description of Securities other than Equity Securities

C. Warrants and Rights.

With respect to the preferred share purchase right, see Form 8-A (file no. 001-32371), Amendment No. 1 to Form 8-A (file no. 001-32371) and Amendment No. 2 to Form 8-A (file no. 001-32371) which we filed with the Securities and Exchange Commission on February 22, 2019 and February 21, 2020 and February 22, 2021, respectively).

PART II

ITEM 13. Defaults, Dividend Arrearages and Delinquencies

None.

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ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

A. — D. Material Modifications to the Rights of Security Holders

In March 2016, we adopted the Rights Agreement. In February 2019, we amended and restated the Rights Agreement. Pursuant to the amended and restated Rights Agreement, subject to limited exceptions, upon (i) a person or group obtaining ownership of 15% or more of aggregate total of our common shares and Series B Preferred Shares (on an as converted basis) then issued and outstanding or (ii) the commencement or announcement of an intention to make a tender offer or exchange offer, the consummation of which would result in the beneficial ownership by a person or group of 15% or more of our common shares and Series B Preferred Shares (on an as converted basis) then issued and outstanding, in each case, without the approval of our board of directors, each Right will entitle the holders, other than the acquiring person, to buy, at an exercise price of $20.00, one one-thousandth of a Series C Preferred Share. Holders are entitled to receive, in lieu of each one one-thousandths of a Series C Preferred Share, common shares or Series B Preferred Shares having a market value at that time of twice the Right’s exercise price. Our board of directors is entitled to redeem the Rights at $0.001 per Right at any time before the Rights are exercisable. We refer to the person who acquired 15% or more of the outstanding common shares or Series B Preferred Shares of Sinovac Antigua as the “acquiring person.” In February 2020, we further amended the amended and restated Rights Agreement to extend its term until February 2021. In February 2020 and 2021, we further amended the amended and restated Rights Agreement to extend its term until February 2022.

On February 18, 2019, after reviewing the judgment of the Antigua Court of December 19, 2018 and considering all additional facts known to the board of directors, our board of directors determined that the Collaborating Shareholders became Acquiring Persons as defined under Sinovac Antigua’s Rights Agreement, and that their conduct resulted in a Trigger Event under the Rights Agreement. As a result, the Rights held by the Collaborating Shareholders were deemed void. Pursuant to the Rights Agreement, the board of directors elected to exchange each valid and outstanding Right held by Sinovac Antigua’s shareholders (not including the Collaborating Shareholders) for an Exchange Share. On March 6, 2019, the Delaware Chancery Court entered a status quo order providing that Sinovac Antigua not distribute any of the Exchange Shares from the trust until the final disposition of the pending Delaware litigation or further order of the Court. On April 4, 2019, the Eastern Caribbean Supreme Court, Court of Appeal issued an order that restrains Sinovac Antigua from taking further action under its Rights Agreement, including the distribution of the previously issued Exchange Shares to the holders of valid Rights, until the conclusion of 1Globe Capital, LLC’s appeal of the December 19, 2018 Judgment of the Antigua Court. On April 8, 2019, the Delaware Chancery Court stayed the Delaware litigation pending the outcome of 1Globe’s appeal of the Antigua Judgment. 1Globe’s appeal of the Antigua Court’s Judgment was heard on September 18, 2019, and the appeal decision is pending as of the date of this annual report.

On February 22, 2019, in connection with the Exchange, we issued approximately 27.8 million common shares and 14.6 million Series B Preferred Shares for the benefit of the holders of valid and outstanding Rights as of that date. This issuance had the effect of significantly diluting the holdings of the shareholders that are not entitled to participate in the Exchange. The Series B Preferred Shares share equally in all dividends and distributions made on our common shares and vote together with the common shares on all matters brought before the shareholders, in each case on an as-converted basis and subject to applicable law. The Series B Preferred Shares are convertible into common shares at our option, or automatically upon a successful shareholder vote to increase the authorized number of common shares of Sinovac Antigua. Until the Series B Preferred Shares are converted into common shares (or until the Series B Preferred Shares are listed on a nationally recognized securities exchange), they will earn a preferred dividend equal to $0.41 per annum, payable quarterly in arrears.

E. Use of Proceeds

Not applicable.

ITEM 15. Controls and Procedures

Disclosure Controls and Procedures

In connection with the preparation of this annual report on Form 20-F, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, which is defined in Rules 13a-15(e) of the Exchange Act, as of the period covered by this annual report.

Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2020, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, which is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of the consolidated financial statements for external

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purposes in accordance with accounting principles generally accepted in the United States and includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that a company’s receipts and expenditures are made only in accordance with authorization of a company’s management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the consolidated financial statements.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, we used the criteria established within the Internal Control —Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included a review of the documentation of controls, an evaluation of the design effectiveness of controls, the testing of the operating effectiveness of controls and a conclusion on this evaluation. All internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement to our annual or interim financial statements will not be prevented or detected on a timely basis.

Based on our evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2020.

Marcum Bernstein & Pinchuk LLP, an independent registered public accounting firm that audited our financial statements included in this annual report, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2020.

Attestation Report of the Registered Public Accounting Firm

The attestation report issued by Marcum Bernstein & Pinchuk LLP, our independent registered public accounting firm, on the effectiveness of internal control over financial reporting can be found on page F-4 of this annual report.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d), under the Exchange Act, our management, including our chief executive officer and chief financial officer, has conducted an evaluation of our internal control over financial reporting to determine whether any changes occurred during the period covered since last report have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on this evaluation, it has been determined that there has been no change during the period covered by this annual report.

ITEM 16A. Audit Committee Financial Expert

Our board of directors has determined that we have at least one audit committee financial expert serving on our audit committee. Our audit committee financial expert is Mr. Simon Anderson. Each member of our audit committee, including Mr. Anderson, satisfies the “independence” requirements of the NASDAQ Marketplace rule and Rule 10A-3 under the Exchange Act.

ITEM 16B. Code of Ethics

Our board of directors has adopted a code of business conduct and ethics that applies to our directors, officers, employees and agents, including certain provisions that specifically apply to our chief executive officer, chief financial officer, vice presidents and any other persons who perform similar functions for us. We have filed our code of business conduct and ethics as an exhibit our annual report on Form 20-F (file no. 001-32371) filed with the SEC on July 14, 2006, and posted the code on our website at www.sinovac.com. We hereby undertake to provide to any person without charge, a copy of our code of business conduct and ethics within ten working days after we receive such person’s written request.

ITEM 16C. Principal Accountant Fees and Services

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Marcum Bernstein & Pinchuk LLP, for the periods indicated below.

	2020		2019
Audit fees(1)	$0.9 million		$1.1 million
Audited-related fees(2)		—		—
Tax fees(3)		—		—
All other fees(4)		—		—

(1) “Audit fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for the audit of our annual financial statements included in our annual reports on Form 20-F or services that are normally provided by accountants in connection with statutory and regulatory engagements for those fiscal years.

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(2) “Audit-related fees” means the aggregate fees billed in each of the fiscal years listed for assurance and related services rendered by our principal auditors that are reasonably related to the performance of the audit of our financial statements and are not reported under “Audit fees.”

(3) “Tax fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for tax compliance, tax advice, and tax planning.

(4) “All other fees” means the aggregate fees billed in each of the fiscal years listed for products and services provided by our principal accountant, other than the services reported in the other categories.

Before our independent auditors are engaged to render any services, the terms and fees of the engagement are reviewed by the audit committee before our audit committee grants approval. All services as described above have been approved by our audit committee.

ITEM 16D. Exemptions from the Listing Standards for Audit Committees

None.

ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 16F. Change in Registrant’s Certifying Accountant

None.

ITEM 16G. Corporate Governance

NASDAQ Stock Market Rule 5620 requires each issuer to hold an annual meeting of shareholders no later than one year after the end of the issuer’s fiscal year-end. However, NASDAQ Stock Market Rule 5615(a)(3) permits foreign private issuers like us to follow “home country practice” in certain corporate governance matters. We did not have an annual meeting of shareholders in 2020 and 2019 and held an annual meeting of shareholders on February 6, 2018. Dentons (formerly known as Delany Law), our Antigua and Barbuda counsel, has provided a letter to the NASDAQ Global Select Market certifying that our current practice relating to the annual meeting of shareholders will not breach our Articles of Incorporation and By-laws nor any applicable law in Antigua and Barbuda.

Other than the annual meeting practice described above, there are no significant differences between our corporate governance practices and those followed by U.S. domestic companies under NASDAQ Stock Market Rules.

ITEM 16H. Mine Safety Disclosure

Not applicable.

PART III

ITEM 17. Financial Statements

We have elected to provide financial statements pursuant to Item 18.

ITEM 18. Financial Statements

The consolidated financial statements of our company are included at the end of this annual report.

ITEM 19. EXHIBITS

Exhibit Number	Description of Document
1.1	Articles of Incorporation and By-laws, as amended on March 21, 2006 and July 14, 2011 (incorporated by reference to Exhibit 1.1 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on April 12, 2012)
1.2	Certificate of Designations of Series A Junior Participating Preferred Shares (incorporated by reference to Exhibit A to Exhibit 4.1 from our Current Report on Form 6-K (file no. 001-32371) filed with the Securities and Exchange Commission on March 29, 2016)
1.3	Certificate of Designations of Series B Convertible Preferred Shares (incorporated by reference to Exhibit 3.2 from our Registration Statement on Form 8-A (file no. 000-29031) filed with the Securities and Exchange Commission on February 22, 2019)
1.4	Certificate of Designations of Series C Junior Participating Preferred Shares (incorporated by reference to Exhibit 99.7 from our Current Report on Form 6-K (file no. 001-32371) filed with the Securities and Exchange Commission on February 22, 2019)
2.1*	Specimen of Common Share Certificate

87

2.2*	Specimen of Series B Convertible Preferred Shares
2.3*	Description of Rights of Each Class of Securities Registered under Section 12 of the Securities Exchange Act of 1934
4.1	Translation of a Lease between Sinovac Beijing and SinoBioway related to a building of approximately 28,000 square feet, dated August 12, 2004 (incorporated by reference to Exhibit 4.1 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on July 14, 2006)
4.2	Translation of a Lease between Sinovac Beijing and SinoBioway related to a building of approximately 13,300 square feet, dated August 12, 2004 (incorporated by reference to Exhibit 4.2 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on July 14, 2006)
4.3	Translation of a Supplement Agreement to the Leases between Sinovac Beijing and SinoBioway (incorporated by reference to Exhibit 4.3 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on July 14, 2006)
4.4	Translation of a Supplemental Agreement, dated August 12, 2010, to a Lease Contract between Sinovac Beijing and SinoBioway, dated August 12, 2004 (incorporated by reference to Exhibit 4.18 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on April 30, 2013)
4.5	Translation of a Supplemental Agreement, dated April 8, 2013, to a Lease Contract between Sinovac Beijing and SinoBioway, dated August 12, 2004 (incorporated by reference to Exhibit 4.16 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on April 30, 2013)
4.6	Translation of a Lease between Sinovac Beijing and SinoBioway related to buildings of approximately 37,000 square feet, dated June 4, 2007 (incorporated by reference to Exhibit 4.8 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on March 31, 2008)
4.7	Translation of a Supplemental Agreement, dated April 8, 2013, to a Lease Contract between Sinovac Beijing and SinoBioway, dated June 4, 2007 (incorporated by reference to Exhibit 4.17 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on April 30, 2013)
4.8	Stock Option Plan adopted on November 1, 2003 (incorporated by reference to Exhibit 4.4 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on July 14, 2006)
4.9	2012 Share Incentive Plan adopted on August 22, 2012 (incorporated by reference to Exhibit 4.15 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on April 30, 2013)
4.10	Form of Employment Agreement between the Registrant and Officers (incorporated by reference to Exhibit 4.5 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on May 11, 2018)
4.11	Translation of Form of Employment Agreement between the Registrant or its subsidiary and any other senior executive officers of the Registrant or its subsidiary (incorporated by reference to Exhibit 4.11 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on April 29, 2019)
4.12	Form of Non-disclosure, Non-competition and Proprietary Information Agreement between the Registrant or its subsidiary and any other senior executive officers of the Registrant or its subsidiary (incorporated by reference to Exhibit 4.7 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on July 14, 2006)
4.13	Form of Director Indemnification Agreements (incorporated by reference to Exhibit 4.13 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on April 29, 2019)
4.14	Securities Purchase Agreement dated as of July 2, 2018, between Sinovac Biotech Ltd., Vivo Capital, LLC and Prime Success, L.P. (incorporated by reference to Exhibit 99.2 from our current report on Form 6-K (file no. 001-32371) filed with the Securities and Exchange Commission on July 3, 2018)
4.15	Registration Rights Agreement dated as of July 2, 2018, between Sinovac Biotech Ltd., and Vivo Capital, LLC and Prime Success, L.P. (incorporated by reference to Exhibit 99.3 from our current report on Form 6-K (file no. 001-32371) filed with the Securities and Exchange Commission on July 3, 2018)
4.16	Shareholders Agreement dated as of July 2, 2018, between Sinovac Biotech Ltd., and Vivo Capital, LLC and Prime Success, L.P. (incorporated by reference to Exhibit 99.4 from our current report on Form 6-K (file no. 001-32371) filed with the Securities and Exchange Commission on July 3, 2018)
4.17	Form of Director Confidentiality Agreement (incorporated by reference to Exhibit 99.8 from our current report on Form 6-K (file no. 001-32371) filed with the Securities and Exchange Commission on July 3, 2018)
4.18	Trust Agreement dated as of February 20, 2019 between Sinovac Biotech Ltd. and Wilmington Trust, National Association (incorporated by reference to Exhibit 99.2 from our current report on Form 6-K (file no. 001-32371) filed with the Securities and Exchange Commission on February 22, 2019)
4.19	Amended and Restated Rights Agreement, dated as of February 22, 2019, between Sinovac Biotech Ltd. and Pacific Stock Transfer Company, as Rights Agent (incorporated by reference to Exhibit 99.6 from our current report on Form 6-K (file no. 001-32371) filed with the Securities and Exchange Commission on February 22, 2019)
4.20	Amendment to Amended and Restated Rights Agreement, dated as of February 19, 2020, between Sinovac Biotech Ltd. and Pacific Stock Transfer Company, as Rights Agent (incorporated herein by reference to Exhibit 4.1 from our current report on Form 6-K (file no. 001-32371) filed with the Securities and Exchange Commission on February 21, 2020)
4.21*	Shareholders’ Agreement dated December 4, 2020
8.1*	List of Subsidiaries

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11.1	Code of Business Conduct and Ethics (incorporated by reference to Exhibit 11.1 from our annual report on Form 20-F (file no. 001-32371) filed with the Securities and Exchange Commission on July 14, 2006)
12.1*	CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*	CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1**	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2**	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*	Consent of Marcum Bernstein & Pinchuk LLP
101.INS*	Inline XBRL Instance Document—this instance document does not appear in the Interactive Data File because its XBRL tags embedded within the Inline XBRL document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)
*	Filed with this annual report on Form 20-F
**	Furnished with this annual report on Form 20-F

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	Sinovac Biotech Ltd.
	By:	/s/ Weidong Yin
		Name: Weidong Yin
		Title: Chairman and Chief Executive Officer
Date: April 22, 2021

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SINOVAC BIOTECH LTD.

Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

December 31, 2020 and 2019

F-1

Index

Reports of Independent Registered Public Accounting Firm –Marcum Bernstein & Pinchuk LLP	F-3
Consolidated Balance Sheets	F-6
Consolidated Statements of Comprehensive Income	F-7
Consolidated Statements of Shareholders’ Equity	F-8
Consolidated Statements of Cash Flows	F-11
Notes to Consolidated Financial Statements	F-12

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Sinovac Biotech Ltd.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sinovac Biotech Ltd. (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).  In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2020, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated April 22, 2021, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Ongoing litigation

Description of the Matter

As described in Note 17(c) and Note 21 to the financial statements, there are series of ongoing litigations between the Company and 1Globe, and certain other minority shareholders. The Company’s board of directors determined that those shareholders became “Acquiring Person”, and their conduct resulted in a “Trigger Event” under the Company’s Rights Agreement. As a result, 27,777,341 new common shares and 14,630,813 preferred shares of the Company were issued into a trust for the benefit of the holders of the valid and outstanding rights. 1Globe filed an amended answer to the Company’s complaint, counterclaims, and a third-party complaint alleging, among other allegations, that the Rights Agreement is not valid, and that 1Globe did not trigger the Rights Agreement. Releasing these shares from the trust is contingent on the outcome from the Company’s legal proceeding in Antigua. 1Globe’s appeal of the Antigua Court’s Judgment was heard on September 18, 2019, and the appeal decision is pending as of the date of this annual report. The Company cannot predict or estimate an outcome or economic burden for this case at this time.

This significant unusual situation is a critical audit matter as it relates to a material disclosure of contingencies and calculation of earnings per shares, and involved subjective and complex auditor judgement.

How we Addressed the Matter in Our Audit

Our principal audit procedures included, amongst others:

F-3

• Obtaining an understanding, and evaluating the design, and testing the operating effectiveness of management controls with regards to the ongoing litigation review, assessment on the impact to financial reporting and disclosure.

• Obtaining an understanding of the progress of above matter with management and reviewing the relevant litigation documents.

• Obtaining written confirmation from the Company’s legal counsel to confirm the status of the litigation.

• Reviewing the relevant disclosures to the financial statements.

/s/ Marcum Bernstein & Pinchuk LLP

Marcum Bernstein & Pinchuk LLP

We have served as the Company’s auditor since 2019.

Beijing, China

April 22, 2021

F-4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Shareholders and Board of Directors of Sinovac Biotech Ltd.

Opinion on Internal Control over Financial Reporting

We have audited Sinovac Biotech Ltd.'s (the “Company”) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2020 and 2019 and the related consolidated statements of comprehensive income, shareholders’ equity, and cash flows and the related notes for each of the three years in the period ended December 31, 2020 of the Company, and our report dated April 22, 2021 expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management Annual Report on Internal Control over Financial Reporting”. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.  

Marcum Bernstein & Pinchuk LLP

Beijing, China

April 22, 2021

F-5

SINOVAC BIOTECH LTD.

Consolidated Balance Sheets

As of December 31, 2020 and 2019

(Expressed in thousands of U.S. dollars, except for number of shares and per share data)

	December 31, 2020			December 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	1,041,008		$	152,718
Restricted cash (note 3)		9,196			3,160
Short-term investment (note 4)		135,248			50,274
Accounts receivable – net (note 5)		253,487			113,736
Inventories (note 6)		105,813			27,846
Prepaid expenses and deposits		15,541			1,873
Total current assets		1,560,293			349,607
Property, plant and equipment – net (note 7)		200,371			74,310
Prepaid land lease payments (note 8)		8,247			7,965
Intangible assets - net (note 9)		1,474			—
Long–term prepaid expenses (note 12(b))		25			23
Prepayments for acquisition of equipment		20,192			2,390
Deferred tax assets (note 14)		26,891			11,368
Right-of-use assets (note 10 and 12(b))		83,833			6,636
Total assets	$	1,901,326		$	452,299
LIABILITIES AND EQUITY
Current liabilities
Short-term bank loans and current portion of long-term bank loans (note 11)	$	32,941		$	5,934
Loan from a non-controlling shareholder (note 12 (a))		6,155			6,607
Accounts payable and accrued liabilities (note 13)		211,428			58,890
Income tax payable		35,262			1,904
Deferred revenue (note 15)		364,005			5,462
Deferred government grants (note 16)		15,159			2,738
Dividend payable (note 18)		11,143			5,128
Lease liability (note 10 and 12(b))		3,517			536
Total current liabilities		679,610			87,199
Deferred government grants (note 16)		4,229			3,986
Long-term bank loans (note 11)		2,155			—
Deferred tax liability		2,724			—
Loan from a non-controlling shareholder (note 12 (a))		6,130			1,436
Lease liability (note 10 and 12(b))		85,488			5,758
Other non-current liabilities (note 14)		865			1,725
Total long-term liabilities		101,591			12,905
Total liabilities		781,201			100,104
Commitments and contingencies (notes 17 and 23)
EQUITY
Preferred stock (note 18)		15			15
Authorized 50,000,000 shares at par value of $0.001 each
Issued and outstanding: 14,630,813, including 14,630,813 held in trust (2019 – 14,630,813, 14,630,813)
Common stock (note 18)		99			99
Authorized: 100,000,000 shares at par value of $0.001 each
Issued and outstanding: 99,294,743, including 27,777,341 held in trust (2019 – 98,903,243, 27,777,341)
Additional paid-in capital		538,924			207,962
Subscriptions receivable		(7,109	)		—
Accumulated other comprehensive income (loss)		19,925			(4,321	)
Statutory surplus reserves (note 20)		50,377			33,533
Accumulated earnings		144,241			56,731
Total shareholders' equity		746,472			294,019
Non-controlling interests		373,653			58,176
Total equity		1,120,125			352,195
Total liabilities and equity	$	1,901,326		$	452,299

The accompanying notes are an integral part of these consolidated financial statements.

F-6

SINOVAC BIOTECH LTD.

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020, 2019 and 2018

(Expressed in thousands of U.S. Dollars, except for number of shares and per share data)

	For the year ended December 31
	2020			2019			2018
Sales (note 22)	$	510,624		$	246,053		$	229,650
Cost of sales		67,180			32,469			24,723
Gross profit		443,444			213,584			204,927
Selling, general and administrative expenses (including rent expenses incurred    to a related party of 2020 - $798, 2019 - $811, 2018 - $810) (note 12(b))		176,534			121,468			137,003
Provision (recovery) for doubtful accounts		2,640			(306	)		820
Research and development expenses		48,760			24,254			21,910
Loss on disposal of property, plant and equipment (note 7)		163			294			75
Government grants recognized in income		(297	)		(688	)		(197	)
Total operating expenses		227,800			145,022			159,611
Operating income		215,644			68,562			45,316
Interest and financing expenses – (including interest expenses incurred    to a related party, 2020 - $663, 2019 - $455, 2018 - $453) (note 12(a))		(1,453	)		(650	)		(1,070	)
Interest income		1,930			1,996			2,016
Other income, net		496			912			321
Income before income taxes		216,617			70,820			46,583
Income tax expense (note 14)		(31,438	)		(5,605	)		(10,472	)
Net income		185,179			65,215			36,111
Less: Income attributable to non-controlling interests		(74,810	)		(20,286	)		(14,329	)
Net income attributable to shareholders of Sinovac		110,369			44,929			21,782
Preferred stock dividends		(6,015	)		(5,128	)		—
Net income attributable to common shareholders of Sinovac	$	104,354		$	39,801		$	21,782
Net income		185,179			65,215			36,111
Other comprehensive income, net of tax of nil
Foreign currency translation adjustments		32,328			(2,827	)		(10,996	)
Comprehensive income		217,507			62,388			25,115
Less: comprehensive income attributable to non-controlling interests		(82,892	)		(19,681	)		(12,507	)
Comprehensive income attributable to shareholders of Sinovac		134,615			42,707			12,608
Earnings per share (note 21)
Basic net income per share		1.06			0.42			0.34
Diluted net income per share		0.97			0.41			0.34
Weighted average number of shares of common stock outstanding
– Basic		98,897,345			94,876,946			64,727,146
– Diluted		113,662,362			109,691,959			64,977,554

The accompanying notes are an integral part of these consolidated financial statements.

F-7

SINOVAC BIOTECH LTD.

Consolidated Statements of Shareholders’ Equity

For the years ended December 31, 2020, 2019 and 2018

(Expressed in thousands of U.S. dollars, expect number of shares data)

						Additional		Accumulated other comprehensive income (foreign currency			Statutory		Accumulated			Total			Non-
	Common stock					paid-in		translation			surplus		(deficit)			shareholders’			controlling			Total
	Shares			Amount		capital		adjustment)			reserves		earnings			equity			interests			equity
Balance, December 31, 2017		57,281,861		$	57		115,339	$	7,075		$	19,549	$	9,132		$	151,152		$	25,988		$	177,140
Share-based compensation (note 19)		—			—		4,305		—			—		—			4,305			—			4,305
Exercise of stock options (note 18)		109,041			—		3		—			—		—			3			—			3
Subscriptions received (note 18)		—			—		64		—			—		—			64			—			64
Cancellation of outstanding shares (note 18)		(51,500	)		—		—		—			—		—			—			—			—
Issuance of new and restricted shares (note 18)		13,800,000			14		85,287		—			—		—			85,301			—			85,301
Other comprehensive income		—			—		—		—			—		—			—			—			—
- Other comprehensive loss attributable to    non-controlling interests		—			—		—		—			—		—			—			(1,822	)		(1,822	)
- Other comprehensive loss attributable    to shareholders of Sinovac		—			—		—		(9,174	)		—		—			(9,174	)		—			(9,174	)
Net income for the year		—			—		—		—			—		—			—			—			—
-Net income attributable to non-controlling interests		—			—		—		—			—		—			—			14,329			14,329
- Net income attributable to shareholders of Sinovac		—			—		—		—			—		21,782			21,782			—			21,782
- Transfer to statutory surplus reserves (note 19)		—			—		—		—			7,094		(7,094	)		—			—			—
Balance, December 31, 2018		71,139,402		$	71	$	204,998	$	(2,099	)	$	26,643	$	23,820		$	253,433		$	38,495		$	291,928

The accompanying notes are an integral part of these consolidated financial statements

F-8

SINOVAC BIOTECH LTD.

Consolidated Statements of Shareholders’ Equity

For the years ended December 31, 2020, 2019 and 2018

(Expressed in thousands of U.S. dollars, expect number of shares data)

													Accumulated other comprehensive loss (foreign
	Common stock					Preferred stock				Additional paid-in			currency translation			Statutory surplus		Accumulated			Total shareholders’			Non- controlling			Total
	Shares			Amount		Shares		Amount		capital			adjustment)			reserves		earnings			equity			interests			equity
Balance, December 31, 2018		71,139,402		$	71		—	$	—	$	204,998		$	(2,099	)	$	26,643	$	23,820		$	253,433		$	38,495		$	291,928
Share-based compensation (note 19)		—			—		—		—		3,003			—			—		—			3,003			—			3,003
Exercise of stock options (note 18)		13,500			—		—		—		4			—			—		—			4			—			4
Cancellation of outstanding shares (note 18)		(27,000	)		—		—		—		—			—			—		—			—			—			—
Issuance of new shares (note 18)		27,777,341			28		14,630,813		15		(43	)		—			—		—			—			—			—
Dividend accrued (note 18)		—			—		—		—		—			—			—		(5,128	)		(5,128	)		—			(5,128	)
Other comprehensive loss		—			—		—		—		—			—			—		—			—			—			—
- Other comprehensive loss attributable to non-controlling interests		—			—		—		—		—			—			—		—			—			(605	)		(605	)
- Other comprehensive loss attributable to shareholders of Sinovac		—			—		—		—		—			(2,222	)		—		—			(2,222	)		—			(2,222	)
Net income for the year		—			—		—		—		—			—			—		—			—			—			—
-Net income attributable to non-controlling interests		—			—		—		—		—			—			—		—			—			20,286			20,286
- Net income attributable to shareholders of Sinovac		—			—		—		—		—			—			—		44,929			44,929			—			44,929
- Transfer to statutory surplus reserves (note 20)		—			—		—		—		—			—			6,890		(6,890	)		—			—			—
Balance, December 31, 2019		98,903,243		$	99		14,630,813	$	15	$	207,962		$	(4,321	)	$	33,533	$	56,731		$	294,019		$	58,176		$	352,195

The accompanying notes are an integral part of these consolidated financial statements

F-9

SINOVAC BIOTECH LTD.

Consolidated Statements of Shareholders’ Equity

For the years ended December 31, 2020, 2019 and 2018

(Expressed in thousands of U.S. dollars, expect number of shares data)

															Accumulated other comprehensive income (loss) (foreign
	Common stock					Preferred stock				Additional paid-in		Subscriptions			currency translation			Statutory surplus		Accumulated			Total shareholders’			Non- controlling			Total
	Shares			Amount		Shares		Amount		capital		receivable			adjustment)			reserves		earnings			equity			interests			equity
Balance, December 31, 2019		98,903,243		$	99		14,630,813	$	15	$	207,962	$	—		$	(4,321	)	$	33,533	$	56,731		$	294,019		$	58,176		$	352,195
Share-based compensation (note 19)		—			—		—		—		10,203		—			—			—		—			10,203			—			10,203
Exercise of stock options (note 18)		401,500			—		—		—		9,108		—			—			—		—			9,108			4,891			13,999
Subscriptions receivable		—			—		—		—		—		(7,109	)		—			—		—			(7,109	)		(4,891	)		(12,000	)
Cancellation of outstanding shares (note 18)		(10,000	)		—		—		—		—		—			—			—		—			—			—			—
Equity transactions of subsidiaries (note 1)		—			—		—		—		311,651		—			—			—		—			311,651			232,585			544,236
Dividend accrued (note 18)		—			—		—		—		—		—			—			—		(6,015	)		(6,015	)		—			(6,015	)
Other comprehensive income		—			—		—		—		—		—			—			—		—			—			—			—
- Other comprehensive income attributable to non-controlling interests		—			—		—		—		—		—			—			—		—			—			8,082			8,082
- Other comprehensive income attributable to shareholders of Sinovac		—			—		—		—		—		—			24,246			—		—			24,246			—			24,246
Net income for the year		—			—		—		—		—		—			—			—		—			—			—			—
-Net income attributable to non-controlling interests		—			—		—		—		—		—			—			—		—			—			74,810			74,810
- Net income attributable to shareholders of Sinovac		—			—		—		—		—		—			—			—		110,369			110,369			—			110,369
- Transfer to statutory surplus reserves (note 20)		—			—		—		—		—		—			—			16,844		(16,844	)		—			—			—
Balance, December 31, 2020		99,294,743		$	99		14,630,813	$	15	$	538,924	$	(7,109	)	$	19,925		$	50,377	$	144,241		$	746,472		$	373,653		$	1,120,125

The accompanying notes are an integral part of these consolidated financial statements.

F-10

SINOVAC BIOTECH LTD.

Consolidated Statements of Cash Flows

For the years ended December 31, 2020, 2019 and 2018

(Expressed in thousands of U.S. dollars)

	For the year ended December 31
	2020			2019			2018
Cash flows provided by operating activities
Net Income	$	185,179		$	65,215		$	36,111
Adjustments to reconcile net income to net cash provided by operating activities:
- Deferred income taxes (note 14)		(11,227	)		(5,685	)		3,146
- Share-based compensation (note 19)		10,203			3,003			4,305
- Inventory provision (note 6)		5,816			651			2,529
- Provision (recovery) for doubtful accounts		2,640			(306	)		820
- Loss on disposal of property, plant and equipment (note 7)		163			294			75
- Depreciation of property, plant and equipment and amortization of licenses (note 7)		3,693			4,579			4,887
- Amortization of prepaid land lease payments (note 8)		238			238			249
- Amortization of intangible assets (note 9)		106			—			—
- Government grants recognized in income		(297	)		(688	)		(197	)
Changes in:
- Accounts receivable		(128,016	)		(40,191	)		(13,082	)
- Inventories		(77,738	)		(3,651	)		(9,412	)
- Income tax payable		31,804			4,904			(11,844	)
- Prepaid expenses and deposits		(13,151	)		2,645			(2,613	)
- Deferred revenue		339,329			2,521			(892	)
- Accounts payable and accrued liabilities		131,777			6,793			(6,167	)
- Other non-current liabilities		(1,210	)		(1,248	)		28
Net cash provided by operating activities		479,309			39,074			7,943
Cash flows provided by financing activities
- Proceeds from bank loans		33,227			2,109			18,898
- Repayments of bank loans		(6,041	)		(3,305	)		(43,886	)
- Proceeds from issuance of common stock, net of share issuance costs		1,999			—			85,304
- Proceeds from shares subscribed		—			—			64
- Proceeds from subsidiary's financing		541,043			—			—
- Government grants received (note 16)		16,521			1,476			3,800
- Loan from a non-controlling shareholder (note 12(a))		10,162			1,457			—
- Repayments of loan from a non-controlling shareholder (note 12(a))		(4,345	)		—			—
Net cash provided by financing activities		592,566			1,737			64,180
Cash flows used in investing activities
- Purchase of short-term investments		(201,688	)		(50,665	)		(19,670	)
- Proceeds from redemption of short-term investments		124,562			18,818			—
- Proceeds from disposal of equipment		20			21			22
- Acquisition of property, plant and equipment		(127,486	)		(10,628	)		(5,613	)
- Acquisition of intangible assets		(164	)		—			—
Net cash used in investing activities		(204,756	)		(42,454	)		(25,261	)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		27,207			(649	)		(4,656	)
Increase (decrease) in cash and cash equivalents and restricted cash		894,326			(2,292	)		42,206
Cash and cash equivalents and restricted cash, beginning of year		155,878			158,170			115,964
Cash and cash equivalents and restricted cash, end of year	$	1,050,204		$	155,878		$	158,170
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,041		$	717		$	1,494
Cash paid for income taxes	$	11,172		$	7,307		$	19,151

The accompanying notes are an integral part of these consolidated financial statements

F-11

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

1. Basis of Presentation

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). They include the accounts of Sinovac Biotech Ltd., which is incorporated under the laws of Antigua and Barbuda, and its wholly owned or controlled subsidiaries (collectively, the “Company”). All significant intercompany transactions have been eliminated. Details of the Company’s subsidiaries are as follows:

Name	Date of incorporation or establishment	Place of incorporation (or establishment) /operation	Percentage of ownership as of December 31, 2020			Percentage of ownership as of December 31, 2019			Principal activities
Sinovac Biotech   (Hong Kong) Limited   (“Sinovac Hong Kong”)	October 2008	Hong Kong		100	%		100	%	International sales   and marketing
Sinovac Biotech Co.,   Ltd. (“Sinovac Beijing”)	April 2001	People’s Republic of China (“PRC”)		73.09	%		73.09	%	Research and   development,   production and   sales of   vaccine   products
Sinovac Life Sciences   Co., Ltd. (“Sinovac LS”)   (formerly Sinovac   Research & Development   Co., Ltd.) *	May 2009	PRC		59.24	%		100	%	Research and   development,   production and   sales of   vaccine   products
Sinovac (Dalian) Vaccine   Technology Co., Ltd.   (“Sinovac Dalian”) **	January 2010	PRC		68	%		67.86	%	Research and   development,   production and   sales of   vaccine   products
Sinovac Biomed Co., Ltd.	April 2015	PRC		100	%		100	%	Distribution of   vaccine products
Sinovac Biotech (Singapore)   Pte. Ltd. ("Sinovac   Singapore")	August 2020	Singapore		100	%		—		International sales   and marketing

* In December 2020, Sinovac LS secured funding for further development, capacity expansion and manufacturing of the CoronaVac, its COVID-19 vaccine candidate. The investor, Sino Biopharmaceutical Limited, a leading innovative research and development driven pharmaceutical conglomerate in China, through its affiliates invested a total of $527,000 in exchange for 15.38% of the total equity interest of Sinovac LS. Vivo Capital Fund IX, L.P. and Prime Success, L.P., also exercised each of its right to convert its convertible loan that was issued to the Company in May 2020 with a total of $15,000, which after the investment by Sino Biopharmaceutical Limited’s affiliates, Vivo Capital Fund IX, L.P. and Prime Success, L.P. each holds 6.345% stake in Sinovac LS. In September 2020, the board of directors approved an employee share ownership plan where options were granted to officers and employees of the Company, through Keding Investment (Hong Kong) Limited, to purchase up to 15% of equity interest of Sinovac LS upon exercise of the options. The options were fully vested and exercised, and after the investment by Sino Biopharmaceutical Limited’s affiliates, Keding Investment (Hong Kong) Limited holds 12.69% stake in Sinovac LS. Total financing expenses associated with the above transactions was $1,000.

** In November 2020, the Company and Dalian Jin Gang Group, non-controlling shareholder of Sinovac Dalian, each made a capital contribution to Sinovac Dalian with a total of $6,972 and $3,193, respectively.After this capital contribution, our ownership of Sinovac Dalian increased.

2. Significant Accounting Policies

(a) Use of Estimates

F-12

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

In preparation of the Company’s consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates made by management include: provision for product returns, allowance for doubtful accounts, inventory provisions, impairment of long-lived assets, fair value of options granted and related forfeiture rates, and realizability of deferred tax assets. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s consolidated financial statements could be materially impacted.

(b) Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments that are readily convertible to cash generally with maturities of three months or less when purchased.

(c) Restricted Cash

Restricted cash is cash held as collateral for transactions the Company has entered into.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts presented in the statement of cash flows. The Company adopted the new standard effective January 1, 2018, using the retrospective transition method.

The ending balance of cash and cash equivalents and restricted cash presented on the face of the consolidated statements of cash flows in 2020 is $1,050,204 (2019 - $155,878, 2018 - $158,170). It includes $ 1,041,008 cash and cash equivalents (2019 - $ 152,718, 2018 - $158,170) and $9,196 restricted cash (2019 - $3,160, 2018 - $nil) as presented in consolidated balance sheets.

(d) Short-term investments

All highly liquid investments with original maturities greater than three months, but less than twelve months, are classified as short-term investments. Investments that are expected to be realized in cash during the next twelve months are also included in short-term investments.

The Company accounts for short-term debt investments in accordance with ASC Topic 320, Investments—Debt Securities (“ASC 320”). The Company classifies the short-term investments in debt as “held-to-maturity,” “trading” or “available-for-sale,” whose classification determines the respective accounting methods stipulated by ASC 320. Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categories of investments in securities are included in earnings. Any realized gains or losses on the sale of the short-term investments are determined on a specific identification method, and such gains and losses are reflected in earnings during the period in which gains or losses are realized.

(e) Accounts Receivable

The Company extends unsecured credit to its customers in the ordinary course of business and actively pursues past due accounts. On January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The Company estimates an allowance for doubtful accounts based on historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect its customers’ ability to pay.

(f) Inventories

Inventories are stated at the lower of cost or net realizable value. The cost of work in progress and finished goods is determined on a weighted-average cost basis and includes direct material, direct labor and overhead costs. Net realizable value represents the anticipated selling price, net of distribution cost, less estimated costs to completion for work in progress.

F-13

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

(g) Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant additions and improvements are capitalized, while repairs and maintenance are charged to expenses as incurred. Equipment purchased for specific research and development projects with no alternative use are expensed. Assets under construction are not depreciated until construction is completed and the assets are ready for their intended use. Gains and losses from the disposal of property, plant and equipment are recorded in gain or loss on disposal and impairment of property, plant and equipment included in the consolidated statements of comprehensive income (loss).

Depreciation of property, plant and equipment is computed using the straight-line method based on the estimated useful lives of the assets as follows:

Plant and buildings	10 to 24 years
Machinery and equipment	8 to 10 years
Motor vehicles	4 to 5 years
Office equipment and furniture	3 to 5 years
Leasehold improvements	Lesser of useful lives and term of lease

(h) Prepaid Land Lease Payments

Prepaid land lease payments represent amounts paid for the rights to use land in the PRC and is recorded at purchased cost less accumulated amortization. Amortization is provided on a straight-line basis over the term of the lease agreement, which ranges from 28 to 49 years.

(i) Intangible Assets

The Company capitalizes the patent payment and the purchased cost of vaccines if the vaccine has received a new drug certificate from the National Medical Products Administration (“NMPA) of China. If the vaccine has not received a new drug certificate, the purchase cost is expensed as in-process research and development.

Licenses in relation to the production and sales of pharmaceutical products are amortized on a straight-line basis over their respective useful lives. Costs incurred to renew or extend the term of licenses are capitalized and amortized over the license’s useful life on a straight-line basis.

The costs of acquiring and developing computer software and cloud computing websites for internal use are capitalized as intangible assets. Computer software and cloud computing related intangible assets are amortized over 5 - 10 years.

F-14

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

(j) Impairment of Long-Lived Assets

Long-lived assets including property, plant and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable from the future undiscounted net cash flows expected to be generated by the asset group. An asset group is identified as assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. If the asset group is not fully recoverable, an impairment loss would be recognized for the difference between the carrying value of the asset group and its estimated fair value, based on the discounted net future cash flows or other appropriate methods, such as comparable market values. The Company uses estimates and judgments in its impairment tests and if different estimates or judgment had been utilized, the timing or the amount of any impairment charges could be materially different.

(k) Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the carrying values and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance is provided if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates and laws. 

The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority, based on the technical merits of the position. The tax benefits recognized from such a position are measured based on the amount that is greater than 50% likely of being realized upon settlement. The Company recognizes a change in available facts after the reporting date but before issuance of the financial statements in the period when the change in facts occur, even if that new information provides a better estimate of the ultimate outcome of an uncertainty. Liabilities associated with uncertain tax positions are classified as long−term unless expected to be settled within one year. Interest and penalties related to uncertain tax positions, if any, are recorded in the provision for income taxes and classified with the related liability on the consolidated balance sheets.

(l) Value-added Taxes

Value-added taxes (“VAT”) collected from customers relating to product sales and remitted to governmental authorities are presented on a net basis. VAT collected from customers is excluded from revenue.

(m) Revenue from Contracts with Customers

The Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”), on January 1, 2018, using the modified retrospective method.

Revenue is recognized when control of promised goods is transferred to the Company’s customers in an amount of consideration of which the Company expect to be entitled to in exchange for the goods, and the Company can reasonably estimates return provision for the goods.

Product return provisions are estimated based on historical return and exchange data as well as the inventory levels and the remaining shelf lives of the products in the distribution channels.     

As of December 31, 2020, sales return provision for the Company’s vaccine products was $12,056 (December 31, 2019 - $3,726). Sales return provision as a percentage of sales was 2.4% and 1.5% in 2020 and 2019, respectively.   

F-15

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

Deferred revenue is generally related to government stockpiling programs and advances received from customers. For government stockpiling programs of H5N1 vaccines, the Company generally obtains purchase authorizations from the government for a specified amount of products at a specified price and no rights of return are provided. Revenue is recognized when the government takes delivery of the products. If the products expire prior to delivery, these expired products are recognized as revenue once cash is received and the products have expired and passed government inspection. For the year ended December 31, 2020, the Company recognized sales of $4,871 related to contract liabilities at January 1, 2020.

For the year ended December 31, 2020, the Company did not have any significant incremental costs of obtaining contracts with customers incurred or costs incurred in fulfilling contracts with customers within the scope of ASC Topic 606, that shall be recognized as an asset and amortized to expenses in a pattern that matches the timing of the revenue recognition of the related contract.

The Company does not have amounts of contract assets since revenue is recognized as control of goods is transferred. The contract liabilities consist of advance payments from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. All contract liabilities are included in deferred revenue in the Consolidated Balance Sheets.

(n) Shipping and Handling

Shipping and handling fees billed to customers are included in sales. Costs related to shipping and handling are recognized in selling, general and administrative expenses in the consolidated statements of comprehensive income. For the year ended December 31, 2020, $9,609 of shipping and handling costs was included in selling, general and administrative expenses (2019 - $7,253, 2018 - $6,261).    

(o) Advertising Expenses

Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising costs were $859 for the year ended December 31, 2020 (2019 - $1,398, 2018 - $3,901).

(p) Research and Development

Research and development ("R&D") costs are expensed as incurred and are disclosed as a separate line item in the Company’s consolidated statements of comprehensive income. R&D costs consist primarily of the remuneration of R&D staff, depreciation, material, clinical trial costs as well as amortization of acquired technology and know-how used in R&D with alternative future uses. R&D costs also include costs associated with collaborative R&D and in-licensing arrangements, including upfront fees paid to collaboration partners in connection with technologies which have not reached technological feasibility and did not have an alternative future use. Reimbursement of R&D costs for arrangements with collaboration partners is recognized when the obligations are incurred.

Under certain R&D arrangements with third parties, the Company may be required to make payments that are contingent on the achievement of specific development, regulatory and/or commercial milestones. Before a product receives regulatory approval, license fees and milestone payments made to third parties are expensed as incurred. License fees and milestone payments made to third parties after regulatory approval is received are capitalized and amortized over the remaining life of the agreement with third parties.

F-16

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

(q) Government Grants

Government grants received from the PRC government by the PRC operating subsidiaries of the Company are recognized when there is reasonable assurance that the amount is receivable and all the conditions specified in the grant have been met. Government grants for R&D are recognized as a reduction to R&D expenses when the expenses are incurred in the same period when the conditions attached to the grants are met, or recognized as government grants recognized in income in the period when the conditions are met after the expenses are incurred. Government grants for property, plant and equipment are deferred and recognized as a reduction to the related depreciation and amortization expenses in the same manner as the property, plant and equipment are depreciated. Interest subsidies are recorded as a reduction to interest and financing expenses in the consolidated statements of comprehensive income, or recorded as a reduction to interest capitalized if the subsidies granted are related to a specific borrowing associated with building a qualifying asset. For government loans received at below market interest rate, the difference between the face value of the loan and fair value using the effective interest rate method is recorded as deferred government grants.

(r) Retirement and Other Post-retirement Benefits

Full-time employees of the Company in the PRC participate in a government mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that the Company makes contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company has no legal obligation for the benefits beyond the contributions. Total amounts for such employee benefits incurred was $10,809 for the year ended December 31, 2020 (2019 - $9,884, 2018 - $7,438).

(s) Foreign Currency Translation and Transactions

The Company maintains their accounting records in their functional currencies, U.S. dollars (“$”) for the Company, Sinovac Hong Kong and Sinovac Singapore, and Renminbi Yuan (“RMB”) for the PRC subsidiaries. The Company uses the US$ as its reporting currency.

At the transaction date, each asset, liability, revenue and expense is re-measured into the functional currency by the use of the exchange rate in effect at that date. At each period end, foreign currency monetary assets, and liabilities are re-measured into the functional currency by using the exchange rate in effect at the balance sheet date. The resulting foreign exchange gains and losses are included in selling, general and administrative expenses. The Company recognized foreign exchange gain of $2,554 for the year ended December 31, 2020 (2019 - $306, 2018 - $559).

Assets and liabilities of the PRC subsidiaries, Sinovac Beijing, Sinovac LS, Sinovac Dalian and Sinovac Biomed are translated into US$ at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at average exchange rates. Gains and losses from such translations are recorded in accumulated other comprehensive income, a component of shareholders’ equity.

Gain on intra-entity foreign currency transactions that are of a long-term-investment nature was $nil for the year ended December 31, 2020 (2019 - $62, 2018 - $268) which was recorded in accumulated other comprehensive income, a component of shareholders’ equity.

(t) Share-based Compensation

Compensation expense for costs related to all share-based payments, including grants of stock options, is recognized through a fair-value based method. The Company uses the Black-Scholes option-pricing model to determine the grant date fair value for stock options. The Company uses the grant date stock price to determine the grant date fair value of restricted shares. The Company has elected to recognize share-based compensation costs using the straight-line method over the requisite service period with a graded vesting schedule, provided that the amount of compensation costs recognized at any date is at least equal to the portion of the grant date value of the awards that are vested at that date. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share based compensation costs are recorded net of estimated forfeitures such that expense is recorded only for those awards that are expected to vest.

F-17

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

(u) Comprehensive Income

The Company’s comprehensive income consists of net income and foreign currency translation adjustments.

(v) Earnings Per Share

Earnings per share is calculated in accordance with Accounting Standards Codification (“ASC”) 260 Earnings per Share. Basic earnings per share is computed by dividing the net income attributable to shareholders of Sinovac by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed in accordance with the treasury stock method and based on the weighted average number of common shares and dilutive common share equivalents. Dilutive common share equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.

(w) Leases

The Company adopted ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) on January 1, 2019 by using the modified retrospective method and did not restate the comparable periods. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Company elected the short-term lease exemption for all contracts with lease terms of 12 months or less.

The Company determines if an arrangement is a lease or contains a lease at lease inception. For operating leases, the Company recognizes a right-of-use asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

(x) Fair Value Measurements

Assets and liabilities subject to fair value measurements are required to be disclosed within a specified fair value hierarchy. The fair value hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following categories based on the lowest level input used that is significant to a particular fair value measurement:

• Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.

• Level 3 — Unobservable inputs for the asset or liability.

As of December 31, 2020 and 2019, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis.

The carrying values of cash equivalents, restricted cash, short-term investment, accounts receivable, accounts payable and accrued liabilities and short-term bank loans and the current portion of long-term debt approximate their fair value because of their short-term nature. Fair value of the long-term bank loans are determined based on level 2 inputs, and the carrying amounts of long-term bank loans approximate fair value as the related interest rates approximate rates currently offered by financial institution for similar debt instruments.

The Company measures property, plant and equipment at fair value on a non-recurring basis only if an impairment charge were to be recognized. There were no non-recurring fair value measurements for the years ended December 31, 2020 and 2019.

F-18

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

(y) Concentration of Risks

Exchange Rate Risks

The Company operates in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between the U.S. dollars and the RMB. In 2020, foreign exchange gain of $2,554 is included in selling, general and administrative expenses (2019 - $306, 2018 - $559). As of December 31, 2020, cash and cash equivalents of $322,442 (RMB 2,104 million) is denominated in RMB and are held in PRC and Hong Kong (December 31, 2019 - $57,079 (RMB 397 million)).   

Currency Convertibility Risks

Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and signed contracts.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentration of credit risks consist primarily of cash and cash equivalents, restricted cash, short-term investment and accounts receivable, the balances of which are stated on the consolidated balance sheets which represent the Company’s maximum exposure. The Company places its cash and cash equivalents, restricted cash, and short-term investment in good credit quality financial institutions in Hong Kong and China. Concentration of credit risks with respect to accounts receivables is linked to the concentration of revenue. The Company’s customers are mainly various government agencies in China. For the year ended December 31, 2020, one of the Company’s customers accounted for 11% of the Company’s total revenue, and no single customer of the Company accounted for more than 10% of the total sales for the year ended December 31, 2019 and 2018. To manage credit risk, the Company performs ongoing credit evaluations of customers’ financial condition.

Interest Rate Risks

The Company is subject to interest rate risk. Other than loans from a non-controlling shareholder of $12,260 with fixed interest rates as of December 31, 2020 (note 12(a)), interests of other interest-bearing loans are charged at variable rates based on the People’s Bank of China (note 11).

(z) Recently Issued Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which reduces the number of accounting models for convertible debt instruments and convertible preferred stock that simplifies the accounting for convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

F-19

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

3. Restricted Cash

As of December 31, 2020, the balance of $9,196 (December 31, 2019 – $3,160) represents cash collateral held as a guarantee relating to an EPI (Expanded Program on Immunization) sales contract, which is restricted until December 2021.

4. Short-term investments

As of December 31, 2020, the Company’s short-term investments comprised of only debt securities, with a total balance of $135,248 (December 31, 2019 - $50,274). All of the short-term held-to-maturity investments were deposits in commercial banks with maturities of less than one year and the Company has the intent and ability to hold those securities to maturity.

During the years ended December 31, 2020, 2019 and 2018, the Company recorded interest income from its short-term investments of $1,154, $797 and $47 in the consolidated statements of comprehensive income, respectively.

5. Accounts Receivable – net

	December 31,
	2020			2019
Trade receivables	$	257,311		$	116,278
Allowance for doubtful accounts		(6,680	)		(4,181	)
		250,631			112,097
Other receivables		2,856			1,639
Total accounts receivable	$	253,487		$	113,736

The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company estimates the allowance based on historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions, and other factors that may affect customers’ ability to pay.           

The Company’s maximum exposure to credit risk at the balance sheets date relating to trade receivables is summarized as follows:

	December 31,
	2020		2019
Aging within one year, net of allowance for doubtful accounts	$	240,266	$	108,635
Aging greater than one year, net of allowance for doubtful accounts		10,365		3,462
Total trade receivables	$	250,631	$	112,097

6. Inventories

	December 31,
	2020		2019
Raw materials	$	29,005	$	5,689
Work in progress		52,515		8,565
Finished goods		24,293		13,592
Total inventories	$	105,813	$	27,846

For the year ended December 31, 2020, the Company charged $1,697 of excessive fixed production overhead to cost of sales (2019 - $3,794, 2018 - $2,735).

For the year ended December 31, 2020, cost of sales includes $5,816 of inventory provision for products that are likely to expire before being sold (2019 - $ 651, 2018 - $2,529).

F-20

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

7. Property, Plant and Equipment - net

	December 31,
	2020		2019
Cost
Construction in progress	$	143,465	$	29,367
Plant and buildings		29,963		28,833
Machinery and equipment		63,675		49,762
Motor vehicles		1,830		1,536
Office equipment and furniture		3,343		3,431
Leasehold improvements		15,632		12,767
Total cost	$	257,908	$	125,696
Less: Accumulated depreciation
Construction in progress	$	—	$	—
Plant and buildings		13,200		12,183
Machinery and equipment		32,398		27,012
Motor vehicles		1,184		1,057
Office equipment and furniture		1,823		2,122
Leasehold improvements		8,932		9,012
Total accumulated depreciation	$	57,537	$	51,386
Property, plant and equipment, net	$	200,371	$	74,310

Buildings of Sinovac Dalian with a net book value of $2,567 (RMB16.7 million) were pledged as collateral for a bank loan from Bank of China (note 11 (b)).

Buildings of Sinovac Dalian with a net book value of $672 (RMB4.4 million) were pledged as collateral for a bank loan from China Merchants Bank (note 11 (g)).

Buildings and Machinery and equipment of Sinovac Dalian with a net book value of $23,015 (RMB150.2 million) were pledged as collateral for a bank loan from China Everbright Bank (note 11 (h))

Net depreciation expense for the year ended December 31, 2020 was $3,693 (2019 - $4,579, 2018 - $4,887 ), after deduction of amortized government grant specifically related to qualified property, plant and equipment.

Loss on disposal of equipment for the year ended December 31, 2020 was $163 (2019 - $294, 2018 - $75).

8. Prepaid Land Lease Payments

	December 31,
	2020		2019
Prepaid land lease payments	$	11,066	$	10,372
Less: accumulated amortization		2,819		2,407
Net carrying value	$	8,247	$	7,965

F-21

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

Prepaid land lease payments of Sinovac Dalian with a net book value of $2,196 (RMB 14.3 million) were pledged as collateral (note 11 (f)) for a bank loan from Guangdong Development Bank.

Amortization expense for prepaid land lease payments for the year ended December 31, 2020 was $238 (2019 - $238, 2018 - $249).

9. Intangible Assets - net

	December 31,
	2020		2019
Computer software	$	1,586	$	—
Less: accumulated amortization		112		—
Net carrying value	$	1,474	$	—

Amortization expense for intangible assets for the year ended December 31, 2020 was $106 (2019 - $nil, 2018 - $nil).

10. Lease

The Company’s operating leases mainly related to plants and buildings, some of which include options to extend the leases that have not been included in the calculation of the Company’s lease liabilities and right-of-use assets. The Company recognizes rent on a straight-line basis over the expected term of the lease, which includes rent holiday and scheduled rent increase. For leases with terms greater than 12 months, the Company records the related asset and lease liability at the present value of lease payments over the term.

As of December 31, 2020, there was no finance leases entered into by the Company.

As of December 31, 2020, the weighted average remaining lease term was 10.8 years and weighted average discount rate was 4.9% for the Group’s operating leases. Operating lease cost excluding cost of short-term lease for the year ended December 31, 2020 was $6,075. Short-term lease cost for the year ended December 31, 2020 was $784 (2019 - $487, 2018 - $948). Supplemental cash flow information related to operating leases was as follows:

	For the year ended December 31,
	2020		2019
Cash payments for operating leases	$	856	$	807
Right-of-use asset obtained in exchange for operating lease liabilities		71,824		135

Future lease payments under operating leases as of December 31, 2020 were as follows:

2021	$	7,700
2022		10,621
2023		10,745
2024		10,891
2025		11,016
Thereafter		63,430
Total future lease payments		114,403
Less: Imputed interest		25,398
Total lease liability balance	$	89,005

Minimum future rental payments under short-term lease for the year ending December 31, 2020 was $10.

As of December 31, 2020, additional operating leases that have not yet commenced were immaterial.

F-22

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

11. Bank Loans

Summarized below are bank loans as of December 31, 2020 and 2019:

	December 31,
	2020		2019
Bank of Beijing (a)	$	—	$	3,842
Bank of China (b)		1,993		1,005
Bank of Beijing (c)		4,598		—
SPD Silicon Valley Bank (d)		6,503		1,087
SPD Silicon Valley Bank (e)		18,361		—
Guangdong Development Bank (f)		1,378		—
China Merchants Bank (g)		108		—
Bank loans due within one year		32,941		5,934
China Merchants Bank (g)		163		—
China Everbright Bank (h)		1,992		—
Long-term bank loans		2,155		—
Total  bank loans	$	35,096	$	5,934

(a) On May 20, 2015, Sinovac Beijing entered into a bank loan with Bank of Beijing in the aggregate principal amount of $7,356 (RMB 48 million) with a term from July 2015 to May 2020 for construction of the pneumococcal polysaccharide vaccine facilities. The loan’s interest rate is based on the prime rate of a five-year term loan published by the People’s Bank of China at the time withdraws are made. Interest is payable quarterly and the loan was repaid on May 20, 2020.         

(b) On November 20, 2019, Sinovac Dalian entered into a maximum credit facility of $3,065 (RMB 20 million) with Bank of China to finance its working capital requirements. $1,005 (RMB 7 million) was drawn on December 24, 2019 and was repaid on December 24, 2020. On March 13, 2020, Sinovac Dalian withdrew $1,073 (RMB 7 million) with an annual interest rate at 95 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.00%. On December 9, 2020, Sinovac Dalian withdrew $920 (RMB 6 million) with an annual interest rate at 55 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 4.40%. Interest is payable monthly and the loans are repayable on March 13, 2021 and December 9, 2021, respectively. Buildings of Sinovac Dalian with a net book value of $2,567 (RMB 16.7 million) were pledged as collateral.

(c) On March 31, 2020, Sinovac LS entered into a maximum credit facility of $4,598 (RMB 30 million) with Bank of Beijing to finance its working capital requirements. $4,598 (RMB 30 million) was drawn on March 31, 2020 with an annual interest rate of 3.05%. Interest is payable quarterly and the loan is payable on March 31, 2021.

(d) On November 25, 2019, Sinovac Dalian entered into a revolving bank loan with SPD Silicon Valley Bank with the aggregate principal of $7,663 (RMB 50 million) to finance its working capital requirements. The revolving loan bears interest at 125 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.1% and interest is payable quarterly. Each withdraw from the revolving loan has a maximum term of 12 months. $1,087 (RMB 7.6 million) was drawn in 2019 and repaid in December 2020. The outstanding balance of $6,503 (RMB 42.4 million) was drawn during 2020 and is payable on or before August 6, 2021.  

(e) On May 14, 2020 and September 3, 2020, Sinovac LS entered into two revolving bank loans with SPD Silicon Valley Bank with the aggregate principal of $7,663 (RMB 50 million) and $10,728 (RMB 70 million) to finance its working capital requirements. The revolving loan bears interest at 120 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.05% and interest is payable quarterly. Each withdraw from the revolving loan has a maximum term of 12 months. The outstanding balance of $18,361 (RMB 119.8 million) was drawn during 2020 and is payable on or before October 15, 2021.  

F-23

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

(f) On November 5, 2020, Sinovac Dalian entered into a maximum credit facility of $1,379 (RMB 9 million) with Guangdong Development Bank to finance its working capital requirements. $1,378 (RMB 9.0 million) was drawn during 2020 and payable on or before November 29, 2021. The loan bears interest at 115 basis point above the prime rate of one year term loan published by the People’s Bank of China, at 5% and interest is payable monthly. Prepaid land lease payments of Sinovac Dalian with a net book value of $2,196 (RMB 14.3 million) were pledged as collateral.

(g) On May 26, 2020, Sinovac Dalian entered into four mortgages in the total amount of $333 (RMB 2.1 million) with China Merchants Bank to purchase four apartments. The loans bears annual interest rate at 175 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.6%. Principals and interests are repaid monthly over a term of 36 months. Sinovac Dalian repaid $58 (RMB 0.4 million) in principal and interest in 2020. As of December 31, 2020, $108 (RMB 0.7 million) is recorded in bank loans due within one year and $163 (RMB 1.1 million) is recorded in long-term bank loans. Buildings of Sinovac Dalian with a net book value of $672 (RMB 4.4 million) were pledged as collateral.

(h) On November 17, 2020, Sinovac Dalian entered into a maximum credit facility of $30,651 (RMB 200 million) is to finance Sinovac Dalian’s purchase of property plant and equipment, with a term from November 17, 2020 to November 16, 2028. The loan bears annual interest rate at 123 basis point above the prime rate of a five year term loan published by the People’s Bank of China, at 5.88%. Interest is payable quarterly and principal installment repayments begin in 2023 and shall be fully paid by November 16, 2028. Certain machinery and equipment of Sinovac Dalian with a net book value of $23,015 (RMB 150.2 million) were pledged as collateral. Sinovac Dalian withdrew $1,992 (RMB 13 million) on December 14, 2020, which will be repaid during 2023 to 2028.

Aggregate maturities of loans for each of the next 5 years following December 31, 2020 are as follows:

Within 1 year	$	32,941
In 2022		114
In 2023		98
In 2024		249
After 2024		1,694
Total	$	35,096

The weighted average interest rate for all short-term and long-term bank loans was 4.84% in 2020 (2019 - 5.09%, 2018 - 4.91%). The weighted average interest rate for short-term loans was 4.77% in 2020 (2019 – 5.09%, 2018 – 5.04%). The Company incurred $1,485 in interest and financing expenses for the year ended December 31, 2020 (2019 - $715, 2018 - $1,470 ), of which $32 was capitalized in property, plant and equipment for the year ended December 31, 2020 (2019 - $65, 2018 - $400 ).

12. Related Party Transactions and Balances

(a) Loan from a non-controlling shareholder

	December 31,
	2020		2019
Loan -  current	$	6,155	$	6,607
Loan -  non - current		6,130		1,436
	$	12,285	$	8,043

F-24

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

The Company has four loans due to Dalian Jin Gang Group, the non-controlling shareholder of Sinovac Dalian, with a total amount of $12,260, of which two loans totalling $6,130 (RMB40 million) were borrowed in August 2020 and are repayable on August 18, 2021. $1,533 (RMB10 million) was borrowed in September 2019 and is repayable on September 19, 2022. $4,597 (RMB30 million) was borrowed in August 2020 and is repayable on August 9, 2023. These four loans are unsecured, bearing interest at 6.5% per year and payable monthly. Interest expense was $663 in 2020 (2019 - $455, 2018 - $453). As of December 31, 2020, $25 interest is owed on the loan from the non-controlling shareholder (December 31, 2019 - $nil). Interests of $640, $470 and $438 were paid to the non-controlling shareholder for the years ended December 31, 2020, 2019 and 2018, respectively.

(b) The Company entered into the following transactions in the normal course of operations at the exchange amount with related parties:

	For the year ended December 31,
	2020		2019		2018
Rent expenses to SinoBioway Biotech Group Co. Ltd. (“SinoBioway”).	$	776	$	775	$	810
Rent expenses to Dalian Jin Gang Group (“Jin Gang”).		22		36		—
	$	798	$	811	$	810

In 2004, the Company entered into two operating lease agreements with SinoBioway, the non-controlling shareholder of Sinovac Beijing, with respect to Sinovac Beijing’s production plant and laboratory in Beijing, China with annual lease payments totaling $197 (RMB 1.4 million). The leases commenced on August 12, 2004 and have a term of 20 years. One of the lease agreements was amended on August 12, 2010 with the rent increasing from $75 (RMB 0.5 million) to $197 (RMB1.4 million) per year.

In June 2007, the Company entered into another operating lease agreement with SinoBioway, with respect to the expansion of Sinovac Beijing’s production plant in Beijing, China, for an annual lease payment of $296 (RMB2.0 million). The lease commenced in June 2007 and has a term of 20 years.

In September 2010, the Company entered into another operating lease agreement with SinoBioway with respect to expansion of Sinovac R&D’s business in research and development activities for an annual lease payment of $146 (RMB1.0 million). The lease commenced on September 30, 2010 and has a term of 5 years.

On April 8, 2013, the Company entered into four supplemental agreements with SinoBioway, under which the expiration date of all operating lease agreements was extended to April 7, 2033.

In 2019, the Company entered into an operating lease agreement with Jin Gang, the non-controlling shareholder of Sinovac Dalian, to rent refrigeration storage with the space of 2,000 sq.m. with an annual rent amounted $49 (RMB0.3 million). The lease commenced on January 1, 2019 and has a term of 5 years. On June 30, 2019, the lease agreement was amended for a remaining 5.5 years, and the annual rent was changed to $22(RMB0.2 million) as the space of the leased refrigeration storage was reduced to 1,000 sq.m. In 2019, the Company also entered into a management service agreement with Jin Gang, pursuant to which it provided the Company with management service related to the operating lease agreement with an annual management service fee of $14 (RMB0.1 million). The management service agreement was amended on June 30, 2019, and the annual management service fee was changed to $7 (RMB 44,000).

As of December 31, 2020, $7,796 in right-of use asset and $7,423 in current and non-current lease liability are related to the lease with SinoBioway and Jin Gang.

13. Accounts Payable and Accrued Liabilities

	December 31,
	2020		2019
Trade payables	$	30,543	$	5,783
Machinery and equipment payables		13,044		2,106
Accrued expenses		113,688		31,145
Value added tax payable		4,682		515
Other tax payable		1,885		488
Withholding tax payable		301		74
Bonus and benefit payables		44,098		10,884
Other payables		3,187		7,895
Total accounts payable and accrued liabilities	$	211,428	$	58,890

F-25

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

14. Income Taxes

Antigua and Barbuda

Under the current laws of Antigua and Barbuda, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no Antigua and Barbuda withholding tax will be imposed.

Hong Kong

Under Hong Kong tax laws, Sinovac Hong Kong is subject to Hong Kong Profits Tax rate at 16.5%, and is exempted from income tax on its foreign-derived income. There are no withholding taxes in Hong Kong on remittance of dividends.

Singapore

Under Singapore tax laws, Sinovac Singapore is subject to Singapore Income Tax rate at 17%, and is exempted from income tax on its foreign-derived income. There are no withholding taxes in Singapore on remittance of dividends.

China

Effective from January 1, 2008, the PRC’s statutory income tax rate is 25%. The Company’s PRC subsidiaries are subject to income tax at the statutory rate of 25% except for Sinovac Beijing, Sinovac Dalian and Sinovac LS. Sinovac Beijing and Sinovac Dalian, have been reconfirmed as a “High and New Technology Enterprise” (“HNTE”) in 2020 for a period of 3 years, are subject to a preferential income tax rate of 15% from 2020 to 2022. Sinovac LS, has been confirmed as a “High and New Technology Enterprise” (“HNTE”) in 2020 for a period of 3 years, is subject to a preferential income tax rate of 15% from 2020 to 2022.

The Company’s income before income tax consists of:

	For the year ended December 31,
	2020		2019			2018
Non-PRC	$	5,866	$	(7,337	)	$	(16,308	)
PRC		210,751		78,157			62,891
Total	$	216,617	$	70,820		$	46,583

Income taxes attributed in China consists of:

	For the year ended December 31,
	2020			2019			2018
Current income tax expenses	$	(42,665	)	$	(11,290	)	$	(7,326	)
Deferred tax benefits		11,227			5,685			(3,146	)
Total income tax expense	$	(31,438	)	$	(5,605	)	$	(10,472	)

The following is a reconciliation of the Company’s total income tax expenses to the amount computed by applying the PRC statutory income tax rate of 25% to its income before income taxes for the years ended December 31, 2020, 2019 and 2018:

	For the year ended December 31,
	2020			2019			2018
Income before income taxes	$	216,617		$	70,820		$	46,583
Income tax expense at the PRC statutory rate		(54,154	)		(17,705	)		(11,646	)
International tax rate differential		(419	)		(1,827	)		(3,929	)
Super deduction for research and development expenses		7,229			2,310			1,835
Non-deductible expenses		(2,225	)		685			(1,865	)
Other adjustments		(1,002	)		(486	)		14
Effect of preferential tax rate		19,224			7,018			6,562
Change in valuation allowance		2,656			4,415			(1,429	)
Effect of PRC withholding tax		(2,747	)		(15	)		(14	)
Income tax expense	$	(31,438	)	$	(5,605	)	$	(10,472	)

F-26

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

The tax effects of temporary differences that give rise to the Company’s deferred tax assets are as follows:

	December 31,
	2020			2019
Inventories		1,212			394
Accrued expenses		17,240			4,184
Deferred government grants		2,838			985
Fixed assets		5,382			4,160
Tax losses carried forward		338			4,420
Less: valuation allowance		(119	)		(2,775	)
Deferred tax assets	$	26,891		$	11,368

In assessing the realizbility of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible or utilized. The Company considers projected future taxable income and tax planning strategies in making this assessment. Based upon an assessment of the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible or can be utilized, the Company provided valuation allowance of $119 as of December 31, 2020 (December 31, 2019 - $2,775).

The Company evaluates its valuation allowance requirements at end of each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When circumstances cause a change in management’s judgment about the realizability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carry forward period available under applicable tax law. The Company’s valuation allowance decreased by $2,656 from $2,775 as of December 31, 2019 to $119 as of December 31, 2020.

Tax losses of the Company’s PRC subsidiaries in the amount of $1,932 (RMB 12.6 million) as of December 31, 2020 will expire from 2021 to 2030, if not utilized.

As of December 31, 2020, deferred tax liabilities of $2,724 represents withholding tax for the potential remittance of earnings from the PRC subsidiaries to Sinovac Hong Kong, accrued at a 5% withholding tax rate. Under the PRC tax regulations, dividends from PRC companies to their overseas parents in respect of earnings derived from January 1, 2008 onwards are subject to PRC dividend withholding tax at 10%, which could be reduced to 5% should treaty benefits be applicable.

As of December 31, 2020, the Company has not recognized any deferred tax liability on Sinovac Beijing’s undistributed earnings of approximately $189,898, in view of the Company's permanent reinvestment plan. The Company would be subject to PRC withholding income taxes at 5% or 10%, depending on the availability of treaty benefit between China and Hong Kong, upon the distribution of such profits outside of China. As of December 31, 2020, the Company’s portion on the amount of unrecognized deferred tax liability was ranging from $9,495 to $18,990.

The changes in unrecognized tax benefits are as follows:

	For the year ended December 31,
	2020			2019			2018
Balance at January 1		904			1,681			1,873
Additions for tax positions of the current year		—			—			7
Additions for tax positions of the prior years		—			—			—
Settlement with the taxing authority		—			—			—
Lapse of statute of limitations		(343	)		(777	)		(199	)
Balance at December 31	$	561		$	904		$	1,681

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits, and such interest and penalties are reversed when statute of limitations lapse. For the year ended December 31, 2020, the Company reversed $107 in interest (December 31, 2019 -

F-27

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

$458 interest recorded) and nil in penalties (December 31, 2019 - nil). The Company had $305 accrued interest as of December 31, 2020 (December 31, 2019 - $412). The PRC tax law provides statute of limitations ranging from 3 to 5 years and for transfer pricing related matters, it could be extended to 10 years. In general, the PRC tax authorities have up to five years to conduct examinations of the tax filings of the Company’s PRC subsidiaries. Accordingly, the PRC subsidiaries’ tax years of 2015 - 2020 remain open to examination by the respective tax authorities.

As of December 31, 2020, the Company had unrecognized tax benefits of approximately $561 (December 31, 2019 - $904, December 31, 2018 - $1,681) and such balance was included in “other non-current liabilities”. As of December 31, 2020, unrecognized tax benefits amounting to $561 would affect the effective tax rate if recognized (December 31, 2019 - $904, December 31, 2018 - $1,681). The Company does not expect the amount of unrecognized tax benefits would change significantly in the next 12 months.

15. Deferred Revenue

Current deferred revenue included $363,787 of advances from customers (December 31, 2019 - $5,258) and $218 from Chinese government for stockpiling of H5N1 and hepatitis A vaccines (December 31, 2019 - $204).

16. Deferred Government Grants

Deferred government grants represent funding received from the government for research and development (“R&D”) or investment in building or improving production facility. The amount of deferred government grants as of year end is net of research and development expenditures, deduction of depreciation expenses, and the amount recognized as government grant income. The Company received $14,162 of government grant in 2020 (2019 - $975, 2018 - $3,546) that were deferred. In addition, the Company received $3,137 in other government grants and subsidies for the year ended December 31, 2020 and recognized as income in the statements of comprehensive income (2019 - $501, 2018 - $254).

Summarized below are deferred government grants As of December 31, 2020 and 2019:

	December 31,
	2020		2019
Government grants for property, plant and equipment (a)	$	565	$	486
Government grants for research and development (b)		14,594		2,252
Current deferred government grants		15,159		2,738
Government grants for property, plant and equipment (a)		3,003		2,137
Government grants for research and development (b)		1,226		1,849
Non-current deferred government grants		4,229		3,986
Total deferred government grants		19,388		6,724

(a) The Company has four deferred government grants related to property, plant and equipment. The Company has fulfilled one of the grants’ conditions and expect to fulfill another one in 2021. $565 will be amortized in 2021 which was included in the current portion of deferred government grant and $1,714 will be amortized after 2021 which was included in the non-current portion of deferred government grants. $412 was recorded as a reduction to depreciation expense for the year ended December 31, 2020 (2019 - $412, 2018 - $430), and $80 was recorded as government grant recognized in income for the year ended December 31, 2020 (2019 - $79, 2018 - $82). $1,289 represents the unamortized portion of one grant where the Company received but has not fulfilled the conditions attached to the grant. As the Company does not expect to fulfill the conditions within one year, the grant is recorded as a non-current deferred government grant.

(b) The Company has ten deferred government grants related to various research and development projects. The Company expects to fulfill nine grants’ conditions in 2021 and recorded $14,594 as current portion of deferred government grants, while the remaining one grant’s condition is expected to be fulfilled after 2021 and $1,226 is recorded in the non-current portion of deferred government grants.  

F-28

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

17. Commitments and Contingencies

(a) Other Commitments

In addition to commitments disclosed in note 23, commitments related to R&D expenditures are $3,886 as of December 31, 2020.

Commitments related to capital expenditures for the Company are approximately $45,306 as of December 31, 2020.

(b) Foreign Corrupt Practice Act Matters

The Company may be subject to legal proceedings, investigations and claims relating to the conduct of the Company’s business from time to time.

The Beijing People’s Court issued five judgments in 2016 and 2017. These judgments were related to corrupt conduct allegedly engaged in by a former official of the Center for Drug Evaluation in NMPA, his wife and his son. These judgments found that the official and his wife had engaged in a practice of improperly soliciting and accepting payments from various individuals involved in the vaccine products industry. According to the judgments, one of the individuals solicited by the official was Mr. Weidong Yin, the Company’s chairman, president and chief executive officer. It was asserted in the judgments that Mr. Weidong Yin made three payments, and arranged for a loan, to the official and his wife, in the total amount of $77 (RMB 0.6 million) between 2002 and 2011. Mr. Weidong Yin was not charged with any offense or improper conduct and he cooperated as a witness with the procuratorate. To the Company’s knowledge, the Chinese authorities have not commenced any legal proceedings or government inquiries against Mr. Yin. In December 2016, the Company’s audit committee authorized the commencement of an internal investigation into the allegations made in the judgments. The audit committee engaged Latham & Watkins as independent counsel to assist with the investigation.

In 2017 and 2018, the Company became aware of certain judgments based on bribery charges issued by Chinese courts in four provinces against various officials of the CDC. While these judgments appear to reflect an industry-wide investigation focused on CDC officials, they also referenced nine of our former salespersons, together with sales personnel from several other Chinese vaccine companies and distributors. These judgments did not name, and no charges were brought against, our company or any of our directors or officers as defendants. To the best of the Company’s knowledge, the nine referenced employees cooperated with the procuratorate. The procuratorate did not contact the Company for cooperation. Upon becoming aware of these judgments, the Company’s Audit Committee expanded its internal investigation to review matters related to these judgments and our sales practices and policies, and further engaged Latham & Watkins LLP to continue the independent investigation with the expanded scope. One of the nine former sales employees has been convicted for giving bribes. The judgment states that this former sales employee took these actions without knowledge of the Company. His criminal penalty was waived by the court.

F-29

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

After the Company publicly announced the internal investigation arising from the allegations in a research report in December 2016, the Company was notified by the SEC in February 2017 of an enforcement inquiry related to the matters discussed in the report, and in April 2017 the Company received a subpoena from the SEC requesting documents. In September 2017, the Company received an inquiry from the Department of Justice (the “DOJ”) and the Company has been cooperating with the DOJ. The SEC and DOJ have requested information regarding the judgments discussed above, and the Company is cooperating with these requests.

Also in February 2017, the Company received an inquiry from NASDAQ related to the same matter. Further, in May 2018, the Company received an inquiry from NASDAQ requesting information related to the actions by Sinobioway and their impact on the Company’s operations and financial reporting. The Company has cooperated with both of these NASDAQ inquiries.

On August 14, 2018, the SEC notified the Company that the SEC had concluded its investigation and would not recommend an enforcement action against the Company at this time. On September 12, 2018, the DOJ notified the Company that it had closed its investigation, with no charges.

With the closure of the DOJ’s investigation, the Company is not aware of any pending U.S. government investigations of the Company related to these matters.

(c) Other Litigation Matters

On March 5, 2018, the Company filed a lawsuit in the Court of Chancery of the State of Delaware seeking a determination whether 1Globe, The Chiang Li Family, OrbiMed and other shareholders of Sinovac Biotech Ltd. had triggered the Rights Agreement by forming a group holding approximately 45% of outstanding shares of Sinovac Biotech Ltd., in excess of the plan’s threshold of 15%, and acting in concert prior to the 2017 AGM. The Rights Agreement is intended to promote the fair and equal treatment of all Sinovac shareholders and ensure that no person or group can gain control of Sinovac through undisclosed voting arrangements, open market accumulation or other tactics potentially disadvantaging the interest of all shareholders.

On April 12, 2018, 1Globe filed an amended answer to the Company’s complaint, counterclaims, and a third-party complaint against Mr. Weidong Yin alleging, among other allegations, that the Rights Agreement is not valid, that Mr. Weidong Yin and the Buyer Consortium had previously triggered the Rights Agreement, and that 1Globe did not trigger the Rights Agreement. The Company and its board of directors believes that the actions taken by the board of directors were appropriate under the circumstances and that the allegations of the counterclaims and third-party complaint are without merit. 1Globe asks for various measures of equitable relief and also includes a claim for its costs, including attorneys’ fees.

On July 31, 2018, following the Company motions for partial summary judgment and an expedited trial date, the Delaware Chancery Court effectively stayed the action pending receipt of a post-trial decision from the Antigua Court in the matter captioned 1Globe Capital, LLC and Sinovac Biotech Ltd., Claim No. ANUHCV 2018/0120. On December 19, 2018, the Antigua Court issued a judgment affirming the validity of Sinovac Antigua’s Rights Agreement under Antigua law, and finding that “there was a secret plan to take control” of the Company at the 2017 AGM.

Based upon the Antigua Court’s judgment and other facts known to the board of directors, the Company’s board of directors determined that the Collaborating Shareholders became Acquiring Persons on or prior to the 2017 AGM and their conduct resulted in a “Trigger Event” under the Company’s Rights Agreement. As a result of becoming Acquiring Persons, the approximately 28.7 million Rights held by the Collaborating Shareholders automatically became void under the terms of the Rights Agreement. Pursuant to the Rights Agreement, the board of directors elected to exchange the approximately 42.4 million valid and outstanding Rights held by the Company’s shareholders (not including the Collaborating Shareholders) for a combination of approximately 27.8 million Common Shares and approximately 14.6 million Series B Preferred Shares, all of which the Company issued into a trust on February 22, 2019 for the benefit of the holders of the valid and outstanding Rights.

On March 6, 2019, the Delaware Chancery Court entered a status quo order providing that the Company not distribute any of the Exchange Shares to rights holders until the final disposition of the pending Delaware litigation or further order of the Court. On April 4, 2019, the Eastern Caribbean Supreme Court, Court of Appeal issued an order that restrains the Company from taking further action under its Rights Agreement, including the distribution of the previously issued Exchange Shares to the holders of valid Rights, until the conclusion of 1Globe Capital, LLC’s appeal of the December 19, 2018 Judgment of the High Court of Justice of Antigua and Barbuda. On April 8, 2019, the Delaware Chancery Court stayed the Delaware litigation pending the outcome of 1Globe’s appeal of the Antigua Judgment. The Company cannot predict whether an ultimate outcome will be favorable or unfavorable, nor estimate the amount or range of potential loss (if any) at this time.

F-30

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

On March 5, 2018, the Company also filed a lawsuit in the United States District Court for Massachusetts alleging violations of Section 13(d) of the Securities Exchange Act of 1934 by 1Globe and The Chiang Li Family. The lawsuit alleges, among other things, that the defendant shareholders failed to make required disclosures on Schedule 13D regarding their intentions to attempt to replace the Company's board of directors.

On April 9, 2018, the Company received a document request from SEC requesting all of the Company’s documents concerning 1Globe, the Chiang Li Family, OrbiMed, certain other shareholders, and their affiliates. The Company has been cooperating with the SEC. The Company understands the SEC is investigating whether 1Globe, and possibly other shareholders, violated the U.S. securities laws. The Company does not have any information to suggest the SEC is investigating the actions of the Company or its officers and directors.

On May 21, 2018, 1Globe answered and filed counterclaims against the Company and certain of its executives, alleging violations of Section 10(b) of the Exchange Act and various state law claims. In response to the Company’s motion to dismiss 1Globe’s counterclaims, on August 1, 2018, 1Globe filed amended counterclaims against the Company and certain of its executives, alleging violations of Section 10(b) of the Exchange Act and Rule 10b-5, as well as state law claims of abuse of process, fraudulent misrepresentation, negligent misrepresentation, and aiding and abetting such violations, primarily arising out of allegedly false and/or misleading statements made by the Company regarding its business, operational, and financial results.

On August 17, 2018, the Massachusetts Court granted a consent motion to extend the deadline for the Company’s response to 1Globe’s counterclaims (and for any subsequent opposition by 1Globe) until after the Antigua Court issued a ruling in the matter captioned 1Globe Capital, LLC and Sinovac Biotech Ltd., Claim No. ANUHCV 2018/0120. On December 19, 2018, the Antigua Court issued a judgment, which 1Globe appealed on January 29, 2019. Per the Massachusetts Court’s order, the parties have filed periodic status reports regarding the pending court proceedings in Antigua. No date for the Company’s response to 1Globe’s counterclaims has been set. The Company is vigorously pursuing this lawsuit; however, the Company cannot predict whether an ultimate outcome will be favorable or unfavorable, nor estimate the amount or range of potential loss (if any) at this time.

Also on August 1, 2018, 1Globe filed a motion for preliminary injunction seeking to enjoin the Company from, inter alia, altering the capital structure of the Company. On October 15, 2018, the Massachusetts Court denied 1Globe’s motion. On November 14, 2018, 1Globe filed an appeal of the denial of its motion for preliminary injunction to the United States Court of Appeals for the First Circuit. On January 10, 2019, 1Globe filed a motion to hold its appeal in abeyance pending the outcome of its separate appeal of the Antigua Court’s judgment, which the Company opposed. In October 2019, 1Globe voluntarily dismissed the appeal.

Separately, Heng Ren Investments LP (“Heng Ren”) filed suit against the Company and Weidong Yin for alleged breach of fiduciary duties and wrongful equity dilution on May 31, 2019, in Massachusetts state court. The Company removed the matter from state court to the United States District Court for the District of Massachusetts. Heng Ren alleged that Mr. Yin breached fiduciary duties owed to minority shareholders, that the Company aided and abetted breaches of fiduciary duties, and that both the Company and Mr. Yin engaged in wrongful equity dilution. Heng Ren requested damages, attorneys’ fees, and prejudgment interest. On September 14, 2020, the Company filed a motion to dismiss Heng Ren’s claims and the court’s decision on that motion is pending as of the date of this annual report.

On March 13, 2018, 1Globe filed a complaint against the Company in the Antigua Court. The complaint seeks a declaration that the five persons purportedly proposed on the Non-Public Submission at the 2017 AGM were elected as directors of the Company at that meeting, an order of the Antigua Court that those directors be installed as the Company’s board of directors, and a declaration that any actions taken on behalf of the Company at the direction of the board of directors since the 2017 AGM are null and void. On April 10, 2018, 1Globe filed a notice of application in the Antigua Court seeking an order declaring the result of the disputed election, an urgent order restraining the Company’s board of directors from acting, pending determination of the dispute, including acting to initiate or continue litigation against the Shareholder Group, and other related relief. The Company attended the first hearing on May 9, 2018. In July 2018, the Antigua court heard an application by 1Globe for interim injunctive relief preventing the Company from exercising its rights under the Rights Agreement. This application was unsuccessful, but the judge set an expedited timetable to trial. The trial of the matter took place from December 3 to 5, 2018. On December 19, 2018, the judge handed down his judgment, finding in Sinovac’s favor in full, dismissing 1Globe’s claim and declaring that the Rights Agreement was validly adopted as a matter of Antigua law. On January 29, 2019, 1Globe filed a Notice of Appeal. On March 4, 2019, 1Globe filed an application for urgent interim relief, seeking an injunction to prevent Sinovac from continuing to implement its Rights Agreement until the resolution of the appeal. This urgent interim relief application was heard on April 4, 2019, at which the Court of Appeal made an order restraining the Company in similar terms to the Delaware Court order of March 6, 2019, together with restraint from operating the Rights Agreement in any way that affects 1Globe’s rights or shareholding until determination of the appeal. 1Globe’s appeal of the Antigua Court’s Judgment was heard on September 18, 2019, and the appeal decision is pending as of the date of this annual report. The Company cannot predict or estimate an outcome or economic burden for this case at this time.

F-31

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

18. Preferred and Common Stock

Share Capital

On February 22, 2019, pursuant to the Rights Agreement, the Company’s board of directors elected to exchange the approximately 42.4 million valid and outstanding Rights held by the Company’s shareholders (not including the Collaborating Shareholders) for a combination of 27,777,341 common shares and 14,630,813 Series B Convertible Preferred Shares (the “Preferred Shares”), all of which the Company issued into a trust on February 22, 2019 for the benefit of the holders of the valid and outstanding Rights under the Company’s Rights Agreement. The Preferred Shares issued share equally in all dividends and distributions made on the common shares and vote together with the common shares on all matters brought before the shareholders, in each case on an as-converted basis and subject to applicable law. Each preferred share is convertible into one common share at the option of the Company, or automatically upon a successful shareholder vote to increase the authorized number of common shares of the Company. Until the Preferred Shares are converted into common shares (or until the Preferred Shares are listed on a nationally recognized securities exchange), they will earn a preferred dividend equal to $0.41 per share per annum, payable quarterly in arrears. As of December 31, 2020, there were 14,630,813 preferred stock issued and outstanding, and the Company accrued $6,015 in preferred stock dividend for the year ended December 31, 2020.

Each share of common stock is entitled to one vote per share and is entitled to dividends when declared by the Company’s board of directors. As of December 31, 2020 and 2019, there were 99,294,743 and 98,903,243 shares of common stock outstanding, respectively.  

In 2018, the Company issued 1,219 shares of common stock on the exercise of employee stock options with exercise price of $2.37 per share and 107,822 shares of common stock on the exercise of employee stock options with exercise price of $4.98 per share, for 156,300 shares of stock options exercised under cashless excise with total proceeds of $3. In 2018, the Company cancelled 51,500 restricted shares previously issued to employees of the Company due to employee termination. On July 2, 2018, in connection with a private placement transaction, the Company issued 11,800,000 shares of common stock at $7.35 per share with a nine months restricted period. The Company received net proceeds of $85,299 after deducting offering expenses of approximately $1,431.

In 2019, the Company issued 13,500 shares of common stock on the exercise of employee stock options with exercise price of $4.98 per share. In 2019, the Company cancelled 27,000 restricted shares previously issued to employees of the Company due to employee termination.

In 2020, the Company issued 401,500 shares of common stock on the exercise of employee stock options with exercise price of $4.98 per share. In 2020, the Company cancelled 10,000 restricted shares previously issued to employees of the Company due to employee termination.

19. Stock Options

(a) Stock Option Plan

The board of directors approved a stock option plan (the “2003 Plan”) effective on November 1, 2003, pursuant to which directors, officers, employees and consultants of the Company are eligible to receive grants of options for the Company’s common stock. The 2003 Plan expires on November 1, 2023. Up to 10% of the Company’s then outstanding common stocks were reserved for issuance under the 2003 Plan. As of December 31, 2020, 42,800 shares of common stock under the 2003 Plan remain available for issuance. Each stock option entitles its holder to purchase one share of common stock of the Company. Options may be granted for a term not exceeding 10 years from the date of grant. The 2003 Plan is administered by the board of directors.

In December 2011, the Company granted 767,000 options to employees with an exercise price of $2.37, being the quoted market price of the Company’s shares at the time of grant. 10% of the options vest every three months from December 26, 2012 to March 26, 2015 and expired on December 25, 2017. This grant was fully vested on March 26, 2015.

On August 22, 2012, the board of directors approved a new stock option plan (the “2012 Plan”), which allowed the Company to issue up to 4,000,000 options for common shares and restricted shares of the Company to directors, officers, employees and consultants of the Company. Each stock option entitles its holder to purchase one share of common stock of the Company. Options and restricted shares may be granted for a term not exceeding 10 years from the date of grant. The 2012 Plan is administered by the board of directors. The 2012 Plan will expire on August 22, 2022. Any awards that are outstanding on August 22, 2022 will remain in force according to the terms of the 2012 Plan and the applicable award agreement.

F-32

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

On May 1, 2015, the Company granted 729,000 restricted shares (the “Restricted Shares”) at par value of $0.001 and 1,341,000 options (the “Options”) under the 2012 Plan with an exercise price of $4.98, being the quoted market price of the Company’s shares at the time of grant. The options will expire on April 30, 2023. One-fifth of the Restricted Shares and Options shall vest on the first, second, third, fourth and fifth anniversaries of date of grant, respectively. The Restricted Shares are not subject to any restriction on transfer and repurchase after they are vested. 20% of the Options and Restricted Shares were vested on May 1, 2016.  On December 16, 2016, the board of directors approved that an additional 30% of the Options to be vested on December 16, 2016, and restrictions of an additional 30% of the Restricted Shares were removed on December 16, 2016. On April 25, 2018, the board of directors approved that all remaining unvested Options and Restricted Shares that were granted on May 1, 2015 were fully vested on April 25, 2018.

On March 7, 2018, the Company granted 2,000,000 restricted shares (the “2018 Restricted Shares”) at par value of $0.001 under the 2012 Plan, to certain officers and employees of the Company. 60% of the 2018 Restricted Shares will vest on the third anniversary of the date of grant, the remaining 40% 2018 Restricted Shares will vest on the fourth and the fifth anniversary evenly.

On September 16, 2020, the board of directors approved an employee share ownership plan (the “2020 ESOP”), where options were granted to officers and employees of the Company the right to purchase up to a 15% equity interest in Sinovac LS upon exercise of the options. The options have an exercise price of $12,000 that vested immediately and have a life of 8 years.

(b) Valuation Assumptions

The Company used the Black-Scholes option-pricing model in determining the fair value of stock options issued under the 2020 ESOP, and valuation assumptions include expected volatility of 73.22%, an expected life of 2 years, a risk-free interest rate of 2.72%, and a dividend rate of 0%. As Sinovac LS is a private company with limited equity transactions in the past, expected volatility is estimated based on share price volatilities of a group of public traded development stage vaccine companies and development stage East Asian pharmaceutical companies that most closely represent the stage of Sinovac LS at the time. The expected life represents the amount of time that options granted are expected to be outstanding based on forecasted exercise behavior. The risk-free interest rate is based on the rate at grant date of Chinese government bond yield with an average term equal to the expected term of the option. There were no options granted in the years ended December 31, 2019 and 2018.

(c) Share-based Payment Award Activity

A summary of the Company’s stock options activity for the 2003 and 2012 Plan is presented below:

	Number of Options			Weighted Average Exercise Price ($/option)		Aggregate Intrinsic Value ($)
Outstanding as of January 1, 2020		785,500		$	4.98	$	1,170,395
Granted		—			—		—
Exercised		(401,500	)		4.98		—
Forfeited / Expired		(4,000	)		—		—
Outstanding as of December 31, 2020		380,000		$	4.98	$	566,200
Vested and expected to vest at December 31, 2020		380,000		$	4.98		566,200
Exercisable as of December 31, 2020		380,000		$	4.98	$	566,200

A summary of the Company’s non-vested restricted share activity for the 2012 plan is presented below:

	Number of Non-Vested Restricted Shares			Weighted Average Grant Date Fair Value ($)
Non-vested as of January 1, 2020		1,973,000		$	8.25
Granted		—			—
Vested		—			—
Forfeited		(10,000	)		8.25
Non-vested as of  December 31, 2020		1,963,000		$	8.25

F-33

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

As at December 31, 2020

Exercise Prices ($/option)		Number of Options Outstanding		Remaining Average Contractual Life (years)		Average Exercise Price ($/option)		Number of Options Exercisable		Remaining Contractual Life (years)		Average Exercise Price ($/option)
$	4.98		380,000		2.33		4.98		380,000	$	2.33	$	4.98
			380,000		2.33		4.98		380,000		2.33		4.98

The grant date fair value of options issued under the 2020 ESOP is $7,200 and the options can acquire 15% of Sinovac LS’s equity interest upon exercise. The options were fully exercised in 2020. The aggregate intrinsic value of the options exercised under the 2020 ESOP was $3,000.

Share-based compensation expense, included in cost of sales, selling, general and administrative expenses and R&D expenses is charged to operations over the vesting period of the options using the straight-line amortization method. The share-based compensation expense was $10,203 in 2020 (2019 - $3,003, 2018 - $4,305 ). As of December 31, 2020, there was $nil and $6,555 of unrecognized compensation cost related to non-vested stock options and non-vested restricted shares, respectively, granted under the 2012 Plan. The unrecognized compensation cost related to the non-vested restrict shares will be recognized over a weighted average period of 26 months.

The aggregate intrinsic value of the Company’s stock options is calculated as the difference between the exercise price of the options and the quoted price of the common shares that were in the money. The aggregate intrinsic value of the Company’s stock options exercised under the 2003 Plan and the 2012 Plan was $nil and $598 for year ended December 31, 2020, respectively, determined as of the date of option exercise (2019 - $27, 2018 - $426).

The estimated fair value of stock options vested during the year ended December 31, 2020 was nil (2019 - $nil, 2018 – $1,135).

20. Statutory Surplus Reserves

Pursuant to Chinese company law applicable to foreign investment companies, the Company’s PRC subsidiaries are required to maintain statutory surplus reserves. The statutory surplus reserves are to be appropriated from net income after taxes, and should be at least 10% of the after tax net income determined in accordance with accounting principles and relevant financial regulations applicable to PRC enterprises (“PRC GAAP”). The Company has an option of not appropriating the statutory surplus reserve after the statutory surplus reserve is equal to 50% of the subsidiary’s registered capital. Statutory surplus reserves are recorded as a component of shareholders’ equity. The statutory surplus reserve as of December 31, 2020 is $50,377 (2019 - $33,533).

Sinovac Biomed have not accumulated any profit since inception. No appropriation to the statutory surplus reserves and staff welfare and bonus were made.

Dividends declared by the Company’s PRC subsidiaries are based on the distributable profits as reported in their statutory financial statements reported in accordance with PRC GAAP, which differ from the results of operations reflected in the consolidated financial statements prepared in accordance with US GAAP. The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its PRC subsidiaries. As of December 31, 2020, the Company has $nil dividend payable to the common shareholders (December 31, 2019 - $nil), and has $11,143 dividend payable to preferred shareholders (December 31, 2019 - $5,128).

Under PRC laws and regulations, statutory surplus reserves are restricted to set-off against losses, expansion of production and operation and increasing registered capital of the respective company, and are not distributable other than upon liquidation. Staff welfare and bonus funds are restricted to expenditures for the collective welfare of employees. The reserves are not allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor are they allowed for distribution except under liquidation. Amounts restricted include the PRC subsidiaries’ paid-in capital, additional paid-in capital and statutory surplus reserves of the Company’s PRC subsidiaries totaling $442,562 (RMB 2,947 million) as of December 31, 2020 (December 31, 2019, $85,446 (RMB 588 million)). Further, foreign exchange and other regulations in the PRC further restrict the Company’s PRC subsidiaries from transferring funds to the Company in the form of loans, advances or cash dividends. As of December 31, 2020, amounts restricted include the net assets of the Company’s PRC subsidiaries, which amounted to $698,552 (December 31, 2019 - $225,014).

F-34

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

21. Earnings per Share

The following table sets forth the computation of basic and diluted income attributable to common shareholders of Sinovac per share (in thousands, except for number of shares and per share data):

	For the year ended December 31
	2020		2019		2018
Numerator
Net income	$	185,179	$	65,215	$	36,111
Less: Income attributable to non-controlling interests		74,810		20,286		14,329
Income attributable to shareholders of Sinovac		110,369		44,929		21,782
Less: Preferred stock dividends		6,015		5,128		—
Net income attributable to shareholders of Sinovac		104,354		39,801		21,782
Net income attributable to shareholders of Sinovac for computing diluted net    income per share		110,369		44,929		21,782
Denominator
Basic weighted average number of common shares outstanding		98,897,345		94,876,946		64,727,146
Dilutive effect of stock options and preferred shares		14,765,017		14,815,013		250,408
Diluted weighted average number of common shares outstanding		113,662,362		109,691,959		64,977,554
Earnings per share
Basic net income per share		1.06		0.42		0.34
Diluted net income per share		0.97		0.41		0.34

As the Company announced on February 22, 2019, the Company’s Board of Directors determined that certain shareholders became Acquiring Persons, and a Trigger Event occurred under the Rights Agreement. As a result, 27,777,341 new common and 14,630,813 preferred shares of the Company were issued into a trust for the benefit of the holders of the valid and outstanding Rights. Releasing these shares from the trust is contingent on an outcome from the Company's legal proceeding in Antigua. Without the effect of the implementation of the Rights Agreement and the newly issued common and preferred shares, basic weighted average number of common shares outstanding and diluted weighted average number of common shares outstanding would be 71,120,004 and 85,885,021, respectively. And the basic and diluted earnings per share for 2020 would be $1.55 and $ 1.29, respectively.

22. Segment Information

The Company operates exclusively in the biotechnology sector. The Company’s business is considered as operating in one segment. The Company’s Chief Executive Officer is the chief operating decision maker and reviews the consolidated results of operations when making decisions about resources allocation and assessing performance of the Company as a whole. All revenues are generated from the subsidiaries located in China. Total long-lived assets of $208,618 including prepaid land lease payments, property, plant and equipment are all located in mainland China (December 31, 2019 - $82,275). The Company’s total assets by geographic location are as follows:

	December 31,
	2020		2019
Assets
Mainland China	$	1,824,380	$	384,297
Outside Mainland China		76,946		68,002
Total Assets	$	1,901,326	$	452,299

F-35

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

The Company’s revenues by market type are as follows:

	For the year ended December 31,
	2020		2019		2018
Sales
EPI	$	96,799	$	6,896	$	10,357
Private Pay		268,821		220,217		204,764
Export		145,004		18,940		14,529
Total Sales	$	510,624	$	246,053	$	229,650

The Company’s revenues are attributed to geographic locations as follows:

	For the year ended December 31,
	2020		2019		2018
Sales
Mainland China	$	365,620	$	227,113	$	215,121
Outside Mainland China		145,004		18,940		14,529
Total Sales	$	510,624	$	246,053	$	229,650

F-36

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

23. Collaboration Agreements

(a) On March 12, 2009, the Company entered into a technology transfer agreement (with an amendment agreement entered into on December 14, 2011) with Tianjin CanSino Biotechnology Inc. (“Tianjin Cansino”). According to the agreement, Tianjing Cansino will transfer the technology related to pneumococcal vaccine to the Company and jointly develop the technology with the Company. The collaboration term under the technology transfer agreement is from March 12, 2009 to eight years after the first sale of the vaccine developed under the technology transfer agreement in the Chinese market.

Under the terms of the technology transfer agreement, the Company will make milestone payments of up to $3,000 and royalty payments ranging from 6% to 10% of net sales in China. Both parties will work together to develop international markets for the products. On November 17, 2009 and December 14, 2011, two amendment agreements were signed for the payment of $300 for the transfer of an additional six serotypes and related technology. As of December 31, 2016, the Company made total milestone payments of $1,200 ($1,000 under the agreement dated as of March 12, 2009 and $200 under the amendment agreement dated as of December 14, 2011). The remaining milestone payments will be paid when the Company achieves each specific milestone, which includes obtaining clinical trials approval, completing clinical trials and achievement of desired results, and achievement of commercial sales.

On January 29, 2015, the Company entered into the third amendment to the technology transfer agreement dated March 12, 2009 and the two amendment agreements dated November 17, 2009 and December 24, 2011, respectively. By entering into this third amendment, the technology transfer agreement was amended to be a licensing agreement. The remaining milestone and royalty payments under the technology transfer agreement have been reduced. Both the Company and Tianjin Cansino are free to develop pneumococcal vaccines or to collaborate with other companies for the same purpose. The Company did not make any payment or recorded any research and development expenses for the years ended December 31, 2020, 2019 and 2018, respectively.

(b) On August 18, 2009, the Company entered into a patent license agreement with the National Institutes of Health (“NIH”), an agency of the United States Public Health Services within the Department of Health and Human Services. NIH has granted us a non-exclusive license to import and use certain Rotavirus Strains and Monoclonal Antibodies (“Biological Materials”) to develop an oral rotavirus vaccine and produce the vaccine in commercial sales and launch into market. NIH has also granted us the right to use certain documentation associated with the Biological Materials for this research and development project. The term of the license under the patent license agreement is from August 18, 2009 to the later of (a) the expiration of all royalty obligations under the licensed rights where such rights exist and (b) eight years after the first commercial sale by the Company, unless the agreement is terminated earlier per the provisions included therein.

The Company has agreed to pay NIH a license issue royalty of $80 upon execution of the agreement and a non-refundable minimum annual royalty of $8, and royalty payments on net sales ranging from 1.5% to 4% depending on the sales territory and the customers. The Company has also agreed to pay NIH benchmark royalties of $330 upon achieving each benchmark as specified in the patent license agreement, including completion of clinical trials, obtaining regulatory approval for marketing, and achievement of commercial sales. The Company recorded a license royalty of $1 for the year ended December 31, 2020 as R&D expenses (2019 - $1, 2018 - $16).

(c) On August 15, 2011, the Company licensed from Medimmune, LLC, a US based pharmaceutical company, certain non-exclusive rights to use patented reverse genetics technology pertaining to H5N1 influenza virus strain production for vaccines. The Company has agreed to pay an upfront license fee and milestone payments of up to an aggregate of $9.9 million based upon achievement of cumulative net sales of licensed products in China (including Hong Kong and Macau), as well as royalty payments in single digit of net sales of the licensed products in China (including Hong Kong and Macau). License fee and royalties of $3,400 accrued at the end of 2011 were paid in 2012. In 2013, the Company obtained a new stockpile order of 3 million doses of H5N1 vaccines from the Chinese government. The Company accrued a royal payment of $9 as of December 31, 2018, which was paid in 2019. The Company did not accrue any royalty payment in 2020 and 2019.

(d) On April 3, 2014, the Company entered into a non-exclusive license agreement (the “Agreement”) with The Institute for Translational Vaccinology (“INTRAVACC”), a governmental institute working under the Dutch Ministry of Public Health, Welfare and Sports, to develop and commercialize the Sabin Inactivated Polio Vaccine (“sIPV”) for distribution in China and other countries. The Company expects to develop and commercialize the vaccine in China, as well as seeking regulatory approval in other countries. The agreement has a term of 50 years.

The Company has agreed to pay INTRAVACC up to $2,406 (€1.5 million), net of PRC tax, including an entrance fee and milestone payments upon achieving specific milestones. The Company has also agreed to pay royalty payments in a single digit percentage of net sales generated worldwide from the product or products developed under the Agreement. The Company recorded a milestone fee of $35 (€30,000) and $611 (€0.5 million) for the year ended December 31, 2020 and 2018 as research and development expense. There was no expense incurred or paid to INTRAVACC for the year ended December 31, 2019.

F-37

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

(e) In September 2015, Sinovac Dalian entered into a technology transfer and supply agreement with GlaxoSmithKline Biologicals SA, or GSK, to use GSK’s measles seeds to develop combination vaccines containing measles for the China market. Under this agreement, GSK agreed to transfer its measles seeds, provide reasonable assistance and relevant technical materials to Sinovac Dalian for the purpose of developing and producing combination vaccines containing measles. The Company did not make any payment for purchasing measles seeds to GSK for the year ended December 31, 2020, 2019 and 2018.

(f) In June 2020, the Company entered into a clinical development collaboration agreement with Instituto Butantan, a leading Brazilian producer of immunobiologic products, to advance the clinical trials of CoronaVac, Sinovac’s inactivated vaccine candidate against COVID-19 to Phase III. Through the collaboration, Instituto Butantan sponsored our phase III clinical trials in Brazil. A series of agreements completed or to be completed between the parties help establish extensive collaboration that includes technology licensing, market authorization and commercialization of CoronaVac. In this way, Instituto Butantan can ensure that the Brazilian population has access to this vaccine.

(g) In September 2020, the Company signed two agreements with PT Bio Farma, a leading biopharmaceutical company in Indonesia, for the supply, local production and technology licensing in respect of CoronaVac. Under these agreements the Company will supply PT Bio Farma bulk vaccine to enable the latter to produce at least 140 million doses of CoronaVac in Indonesia.

(h) In November 2020, the Company signed two agreements with KEYMEN Ilac Sanayi. Ve Tic. A.S. (“KEYMEN”), an active in supplying of pharmaceutical products in Turkey, for the supply, local production and technology and know-how licensing of CoronaVac. Under the agreements the Company and KEYMEN will cooperate to enable local filling and packaging from the bulk vaccine supplied by the Company in designated facilities in Turkey.

24.Subsequent Events

Aside from those disclosed in note 17 to the financial statements, no other reportable events or transactions take place after the balance sheet date.

F-38

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

25. Condensed Financial Information of the Parent Company

Balance Sheets

	December 31,
	2020		2019
ASSETS
Current assets
Cash and cash equivalents	$	56,666	$	70,201
Prepaid expenses and other receivables		2,461		1,166
Amount due from subsidiaries		93,665		86,006
Dividend receivables		3,195		3,195
Total current assets		155,987		160,568
Investment in subsidiaries		609,057		149,087
Total assets	$	765,044	$	309,655
LIABILITIES AND EQUITY
Current liabilities
Accrued expenses and other payables	$	4,236	$	1,544
Amount due to subsidiaries		3,193		8,964
Dividend payable		11,143		5,128
Total current liabilities		18,572		15,636
Total liabilities	$	18,572	$	15,636
EQUITY
Preferred stock		15		15
Authorized 50,000,000 shares at par value of $0.001 each
Issued and outstanding: 14,630,813 (2019 – 14,630,813)
Common stock		99		99
Authorized: 100,000,000 shares at par value of $0.001 each
Issued and outstanding: 99,294,743 (2019 – 98,903,243)
Additional paid-in capital		531,815		207,962
Accumulated other comprehensive income (loss)		19,925		(4,321	)
Retained earnings		194,618		90,264
Total shareholders' equity		746,472		294,019
Total liabilities and equity	$	765,044	$	309,655

Statements of Comprehensive Income

	For the year ended December 31
	2020			2019			2018
Selling, general and administrative expenses		7,013			7,750			15,615
Total operating expenses		7,013			7,750			15,615
Loss from operations		(7,013	)		(7,750	)		(15,615	)
Other expenses		(23	)		(16	)		(13	)
Interest income		532			871			798
Equity earnings of subsidiaries, net of tax		116,873			51,824			36,612
Net income		110,369			44,929			21,782
Preferred stock dividends		(6,015	)		(5,128	)		—
Net income attributable to common shareholders		104,354			39,801			21,782
Net income		110,369			44,929			21,782
Foreign currency translation adjustments		24,246			(2,222	)		(9,174	)
Total comprehensive income	$	134,615		$	42,707		$	12,608

F-39

SINOVAC BIOTECH LTD.

Notes to Consolidated Financial Statements

(Expressed in thousands of U.S. dollars, unless otherwise stated)

Statements of Cash Flows

	For the year ended December 31
	2020			2019			2018
Cash flows used in operating activities
Net income	$	110,369		$	44,929		$	21,782
Adjustments to reconcile net loss to net cash provided by (used in)    operating activities:
- Share-based compensation		3,003			3,003			445
- Equity in earnings of subsidiaries		(116,873	)		(51,824	)		(36,612	)
Changes in:
- Amount due from subsidiaries		(7,659	)		(3,425	)		(7,624	)
- Prepaid expenses and other receivables		(1,295	)		172			(861	)
- Dividend receivables		—			—			18,085
- Amount due to subsidiaries		(5,771	)		(7,584	)		2,602
- Accrued expenses and other payables		2,692			(119	)		(276	)
Net cash used in operating activities		(15,534	)		(14,848	)		(2,459	)
Cash flows provided by financing activities
- Proceeds from issuance of common stock, net of share issuance costs		1,999			—			85,304
- Proceeds from shares subscribed		—			—			64
Net cash provided by financing activities		1,999			—			85,368
Increase (decrease) in cash and cash equivalents		(13,535	)		(14,848	)		82,909
Cash and cash equivalents, beginning of year		70,201			85,049			2,140
Cash and cash equivalents, end of year	$	56,666		$	70,201		$	85,049

(a) Basis of presentation

The condensed financial information has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the Company used the equity method to account for investment in its subsidiaries.

The Company records its investment in its subsidiaries under the equity method of accounting. Such investment is presented on the balance sheets as “Investment in subsidiaries” and share of their income (loss) as “Equity earnings (losses) of subsidiaries” in the statements of comprehensive income (loss).

Each of the Company’s PRC subsidiaries has restrictions on its ability to pay dividends to the Company under PRC laws and regulations (Note 20). The subsidiaries did not pay any dividends to the Company for the years presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted by reference to the consolidated financial statements.

(b) Commitments

The Company does not have any significant commitments or long-term obligations as of any of the periods presented, except for those disclosed in the consolidated financial statements (notes 17 and 23).

F-40

EX-2.1

Exhibit 2.1

SPECIMEN

* NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT * INCORPORATED UNDER THE LAWS OF THE GOVERNMENT OF ANTIGUA

Number	Sinovac	Shares
	BIOTECH LTD.

This Certifies that

Is the Owner of

Fully paid and non-assessable shares of Common Stock of

Sinovac Biotech Ltd.

transferable on the books of the Corporation in person or by attorney upon surrender of this certificate duly endorsed or assigned. This certificate and the shares represented hereby are subject to the laws of the government of Antigua, and to the Articles of Incorporation and Bylaws of the Corporation, as now or hereafter amended. This certificate is not valid until countersigned by the Transfer Agent.

Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Dated:

CHIEF FINANCIAL OFFICER		PRESIDENT
		PACIFIC STOCK TRANSFER COMPANY
	Countersigned by

EX-2.2

Exhibit 2.2

SPECIMEN

sinovac biotech, ltd

NUMBER incorporated under the laws of the government of antigua not valid unless countersigned by transfer agent SHARES

This

certifies

that

is the record holder of

FULLY PAID AND NON-ASSESSABLE SHARES OF PREFERRED SERIES “B” STOCK OF SINOVAC BIOTECH, LTD

transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are subject to the laws of the government of Antigua and to the Articles of Incorporation and Bylaws of the Corporation, as how or hereafter amended. This certificate is not valid unless countersigned by the Transfer Agent.

WITNESS the facsimile seal of the Corporation and the signature of its duly authorized officers.

DATED

SECRETARY PRESIDENT

COUNTERSIGNED

PACIFIC STOCK TRANSFER COMPANY

Las Vegas, Nevada

AUTHORIZED SIGNATURE

EX-2.3

Exhibit 2.3

Description of Rights of Each Class of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”)

Sinovac Biotech Ltd. (the “Company”) is an Antiguan company (Company No. 11949) with limited liability and its affairs are governed by its articles of incorporation and by-laws and the International Business Corporations Act. Prior to February 22, 2019, the Company’s common shares was listed on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “SVA.” Since February 22, 2019, trading of the Company’s common shares on Nasdaq has been halted. The Company’s common shares and preferred share purchase rights (collectively, the registered securities”) are registered under Section 12 of the Exchange Act.

This exhibit contains a description of the rights of the holders of the registered securities of the Company.

Common Shares

The following are summaries of material provisions of the Company’s Articles of Incorporation, By-laws and the International Business Corporations Act insofar as they relate to the material terms of the Company’s common shares. Notwithstanding this, because it is a summary, it may not contain all the information that investors may otherwise deem important. For more complete information, investors should read the entire Articles of Incorporation and By-laws of the Company, which have been filed with the annual report on Form 20-F of the Company with the Securities and Exchange Commission (File No. 001-32371), and any amendment thereto.

Type and Class of Securities (Item 9.A.5 of Form 20-F)

Each of the Company’s common shares has par value of $0.001 per share. All of the outstanding common shares of the Company are fully paid and non-assessable. The common shares are issued in registered form. The respective number of common shares that were issued as of the last day of the fiscal year as report on the annual report on Form 20-F is provided on the cover of such Form 20-F publicly filed by the Company with the United States Securities and Exchange Commission (the “SEC”) (the “Company’s Form 20-F”). Holders of common shares are entitled to receive share certificates. The Company’s holders of common shares who are non-residents of Antigua may freely hold and vote their common shares.

Preemptive Rights (Item 9.A.3 of Form 20-F)

The holders of the Company’s common shares do not have preemptive right.

Limitations or Qualifications (Item 9.A.6 of Form 20-F)

See “Item 10. Additional Information—B. Memorandum and Articles of Association—Voting Rights” of the Company’s Form 20-F.

Other Rights (Item 9.A.7 of Form 20-F)

Not applicable.

Rights of the Common Shares (Item 10.B.3 of Form 20-F)

See “Item 10. Additional Information—B. Memorandum and Articles of Association” of the Company’s Form 20-F with respect to the dividend rights and the rights to share the Company’s profits, voting rights, right to share in any surplus in the event of liquidation, redemption provisions, sinking fund provisions, liability to further capital calls by the Company and any provision discriminating against any existing or prospective holder of such securities as a result of such shareholder owning a substantial number of shares.

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Variation of Rights of Shares (Item 10.B.4 of Form 20-F)

See “Item 10. Additional Information—B. Memorandum and Articles of Association—Differences in Corporate Law—Variation of Rights of Shares” of the Company’s Form 20-F.

Limitations on the Rights to Own Shares (Item 10.B.6 of Form 20-F)

See “Item 10. Additional Information—B. Memorandum and Articles of Association—Limitations on the Rights to Own Shares” of the Company’s Form 20-F.

Rights of Non-resident or Foreign Shareholders  (Item 10.B.6 of Form 20-F)

See “Item 10. Additional Information—B. Memorandum and Articles of Association—Differences in Corporate Law—Rights of Non-resident or Foreign Shareholders” of the Company’s Form 20-F.

Provisions Affecting Any Change of Control (Item 10.B.7 of Form 20-F)

See “Item 10. Additional Information—B. Memorandum and Articles of Association—Differences in Corporate Law—Anti-takeover Provisions in the By-laws” of the Company’s Form 20-F.

Ownership Threshold (Item 10.B.8 of Form 20-F)

See “Item 10. Additional Information—B. Memorandum and Articles of Association—Ownership Threshold” of the Company’s Form 20-F.

Differences Between the Law of Different Jurisdictions (Item 10.B.9 of Form 20-F)

See “Item 10. Additional Information—B. Memorandum and Articles of Association—Differences in Corporate Law” of the Company’s Form 20-F.

Changes in Capital (Item 10.B.10 of Form 20-F)

See “Item 10. Additional Information—B. Memorandum and Articles of Association—Changes in Capital” of the Company’s Form 20-F.

Series B Preferred Shares

The Series B Preferred Shares rank senior to the Company’s common shares, series A junior participating preferred shares, par value $0.001 per share, and series C junior participating preferred shares, par value $0.001 per share, and junior to all series or any other class of the Company’s preferred shares, except to the extent that any such other series or class specifically provides that it will rank on a parity with or junior to the Series B Preferred Shares.

With respect to the rights of holders of the Company’s series B preferred Shares, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Series B Preferred Shares” of the Company’s Form 20-F.

Debt Securities (Item 12.A of Form 20-F)

Not applicable.

Warrants and Rights (Item 12.B of Form 20-F)

Not applicable.

Other Securities (Item 12.C of Form 20-F)

With respect to the preferred share purchase rights granted by the Company to each holder of the Company’s common shares, see (i) “Item 10. Additional Information—B. Memorandum and Articles of Association—Rights Agreement” of the Company’s Form 20-F and (ii) Form 8-A (file no. 001-32371) and

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Amendment No. 1 to Form 8-A (file no. 001-32371) filed by the Company with the SEC on February 22, 2019 and February 21, 2020, respectively, and any subsequent amendments to Form 8-A the Company may file from time to time.

American Depositary Shares (Item 12.D of Form 20-F)

Not applicable.

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EX-4.21

Exhibit 4.21

SHAREHOLDERS’ AGREEMENT

This Shareholders’ Agreement (this “Agreement”) is made and entered into by and among the following parties on December 4, 2020 (the “Execution Date”):

1. Sinovac Life Sciences Co., Ltd. (the “Company”), a limited liability company validly incorporated and duly existing under the PRC laws with its registered address at Building 1, No. 21 Tianfu Street, Zhongguancun Science and Technology Park, Daxing Biological Pharmaceutical Industry Base, Daxing District, Beijing;

2. Sinovac Biotech (Hong Kong) Limited (“Sinovac HK”), a limited liability company registered in Hong Kong, the PRC, with its registered address at FLAT/RM 1906 19/F LUCKY COMM BLDG 103 DES VOEUX ROAD WEST HK;

3. Keding Investment (Hong Kong) Limited (“Keding Investment”), a limited liability company registered in Hong Kong, the PRC, with its registered address at Suite 3101 Everbright CTR 108, Gloucester RD Wanchai, Hong Kong;

4. VIVO CAPITAL FUND IX, L.P. (“Vivo”), a limited partnership incorporated under the laws of the State of Delaware, USA, with its registered address at 192 Lytton Ave., Palo Alto, CA 94301, USA;

5. Prime Success, L.P. (“Advantech”), an exempted limited partnership incorporated under the laws of the Cayman Islands, with its registered address at Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands (with respect to their convertible loan investments, Advantech and Vivo are referred to individually as “Series A Investor”, and collectively, the “Series A Investors”);

6. *** (“***”), a permanent resident of Hong Kong, with ID number being                     , address at                                                       ; and

7. Talent Forward Limited (“Talent”), a limited liability company incorporated under the laws of Hong Kong, China, with its registered address at Room 4109, 41/F, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong (*** and Talent are referred to individually as the “Series B Investor”, and collectively, the “Series B Investors”. “Series B Investors” and “Series A Investors” are collectively referred to as the “Investors”).

The above parties are referred to individually as a “Party”, and collectively the “Parties”.

For the purpose of this Agreement, “PRC” does not include Hong Kong Special Administrative Region (“Hong Kong”), Macao Special Administrative Region and the Taiwan Region.

For purposes of this Agreement, “PRC Law” means any current effective laws, administrative regulations, rules, provisions and policies of the PRC, and any regulations, decisions and policies that are promulgated by the local government or local governmental authorities of the PRC.

WHEREAS :

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1. The Company entered into a Loan Agreement with Advantech and Vivo, respectively, on May 18, 2020, pursuant to which Advantech provided a convertible loan in the aggregate principal amount of USD7,500,000 (the “Advantech Convertible Loan”) to the Company and Vivo provided a convertible loan in the aggregate principal amount of USD7,500,000 (the “Vivo Convertible Loan”) to the Company.

2. Pursuant to the Investment Agreement (the “Investment Agreement”) entered into by and among the Series A Investors, the Series B Investors, Sinovac HK, Keding Investment and the Company on December 4, 2020, the Series A Investors acknowledge and agree that the principal of the Advantech Convertible Loan and the Vivo Convertible Loan shall be converted into the Company’s newly increased registered capital of USD5,141,120.86 in accordance with the Investment Agreement; and the Series B Investors agree to subscribe for the Company’s newly increased registered capital of USD6,230,925.05 at the purchase price of USD527,000,000.00 in accordance with the Investment Agreement. After the completion of the Capital Increase Transaction (as defined below), the registered capital of the Company will increase to USD40,513,166.77 (the newly increased registered capital subscribed by the Investors represents 28.070% of equity interest of the Company), where: (1) Advantech agrees to subscribe for the Company’s newly increased registered capital of USD2,570,560.43, which represents 6.345% of the total equity interests of the Company upon the completion of the Capital Increase Transaction (as defined below), at the purchase price of USD7,500,000.00 in accordance with the Investment Agreement; (2) Vivo agrees to subscribe for the Company’s newly increased registered capital of USD2,570,560.43, which represents 6.345% of the total equity interests of the Company upon the completion of the Capital Increase Transaction (as defined below), at the purchase price of USD7,500,000.00 in accordance with the Investment Agreement; (3) *** agrees to subscribe for the Company’s newly increased registered capital of USD141,796.08, which represents 0.350% of the total equity interests of the Company upon the completion of the Capital Increase Transaction (as defined below), at the purchase price of USD12,000,000.00 in accordance with the Investment Agreement; and (4) Talent agrees to subscribe for the Company’s newly increased registered capital of USD6,089,128.97, which represents 15.030% of the total equity interests of the Company upon the completion of the Capital Increase Transaction (as defined below), at the purchase price of USD515,000,000.00 in accordance with the Investment Agreement. The foregoing transactions set forth in (1) - (4) above are referred to as, collectively, the “Capital Increase Transaction”. After the completion of the Capital Increase Transaction, Sinovac HK will hold 59.240% of the equity interests of the Company, and Keding Investment will hold 12.690% of the equity interests of the Company.

3. Upon the completion of the Capital Increase Transaction, the registered capital subscribed by each shareholder of the Company (including specific amount, shareholding ratio and class of shares) and their corresponding shareholding ratio are set forth in Exhibit I hereto. This Agreement, the Investment Agreement and the Articles of Association of Sinovac Life Sciences Co., Ltd. (the “Articles of Association”) executed by the Parties for the purpose of the Capital Increase Transaction on the date hereof are collectively referred to as the “Transaction Documents”.

4. The Parties intend to set forth, among other things, the corporate governance of the

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Company and the rights and obligations of each Party after the completion of the Capital Increase Transaction in this Agreement.

NOW, THEREFORE, on the basis of equality and mutual benefits, the Parties have reached the following agreements with respect to the Capital Increase Transaction:

1. CORPORATE GOVERNANCE

1.1 Board of shareholders

After the completion of the Capital Increase Transaction, the board of shareholders of the Company shall conform to the following provisions:

1.1.1 The board of shareholders shall be composed of all shareholders, which will act as the highest authority of the Company and exercise the following rights:

(1) approval of operation plan and investment proposal of the Company;

(2) approval of the appointment and replacement of directors and supervisors who are not acted by representatives of employees, and the remuneration of directors and supervisors;

(3) approval of reports of the board of directors;

(4) approval of reports of supervisors;

(5) approval of annual budget plan and final settlement of account plan of the Company;

(6) approval of profit distribution plan and loss recovery plan of the Company;

(7) approval of increase or reduction of the registered capital of the Company, including increase of the registered capital of the Company for the purpose of implementing the employee equity incentive plan;

(8) approval of issuing bonds by the Company;

(9) approval of merger or spin-off of the Company;

(10) approval of dissolution, liquidation or change of the legal form of the Company;

(11) any amendment to the articles of association of the Company;

(12) any provision of guarantee to any shareholder, affiliate, actual controller of the Company, or the actual controller of the shareholder of the Company;

(13) approval of the listing plan;

(14) approval of any equity financing plan of the Company;

(15) approval of any transaction between the Company and Sinovac HK (or its affiliates) which enables Sinovac HK (or its affiliates) to achieve a gross profit rate higher than 30%;

(16) Approval of any transaction between the Company as one party, and any shareholder of the Company (other than Sinovac HK), any director or any entity controlled by such a director, any senior management officer of the Company or any entity controlled by such a senior management officer, as the other party, the amount of which exceeds RMB500,000 for a single transaction or RMB1 million in the aggregate for

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all such transactions during any single financial year;

(17) approval of any transfer or license of any patent or know-how developed or owned by the Company, or any strain, bacterial seed, cell or other raw material for the purpose of research and development of vaccine of which the Company holds the intellectual property rights, to any third parties;

(18) approval of any transfer, sale or pledge of any assets of the Company, with an amount in excess of RMB50 million or 3% of the total assets of the Company in the most recent financial year;

(19) approval of any change in the principal business of the Company or entering into new business that is completely outside the scope of the principal business of the Company;

(20) approval of other duties and powers (if any) of the board of shareholders pursuant to laws and regulations and the Articles of Association.

The matters set forth in (2), (7), (8), (11), (14) and (18) above shall be approved by shareholders having more than two thirds (2/3) of voting rights of all shareholders. The matters set forth in (9), (10), (13), (17) and (19) above shall be approved by all shareholders. If any matter set forth in (12), (15) or (16) above is submitted for shareholders’ approval, the shareholder that meets any of the following conditions shall not be entitled to vote, and such matter shall be approved by the shareholders representing more than 50% of the voting rights of remaining shareholders present at the meeting: (1) the Company provides guarantee to such shareholder, (2) the shareholder is an affiliate of the party to which the Company provides guarantee, (3) the shareholder is the counterparty to the transaction with the Company or the shareholder of the counterparty to the transaction with the Company, and (4) the shareholder is an affiliate of the counterparty to the transaction with the Company. Any other matter shall be approved by the shareholders having the majority of voting rights of all shareholders.

1.1.2 The shareholders shall exercise their voting rights at shareholders’ meetings in proportion to their respective capital contribution percentage.

1.1.3 The board of shareholders holds regular shareholders’ meetings. Before the regular shareholders’ meeting, the chairman of the board of directors shall notify all shareholders twenty (20) days before the date of meeting of the date, venue and agenda of the meeting. An interim meeting shall be convened if it is proposed by shareholders having more than 10% of the voting rights of all shareholders, or by at more than third (1/3) of the directors or by supervisors. In such case, the chairman of the board of directors shall notify all shareholders at least fifteen (15) days before the date of meeting. In the case of emergency, with the consent of shareholders having the majority of voting rights of all shareholders, the chairman of the board of directors may notify

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all shareholders three (3) days before the date of meeting. A resolution may be adopted in writing without convening a shareholders’ meeting if it is unanimously approved by the shareholders in writing, and the resolutions shall be executed and affixed bythe shareholders.

1.1.4 The shareholders’ meeting shall be convened by the board of directors and presided over by the chairman of the board of directors. If the chairman of the board of directors is unable or fails to preside over the meeting, the director nominated by the majority of the directors shall preside over the shareholders’ meetings. Where the board of directors is unable or fails to convene the shareholders’ meeting, the meeting shall be convened and presided over by the supervisors. Where the supervisors fail to convene and preside over the meeting, the shareholders having at least one tenth (1/10) the voting rights of all shareholders may convene and preside over the meeting.

1.1.5 Parties may participate in the shareholders’ meetings via telephone, video conference or by any other means of synchronous communication, provided that all attendees of the meeting can hear each other at the meeting.

1.1.6 Each shareholder must provide identity materials for attending the shareholders’ meeting. If the shareholder appoints a proxy to attend the meeting at scene, the proxy must provide a power of attorney in hard copy to the Company when he/she arrives at the scene; if the shareholder appoints a proxy to attend the meeting via telephone, video conference or by any other means of synchronous communication, the proxy must provide a power of attorney in hard copy or via email before the meeting is held. Shareholder who fails to provide such identity materials shall be deemed to be absent from the meeting.

1.2 Board of directors

After the completion of the Capital Increase Transaction, the board of directors of the Company shall conform to the following provisions:

1.2.1 The board of directors of the Company shall consist of five (5) directors, who shall be elected in the following manner: (i) Talent shall have the right to nominate one (1) director (the “Talent Director”); (ii) Sinovac HK shall have the right to nominate three (3) directors (the “Sinovac Director”); and (iii) Keding Investment shall have the right to nominate one (1) director (the “Keding Director”). The nominees shall be appointed as directors of the Company upon approval by the shareholders’ meeting. The board of directors shall have a chairman who shall be served by one of the Sinovac Director. The directors shall serve a term of office of three (3) years, and may serve consecutive terms if reappointed upon expiration of term of office. Where upon expiry of the term of office, there is no new director elected

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or a director resigns during his/her term of office and thereby causes the quorum of board of directors not formed, the departing director shall continue to perform his/her duties as a director pursuant to the provisions of laws and administrative regulations and theArticles of Associationuntila new director is elected and takes office. Where a director resigns during his/her term of office while the quorum of the board of directors is still formed, the resigning director shall cease to perform his/her duties as a director. In such case, relevant shareholders shall nominate a new director forshareholders’ meetingto appoint, anda new board of directorsshall be constituted by remaining directors and shall continue to perform the duties of the board of directors. If any seat of the board of directors becomes vacant, the relevant shareholders shall nominate a new director in a timely manner, and the board of shareholders shall promptly convene an interim shareholders’ meeting to elect a new director.

Notwithstanding the foregoing, if any shareholder’s shareholding ratio in the Company falls below 10% (exclusive), such shareholder shall no longer have the right (if any) to nominate a director and the director that it has nominated shall not server as the director. In such case, shareholders having more than two thirds (2/3) of the voting rights of the board of shareholders shall pass a written resolution regarding the composition of the board of directors. Where no such written resolution is passed but the remaining directors can still form a quorum, the remaining directors shall form the new board to exercise relevant functions until a written resolution is passed.

1.2.2 The board of directors shall exercise the following rights:

(1) convene the meetings of shareholders and report to shareholders;

(2) any implementation of shareholders’ resolutions;

(3) any approval of operation plan and investment proposal of the Company;

(4) any preparation of annual budget plan and final settlement of account plan of the Company;

(5) any preparation of profit distribution plan and loss recovery plan of the Company;

(6) any preparation of plan of increase or reduction of the registered capital of the Company and issuing bonds by the Company;

(7) preparation of the scheme of any merger, spin-off or any change of the legal form of the Company and liquidation of the Company;

(8) approval of the composition of the internal management organization and the appointment and removal of general manager, vice general manager and chief financial officer;

(9) approval of the remuneration of general manager, vice general manager and chief financial officer;

(10) formation of basic management plans of the Company;

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(11) formulation of and amendment to employee incentive plan (including amendments to any of its terms and conditions);

(12) approval of any transfer, sale or pledge of any assets of the Company, with an amount in excess of RMB10 million or 0.1% of the total assets of the Company in the most recent financial year;

(13) approval of any borrowing or assumption of liability by the Company in an amount exceeding RMB10 million in a single transaction or exceeding RMB20 million in the aggregate for all such transactions during any single financial year;

(14) approval of any lending by the Company to any third parties in an amount exceeding RMB10 million in a single transaction or exceeding RMB10 million in the aggregate for all such transactions during any single financial year;

(15) approval of any investment in entity or individual in an amount exceeding RMB10 million or any provision of any guarantee to any entity or individual in an amount exceeding RMB10 million;

(16) other duties and powers (if any) of the board of directors pursuant to laws and regulations and the Articles of Association.

1.2.3 The board of directors shall convene at least one (1) meeting each year. The quorum for a meeting of the board of directors shall be at least three (3) directors.

1.2.4 Each director shall have one vote for the resolutions of the board of directors.

1.2.5 The resolutions of the board of directors shall be approved by more than half of the directors attending the meeting. Furthermore, an affirmative vote of Keding Director is required if the proposal submitted for voting concerns the matter set forth in Section 1.2.2 (11).

1.2.6 The meeting of the board of directors shall be convened and presided over by the chairman of the board of directors. Where the chairman is unable or fails to convene and preside over the meeting, a director appointed by more than half of the board of directors shall convene and preside over the meeting. The director so appointed to convene and preside over the meeting of the board of directors shall give a written notice to all directors at least ten (10) business days in advance before the date of meeting. The notice period shall be at least three (3) days if a meeting of the board of directors is required to be convened in the case of emergency.

1.2.7 Directors may attend a meeting of the board of directors at scene or via telephone or video conference. A director attending the meeting shall be deemed to be present if all attendees can hear each other at the meeting.

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1.2.8 Each director shall have the right to appoint a proxy to attend the meeting of the board of directors, and the proxy so appointed shall have the right to attend the meeting of the board of directors and cast vote on the proposal submitted for voting on behalf of the appointing director.

1.3 Supervisor

The Company does not have a board of supervisors, and shall have one (1) supervisor who shall be nominated by Sinovac HK and appointed by the board of shareholders. The supervisor shall serve for a term of three (3) years and may serve consecutive terms if reappointed.

2. SPECIAL RIGHTS OF SHAREHOLDERS

2.1 Pre-emptive Right to Subscribe for Increased Capital

2.1.1 If the Company intends to increase its registered capital prior to the initial public offering of the Company or its affiliates (whichever is earlier), Sinovac HK, Keding Investment and the Series B Investors (the “Pre-emptive Rights Holders”) shall have the right (but not the obligation) to subscribe for the increased registered capital in accordance with Sections 2.1.2 to 2.1.4 (the “Pre-emptive Right”). Each of other shareholders hereby agrees to waive their respective Pre-emptive Right with respect to such increased registered capital.

2.1.2 With respect to each Series B Investor, subject to Section 2.1.3, the maximum amount of the increased registered capital that it may subscribe for by exercising the Pre-emptive Right shall be equal to the product of (i) its then shareholding percentage in the Company, multiplied by (ii) the total amount of the increased registered capital.With respect to Sinovac HK and Keding Investment, the maximum amount of increased registered capital that each of them may subscribe for by exercising the Pre-emptive Right is equivalent to the product of (i) relative shareholding ratio between Sinovac HK and Keding Investment, multiplied by (ii) remaining of the total amount of increased registered capital minus the maximum amount of increased registered capital that the Series B Investors may subscribe for by exercising the Pre-emptive Right.

2.1.3 If the Company decides to increase its registered capital, it shall serve a written notice to all Pre-emptive Rights Holders at least twenty (20) business days in advance, stating the terms and conditions of the capital increase (including the amount of the increased registered capital, shareholders’ shareholding ratio and conditions for subscription), and deliver an offer to the Pre-emptive Rights Holders to subscribe for the increased registered capital according to the said conditions and price (the “Subscription Offer”). The Pre-emptive Rights Holders shall notify the Company in writing of its decision to exercise the Pre-

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emptive Right and the amount of increased registered capital it intends to subscribe for(if any) within ten (10) business days after the receipt of the Subscription Offer (the “Subscription Reply Period”). If any Pre-emptive Rights Holder fails to replywithin the Subscription Reply Period, such Pre-emptive Right Holder shall be deemed to have waived its Pre-emptive Right. In such case, the Company shall determine the amount of capital contribution that each Pre-emptive Rights Holder who elects to exercise the Pre-emptive Right pursuant to Section 2.1.2 is entitled to purchase. However, if, after any Series B Investor exercises the Pre-emptive Right, the shareholdingratio jointly held by all Series B Investors and their affiliates, directly or indirectly, in the Companyis higher than the Specific Shareholding Limit (as defined below), the Company shall have the right to reduce the registered capital such Series B Investor is entitled to purchase accordingly, to ensure that the shareholding jointly held by all Series B Investors and their affiliates, directly or indirectly, in the Company is lower than the Specific Shareholding Limit (as defined below). The “Specific Shareholding Limit” shall mean the higher of: (1) theshareholding ratio of Keding Investmentin the Company after the completion of the Capital Increase Transaction; (2) the shareholding ratio of Keding Investment in the Companyon the closing date of the Capital Increase Transaction (i.e. the Closing Date); and (3) the shareholding ratio of Keding Investment in the Company before such equity transfer or private capital reduction (if following the date hereof the shareholding ratio of Keding Investment in the Company decreases due to equity transfer or the private capital reduction). Each of the Series B Investors shall waive, and hereby agrees to waive, the Pre-emptive Rightto purchase the portion of the increased registered capital so reduced. For the avoidance of doubt, under this Agreement, each Series B Investor shall be deemed as an affiliate of other Series B Investors.

2.1.4 Each Investor that subscribes for the increased registered capital or each Pre-emptive Rights Holder that exercises the Pre-emptive Right shall pay the relevant purchase price within sixty (60) business days upon expiration of the Subscription Reply Period. If any Investor who subscribes for the increased registered capital or any Pre-emptive Rights Holder who exercises the Pre-emptive Right fails to pay the relevant purchase price within the prescribed period, the Pre-emptive Rights Holders may exercise the Pre-emptive Right with respect to the unpaid portion of the increased registered capital. In such case, the Company and the Pre-emptive Rights Holders shall determine whether the Pre-emptive Rights Holders will exercise the Pre-emptive Right to subscribe for the unpaid portion of increased registered capital in accordance with Section 2.1.

2.1.5 None of the Pre-emptive Rights Holders shall have the Pre-emptive Right under Section 2.1 with respect to the increased registered capital under any of the following circumstances, and

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each shareholder agrees to waive any statutory Pre-emptive Rightit may be entitled to in such circumstances:

(1) any increase of registered capital in order to implement any employee equity incentive plan adopted by the board of directors;

(2) Any increase of registered capital in order to acquire another entity or business or merger with another entity, upon approval by the board of shareholders, including, without limitation, any shareholder or a third party subscribing for the increased registered capital of the Company in non-currency form in connection with such acquisition or merger;

(3) Any increase of registered capital by conversion of profits into registered capital or conversion of capital reserves into registered capital, etc. upon approval of the board of shareholders; or

(4) Any issue of shares or dividends upon reorganizing the Company into a company limited by shares, issue of shares due to shares conversion upon splitting of the Company or other similar issue of securities.

2.2 Right of First Refusal

2.2.1 Within one (1) year (inclusive) from the Closing Date, if any shareholder of the Company (the “Transferor”) proposes to directly or indirectly sell or otherwise dispose of all or part of its equity interest of the Company (the “Proposed Transferred Shares”) to any entity or individual (including other shareholders of the Company) (the “Transferee”), the Transferor shall obtain unanimous written consent of other shareholders. Without the unanimous written consent of other shareholders, the Transferor shall not transfer its equity interest of the Company to any entity or individual. For the avoidance of doubt, the shareholders disapproving the equity transfer shall not be obliged to purchase such Proposed Transferred Shares.

2.2.2 After one (1) year from the Closing Date, if any shareholder of the Company (the “Transferor”) proposes to directly or indirectly sell or otherwise dispose of all or part of its equity interest in the Company (the “Proposed Transferred Shares”) to any entity or individual (including other shareholders of the Company) (the “Transferee”), the non-selling shareholders shall have the pre-emptive right (but not the obligation) to purchase the Proposed Transferred Shares on the same terms and conditions that the Transferor offers to the Transferee in accordance with Sections 2.2.3 to 2.2.11 hereof (the “Right of First Refusal”).

2.2.3 The specific amount of Proposed Transferred Shares which each shareholder exercising the Right of First Refusal is entitled to purchase shall be proportionate equity interests (based on the total amount of equity interests of the Company when exercising the Right of First Refusal).

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2.2.4 Within ten (10) business days after the Transferee gives an binding offer stating its intention to purchase the Proposed Transferred Shares, the Transferor shall notify each of the remaining shareholders in writing (the “First Transfer Notice”), stating: (a) its intention of transfer of the Proposed Transferred Shares; (b) the share of equity it intends to transfer; (c) the terms and conditions of the transfer; and (d) the basic information of the Transferee.

2.2.5 Within fifteen (15) days (the “First Refusal Period”) of their receipt of the First Transfer Notice, other shareholders shall notify the Transferor in writing whether they will exercise the Right of First Refusal and the amount of equity interests they propose to subscribe for. If they fail to give such notice within the prescribed period, they shall be deemed to have agreed to such transfer and waived their Right of First Refusal with respect to the Proposed Transferred Shares.

2.2.6 If the Proposed Transferred Shares that the Shareholders exercise their Right of First Refusal to purchase are less than all Proposed Transferred Shares that Transferor proposes to sell upon expiration of First Refusal Period, any Shareholder that exercises its Right of First Refusal to the fullest extent during the First Refusal Period shall have the Right of First Refusal to purchase all or part of the remaining Proposed Transferred Shares. The Transferor shall deliver a written notice (the “Second Transfer Notice”) to each shareholder exercising its Right of First Refusal to the fullest extent during the First Refusal Period within three (3) business days after the expiration of the First Refusal Period. The Second Transfer Notice shall state the amount of the remaining Proposed Transferred Shares.

2.2.7 Any Shareholder who replies to exercise its Right of First Refusal to the fullest extent during the First Refusal Period shall notify the Transferor in writing within five (5) business days after the receipt of the Second Transfer Notice (the “Second Refusal Period”) of its decision to exercise the Right of First Refusal to purchase the remaining Proposed Transferred Shares and the amount of the Proposed Transferred Shares it proposes to purchase. Any shareholder who fails to provide such notice within the prescribed period shall be deemed to waive its Right of First Refusal with respect to the remaining Proposed Transferred Shares.

2.2.8 If there are two or more shareholders exercising the Right of First Refusal in accordance with Section 2.2.7 within the Second Refusal Period, and the amount of Proposed Transferred Shares they propose to purchase is greater than the total amount of the remaining Proposed Transferred Shares, then the specific amount of Proposed Transferred Shares that each shareholder is entitled to purchase shall be the lower of: (1) the amount of remaining

11

Proposed Transferred Shares itproposes to purchase; or (2) the product ofremaining Proposed Transferred Shares multiplied bythe relative shareholding ratioamong such shareholders in the Company then.

2.2.9 If there is still remaining Proposed Transferred Shares upon expiration of the Second Refusal Period, the relevant parties shall go through procedures set forth above to distribute the remaining Proposed Transferred Shares. If there is still remaining Proposed Transferred Shares upon expiration of sixty (60) business days after the First Transfer Notice is given, other shareholders shall be deemed to have waived their Right of First Refusal with respect to the remaining Proposed Transferred Shares.

2.2.10 Notwithstanding the foregoing, if an Investor exercises the Right of First Refusal and the shareholding ratio held by such Investor and its affiliates, directly or indirectly, in the Company is higher than the Specific Shareholding Limit (as defined below), the amount of the Proposed Transferred Shares that such Investor may purchase by exercising the Right of First Refusal shall be reduced accordingly so as to ensure the shareholding ratio held by such Investor and its affiliates, directly or indirectly, is not higher than the Specific Shareholding Limit (as defined below). The “Specific Shareholding Limit” shall mean the higher of: (1) the shareholding ratio of Keding Investment in the Company after the completion of the Capital Increase Transaction; (2) the shareholding ratio of Keding Investment in the Company on the closing date of the Capital Increase Transaction (i.e. the Closing Date); and (3) the shareholding ratio of Keding Investment in the Company before such equity transfer or private capital reduction (if following the date hereof the shareholding ratio of Keding Investment in the Company decreases due to any equity transfer or private capital reduction). Such Investor shall waive, and hereby agree to waive, the Right of First Refusal with respect to the reduced portion of the Proposed Transferred Shares.

2.2.11 If other shareholders of the Company exercise the Right of First Refusal to purchase the Proposed Transferred Shares, the transfer of the Proposed Transferred Shares shall be completed within forty-five (45) business days after the expiration of the Frist Reply Period or the Second Refusal Period (if any) (including execution of relevant share transfer agreement and other transaction documents and completion of filing such equity transfer with the competent administrative authority for market regulation). If the transfer of the Proposed Transferred Shares fails to be completed during such period, the procedures set out in this section shall be undertaken again to determine whether other shareholders may exercise the Right of First Refusal with respect to the Proposed Transferred Shares.

2.2.12 For the avoidance of doubt, the following transfer is not subject to the Right of First Refusal: (1) any transfer under employee equity

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incentive plan approved by the board of directors, (2) any transfer from any Series A Investor to other affiliated fund which under the common control with such Series A Investor or an entity that is 100% owned by such fund; (3) any transfer from any Series B investor to Sino Biopharmaceutical Limited (stock code: 01177), a listing company at Hong Kong Exchanges and Clearing Limited or the wholly owned, directly or indirectly, subsidiaries of Sino Biopharmaceutical Limited, on the condition that at the time of transfer, such the actual controller of Sino Biopharmaceutical Limited or the relatives of such actual controller actually controls such Series B Investor, (4) any transfer between the Series B investors (on the condition that at the time of transfer, the actual controller of the Series B investors are the same or relatives) or any transfer from any Series B investor to its own wholly owned subsidiaries; and (5) any transfer of equity interestsof the Company held by Keding Investment or Sinovac HK to their respective wholly-owned subsidiaries.

2.3 Co-Sale Right

2.3.1 Subject to Section 2.4, if any Investor does not exercise its Right of First Refusal when Keding Investment or Sinovac HK (the “Restricted Transferor”) transfers their respective equity interests of the Company in accordance with this Agreement, such Investor (the “Co-Sale Investor”) shall have the right (but no obligation) to sell its equity interests of the Company to the Transferee together with the Restricted Transferor in the proportion set forth in Section 2.3.2 and at the same price and upon the same terms and conditions offered to the Transferee (the “Co-Sale Right”). The Co-Sale Investor shall, within fifteen (15) business days after receipt of the First Transfer Notice as set forth in Section 2.2.4, notify the Restricted Transferor in writing whether it will exercise its Co-Sale Right and the amount of equity interests it intends to sell to the Transferee (if any).

2.3.2 The shareholding ratio that a Co-Sale Investor may exercise the Co-Sale Right to sell shall be the product of the amount of the equity interests that the Restricted Transferor proposes to transfer multiplied by the Co-Sale Percentage calculated as follows: Co-Sale Percentage = Amount of equity interests of the Company held by the Co-Sale Investors ÷ (the amount of equity interests of the Company held by all Co-Sale Investors + the amount of the equity interests of the Company held by the Restricted Transferor).

2.3.3 If the Co-Sale Investor exercises the Co-Sale Right in accordance with this Section 2.3.1, the Restricted Transferor shall be obligated to cause the Transferee to purchase the equity interests that the Co-Sale Investor proposes to sell at the same price and upon the same terms and conditions that the Restricted Transferor offers to the Transferee. If the Transferee refuses in any way to purchase equity interests that the Co-Sale Investor proposes to sell by exercising the Co-Sale Right in accordance with this

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Section 2.3.1, the Restricted Transferor shall purchase such equity intereststhat the Co-Sale Investorproposes to sell upon the terms and conditions set forth in the Transfer Notice. Otherwise, the Restricted Transferor shall not sell any equity interests to the Transferee.

2.4 Other Provisions on Equity Transfer

2.4.1 Within one (1) year after the execution of this Agreement, Sinovac HK and/or Keding Investment shall not transfer, pledge or otherwise dispose of their equity interests in the Company, whether directly or indirectly, without the consent of the Investors. Any equity transfer, pledge, capital increase, capital decrease and other actions conducted in violation of this section shall be null and void. Furthermore, any transferee that acquires Company’s equity interest through transaction conducted in violation of this section shall not be deemed as the shareholder of the Company and therefore shall not enjoy any right of the shareholder of the Company.

2.4.2 Unless otherwise agreed by the Parties in writing, the equity transfer set forth under Section 2.2 and Section 2.3 shall meet the following conditions; otherwise the equity transfer shall be null and void:

(1) The Transferee shall execute a Joinder Agreement in the form set forth in Exhibit II, confirming in writing its intention to be bound by the terms of this Agreement and the Articles of Association, and to assume the rights and obligations of the Transferor hereunder and thereunder; and

(2) The Company shall complete the registration with the competent market supervision and management authority in accordance with applicable laws to reflect such equity transfer.

2.4.3 No shareholder may transfer, directly or indirectly, its equity or interest in the Company to any competitor of the Company or any competitor’s affiliates without the prior written resolution of the board of shareholders of the Company. A competitor of the Company means any company or entity that is engaged in research and development, production or sale of vaccines for human use and/or technical services relating to research and development or production of vaccines, except for transfer to Sinovac Biotech Ltd., a limited liability company established and existing in Antigua and Barbuda, and its affiliates.

2.5 Information Rights

As long as any Investor holds any equity interest in the Company, the Company shall submit to such Investor the following documents in connection with the Company and its controlled affiliates in accordance with the following provisions:

(1) Within one hundred and twenty (120) days after the end of each fiscal year, the

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audited consolidated annual financial statements issued in accordance with the PRC GAAP;

(2) Within forty-five (45) days after the end of each fiscal year, the unaudited consolidated financial statements for such fiscal year;

(3) Within forty-five (45) days after the end of each fiscal quarter, the unaudited consolidated quarterly financial statements prepared in accordance with the PRC GAAP;

(4) Within thirty (30) days after the end of each fiscal year, the business plan, annual budget and forecast financial statements of the next fiscal year approved by the board of shareholder of the Company;

(5) Such other information, statistical data, trading and financial data as the Investors may request and are entitled to knowledge as shareholders of the Company pursuant to laws and regulations.

(6) If the Company becomes aware of any information that may have a material adverse effect on the business, operation, finance or development prospects of the Company, the Company shall notify the Investors in writing within seven (7) days after becoming aware of such information.

If an Investor gives a written notice to the Company ten (10) business days in advance to state the purpose, without prejudice to the normal operation of the Company, each Investor shall be permitted to (1) inspect and reproduce the Articles of Association, minutes of the shareholders’ meeting, resolutions of the board of directors, resolutions of the board of supervisors and financial and accounting reports; and (2) inspect the accounting books of the Company, during business hours of the Company; provided that, if the Company has reasonable grounds to believe that the inspection of the accounting books by the shareholders is for any improper purpose and may damage the legitimate interests of the Company, the Company may refuse such inspection and shall reply to the shareholders in writing and state the reasons within fifteen (15) days after the shareholders make a written request.

2.6 Due Diligence and Non-Competition

2.6.1 Keding Investment will cause the senior executives and key technical personnel engaged by the Company as listed in Exhibit III (collectively, the “Key Personnel”) to use their best efforts to promote the development and benefit of the Company and shall devote all of their working time and energy to the operation of the Company, unless such personnel serve or provide services to Sinovac Biotech Ltd. and/or its affiliates, as long as there is no competition between Sinovac Biotech Ltd. and/or its affiliates and the Company regarding the COVID-19 vaccines.

2.6.2 Keding Investment will cause the Key Personnel to comply with the following provisions: during the period in which the Key Personnel hold any type of equity interest (including equity option) in the Company, and/or during the period in which the Key Personnel hold any position in the Company and within two (2) years from the date on which such shareholder ceases to hold any equity interest in the Company (including equity option) or from the date on which such shareholder ceases to hold any position in the Company (“Non-competition Period”) (whichever is longer), such Key Personnel shall not, directly or indirectly, (1) own, manage, control or invest in any business that is the same as, similar to or in competition with the business being carried out or specifically planned

15

to be carried out by the Company (“Competing Business”), (2) participate in the ownership, management, control or investment in the Competing Business or directly or indirectly have any interest in the Competing Business (except for obtaining no more than 1% of shares through public securities market), (3) serve as the director, officer, consultant, agent or employee of a company or organization engaged in the Competing Business or provide services or support in any other form or name to any company or organization engaged in the Competing Business, (4) provide funds, customer information or any other form of assistance or support to a company or organization engaged in the Competing Business, (5) deal or attempt to deal with a client of the Company in any manner regardless of whether the client of the Company become a client hereof before or after the Closing Date, (6) divulge, disclose, use or allow a third party to use the intellectual property or confidential information of the Company in any manner, (7) employ or solicit any employee or individual of the Company to engage in the Competing Business within twenty-four (24) months after the termination of his/her employment relationship or service relationship with the Company, (8) induce, persuade or attempt to influence any employee or individual of the Company to terminate his/her employment relationship or service relationship with the Company, or (9) permit, support or engage in any of the foregoing through others. Provided, however, that the foregoing undertakings in this Section ‎2.6.2 shall not apply to such person’s ownership of any interest in, its employment of or provision of services to, Sinovac Biotech Ltd. or its affiliates.

2.6.3 Keding Investment shall cause the Key Personnel of the Company to enter into a labor contract containing confidentiality and non-competition clauses with the Company or enter into a separate confidentiality agreement and non-competition agreement with the Company.

2.7 Termination of Special Rights of Shareholders

The Parties hereby acknowledge and agree that, unless otherwise agreed by the Parties in writing, for the purpose of the initial public offering of the Company or its affiliates, the Investors’ Pre-emptive Right, Shareholders’ Right of First Refusal, the Investors’ Co-Sale Right, the Shareholders’ information right and any other provisions that may constitute legal impediments to the initial public offering and listing of the Company or its affiliates or have any adverse effect on the listing process of the Company or its affiliates shall automatically become invalid as of the date on which the Company or its affiliates formally submits the listing application.

2.8Prohibition on Transactions or Cooperation

Without the prior written consent of the Series B Investors, the Company shall not enter into any transaction or cooperation with any of the following entities:

(1) Jiangsu Hengrui Pharmaceutical Co., Ltd., Jiangsu Haosen Pharmaceutical Group Co., Ltd., Shanghai Junshi Biological Pharmaceutical Technology Co., Ltd., Xinda Biopharmaceutical (Suzhou) Co., Ltd., Baiji Shenzhou Co., Ltd., Shiyao Holdings Group Co., Ltd. and pharmaceutical enterprises controlled or actually controlled by Fuxing International Co., Ltd. (including, without

16

limitation, Shanghai Fuxing Pharmaceutical (Group) Co., Ltd., Shanghai Fuhong Hanlin Biological Pharmaceutical Co., Ltd. and Jiangsu Wanbang Biological Pharmaceutical Group Co., Ltd.);

(2) any affiliates of aforementioned entities, and

(3) any company of which any entity listed in (1) and/or any entity listed in (2) holds, directly or indirectly, more than 30% of equity interest.

3. EFFECTIVENESS, SUPPLEMENT, AMENDMENT, VARIATION AND TERMINATION OF THIS AGREEMENT

3.1 This Agreement shall come into effect upon the execution by the Parties hereto.

3.2 This Agreement may be amended or modified by the Parties through consultation. Any amendment or modification shall be made in writing and become effective upon execution by the Parties hereto.

3.3 This Agreement may be terminated by the mutual written agreement of the Parties hereto.

4.LIABILITY FOR BREACH OF CONTRACT

4.1 If any Party hereto breaches or fails to fully perform its representations, warranties, obligations or responsibilities hereunder, it shall constitute a breach of contract and such Party shall assume the liabilities for breach of contract to other Parties.

4.2 If any Party hereto breaches any provisions of this Agreement, in addition to other rights available to other Parties hereunder, other Parties shall be entitled to request the breaching Party to actually and fully perform the obligations hereunder.

5.FORCE MAJEURE

5.1 If any Party fails to perform its obligations hereunder due to occurrence of earthquake, typhoon, flood, fire, pandemic or epidemic, military action, strike, riot, war or other unforeseeable event of force majeure beyond the reasonable control of such Party (each, a “Event of Force Majeure”), it shall immediately notify other Parties without any delay, and provide other Parties with detailed information and documentary evidence in respect of such event and explain the reason for its inability to perform or delay in performing all or part of its obligations hereunder. The Parties shall consult with each other to find a solution acceptable to the Parties and implement such solutions.

5.2 If an Event of Force Majeure occurs, the Party affected by such Event of Force Majeure shall not be responsible for any damage, increased costs or losses which other Parties may suffer as a result of such Party’s failure of or delay in performing its obligations hereunder caused by such Event of Force Majeure, and such failure or delay shall not be deemed as a breach of this Agreement. The Party claiming the occurrence of an Event of Force Majeure shall take appropriate actions to mitigate or remove the effects of the Event of Force Majeure and attempt to resume performance of the obligations delayed or prevented by the Event of Force Majeure within the shortest period.

5.3 If a Party or the Parties fails to perform all or part of its obligations under this

17

Agreement due to an Event of Force Majeure or the impact of an Event of Force Majeure for a continuous period of more than three (3) months, other Parties that are not affected by such Event of Force Majeure are entitled to terminate this Agreement and discharge from part of the obligations hereunder or delay the performance of this Agreement.

6.GOVERNING LAW AND DISPUTE RESOLUTION

6.1 The execution, validity, interpretation, implementation, amendment and termination of this Agreement, as well as dispute resolution relating to this Agreement, shall be governed by the PRC Law.

6.2 All disputes arising out of or in connection with this Agreement shall be settled by negotiation of the relevant parties. If the relevant parties fail to reach an agreement within thirty (30) days after the occurrence of such dispute, the dispute shall be settled at the Beijing Arbitration Commission (“BAC”) under its arbitration rules in force at the time of the initiation of the arbitration. The arbitration shall be conducted by three (3) arbitrators. One (1) arbitrator shall be appointed by the claimant, one (1) arbitrator shall be appointed by the respondent, and the third arbitrator shall be appointed by the above two arbitrators through consultation or by BAC. The seat of arbitration shall be Beijing. The arbitration proceedings shall be conducted in Chinese. The arbitration award shall be final and binding on the parties.

6.3 During the period of dispute resolution, the Parties shall continue their remaining rights and obligations under this Agreement.

7.NOTICES AND DELIVERY

7.1 All notices, requests and demands under this Agreement, other than routine communications under this Agreement, shall be in writing and shall be deemed to have been duly delivered when given, or when transmitted if sent by confirmed facsimile or electronic mail during regular business hours on a business day, and if sent after business hours on a business day or on a non-working day, the next business day, or one (1) working day after being given to an overnight courier with a reliable system for tracking delivery, or three (3) working days after the day of mailing, when mailed by mail, registered or certified mail, return receipt requested and postage prepaid.

7.2 For the purpose of delivering the notices, the contact details of each Party are set out as follows:

If to the Company:

Attention: Chief Legal Compliance Officer

Address: No. 39, Shangdi West Road, Haidian District, Beijing

Postal Code: 100085

Email: lad@sinovac.com

If to Sinovac HK:

Attention: General Manager

Address: No.15 Zhitong Road, Changping District, Beijing

Postal Code: 102200

Email: sinovac@sinovac.com

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If to Keding Investment:

Attention: Director

Address: SUITE 3101 EVERBRIGHT CTR 108 GLOUCESTER RD WANCHAI HONG KONG

Email: gmo@sinovac.com

If to Vivo:

Attention: General Counsel

Address: C/O Vivo Capital LLC, 192 Lytton Avenue, Palo Alto, CA 94301

Postal Code: CA 94301

Email: legal@vivocapital.com

If to Advantech:

Attention: Director

Address: Rooms 1702-03, 17/F, One Exchange Square, 8 Connaught Place, Central, Hong Kong

Email: legal@nhfund.com

If to ***:

Attention:

Address:  

Email:

If to Talent:

Attention: LI He

Address: 31/F, Block A, General International Centre, 3A Yard, Jian Guo Men Wai Avenue, Chaoyang District, Beijing, China

Email: lihe@cppharm.com

8.SPECIAL CONVENANTS

8.1 Each Investor hereby warrants, severally but not jointly, to the Company, Sinovac HK and Keding Investment that such Investor is not the affiliate of 1Globe and Beijing Beida Weiming Bioengineering Group Co., Ltd. (the affiliates of 1Globe include, without limitation, 1 Globe Capital LLC.), and there is no entrustment of shareholding or exercise of shareholders’ or directors’ voting rights, and no concerted action or similar arrangements with the aforementioned companies and their affiliates. If such Investor intends to become an affiliate of 1Globe or Beijing Beida Weiming Bioengineering Group Co., Ltd. in the future or enter into any entrustment of shareholding or exercise of shareholders’ or directors’ voting rights, concerted action or similar arrangements with the aforementioned companies and their affiliates (“Repurchase Trigger Event”), such Investor shall give a written notice to the Company and Sinovac HK sixty (60) Business Days in advance and disclose such specific arrangements. Sinovac HK shall be entitled to repurchase, or designate a third party to purchase, all or part of the equity interest held by such Investor in the Company within sixty (60) Business Days after the receipt of the aforementioned written disclosure or knowledge of the Repurchase Trigger Event (whichever is the later), and the repurchase price of the registered capital of such Investor shall be the lower of the amount of the original investment amount paid by such Investor at the time when it invests in the Company or the fair market value. Each of the remaining shareholders hereby agrees to waive their Right of First

19

Refusal. From the date of disclosure in writing from the Investor or the date of occurrence of a Repurchase Trigger Event (whichever is earlier) to the date on which Sinovac HK completes its repurchase of the equity interest held by such Investor in the Company, such Investor shall have no shareholder’s rights (including, without limitation, the Pre-emptive Right, the Right of First Refusal, the information rights, the right to nominate directors and shareholders’ voting rights hereunder). The powers and authorities of its nominateddirectors (including voting rights on the board of directors) shall be irrevocably entrusted to Sinovac HK’s directors to exercise during their term of office. If such Investor breaches any of the aforementioned covenants or fails to make truthful and timely disclosure, such Investor shall unconditionally pay liquidated damages to Sinovac HK in the amount of the higher of the following: (a) 50% of the fair market value of the equity interests of the Company then held by the breaching Investor; and (b) the aforementioned repurchase price, and the payment of such liquidated damages by the breaching Investor shall not affect the legal remedies that Sinovac HK is entitled to if it continues to exercise its repurchase right.

8.2 For the avoidance of doubt, in relation to any entity (the “Target Enterprise”), the “affiliates” referred to under Section 8 include:

8.2.1 Any legal person or other organization that has any of the following relationships with the Target Enterprise:

(i) any legal person or other organization that directly or indirectly controls the Target Enterprise;

(ii) any legal person or other organization other than the Target Enterprise and its subsidiaries that is directly or indirectly controlled by the aforementioned legal person;

(iii) any legal person or other organization other than the Target Enterprise and its subsidiaries that is directly or indirectly controlled by a natural person affiliated to the Target Enterprise listed in Section 8.2.2, or is holding such natural person as directors (other than independent directors) or senior executives;

(iv) any legal person or other persons acting in concert that holds 5% or more of the shares of the Target Enterprise;

(v) any legal person or other organization that is deemed to have a special relationship with the Target Enterprise under the principle of substance over form, which may cause the Target Enterprise to imbalance its interests.

8.2.2 Any natural person who has the following relationships with the Target Enterprise:

(i) any natural person who directly or indirectly holds more than 5% of the shares of the Target Enterprise;

(ii) directors, supervisors and senior executives of the Target Enterprises;

(iii) directors, supervisors and senior executives of the legal person or other organization that directly or indirectly controls the Target Enterprise;

(iv) any family members who have a close relationship with the persons aforementioned in (i) to (iii), including spouse, parents,

20

parents-in-law, siblings and their spouses, children aged 18 or above and their spouses, spouse’s siblings and parents of children’s spouses;

(v) any other natural person who has a special relationship with the Target Enterprise as determined under the principle of substance over form that may cause the Target Enterprise to imbalance its interests.

9.INFORMATION DISCLOSURE

9.1 The terms and detailed rules relating to this Agreement and the appendices hereto (including all terms and provisions and even the existence of this Agreement and any related investment documents) shall be treated as confidential information and shall not be disclosed by the Parties hereto to any third party unless otherwise provided.

9.2 Each Party shall keep confidential and shall not disclose to any third party or person other than the Parties, the Company, the professional advisors and relevant governmental authorities any proprietary, secret or confidential data and materials relating to the Company, its business or belonging to the other Parties or disclosed by the other Parties at any time or for the negotiation of this Agreement or for the establishment or operation of the Company (the “Confidential Information”).

9.3 Each Party agrees and covenants to procure its director(s) not to use any Confidential Information (other than for the purpose of exercising his powers as a director or for the purpose of the performance of the Company’s business), except that such director reports to its appointer on condition that such appointer complies with the confidentiality obligations hereunder.

9.4 Notwithstanding the foregoing, each Party is entitled to disclose the transaction contemplated hereunder to their respective current or future investors, fund management companies, investment banks, lenders, accountants, legal counsels, bona fide potential investors, employees, directors, shareholders, partners, lenders and business partners, provided that the individuals or entities receiving such information have agreed to assume confidentiality obligations.

9.5 The restrictions set forth in this Section 9 do not apply to:

(1) information required to be disclosed or used by the laws and any regulatory authorities;

(2) information required to be disclosed or used for the purpose of any judicial proceedings arising out of this Agreement or any other agreements executed pursuant to this Agreement, or information reasonably disclosed to the tax authority;

(3) the disclosure made to professional advisors of the Parties, provided that the Parties shall require such professional advisors to comply with provisions of this Section 12 in respect of such Confidential Information as if they were a Party to this Agreement;

(4) information which was already in the public domain otherwise than due to any reason attributable to any Party hereto; or

(5) information the disclosure of which has been approved by all other Parties in writing in advance.

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In the case of disclosure due to the above reasons set forth in (1) and (2), the disclosing Party shall discuss with other Parties on such disclosure and submission within reasonable time before such information is disclosed or submitted and shall, if required to disclose or submit such information by other parties, require the receiving party to take relevant measures to keep such information confidential to the extent possible.

9.6 Notwithstanding the foregoing, Sinovac HK and its affiliates shall be entitled to disclose this Agreement as required by the securities laws and regulations of the United States, and attach this Agreement as an exhibit to the disclosure documents.

10.MISCELLANEOUS

10.1 The headings used in this Agreement are for reference only and shall not have any effect on the meaning or interpretation of any provision of this Agreement.

10.2 This Agreement and the other Transaction Documents constitute the entire agreement reached among the Parties with respect to this Capital Increase Transaction, and supersede any previous agreement, letter of intention, memorandum of understanding, representations or other obligations (whether in writing or orally, including various forms of communication) entered into among the Parties with respect to this Capital Increase Transaction, and this Agreement (including any amendment thereto and the other Transaction Documents) and the Investment Agreement separately executed among the Parties contain the entire agreement of the Parties with respect to the matters hereunder.

10.3 If any term of this Agreement is invalid or incapable to be enforced due to applicable laws, then such term shall be deemed to have never existed from the beginning and shall not affect the validity of other terms of this Agreement. The Parties shall negotiate and determine new provisions to the extent lawful to ensure that the intention of the original provisions is fulfilled to the greatest extent possible.

10.4 This Agreement shall be binding upon the successors and assigns of the Parties, such successors and assigns shall be entitled to the benefit hereunder. Neither Party shall assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other Parties.

10.5 Unless otherwise provided for in this Agreement, any failure or delay on a Party to exercise its right, power or privilege under this Agreement shall not be deemed as a waiver of such right, power and privilege, and any partial exercise of such right, power and privilege will not preclude the exercise of any other right, power and privilege.

10.6 If the Articles of Association of the Company then in effect conflicts with this Agreement or the provisions of the Articles of Association are less clear or specific than this Agreement, this Agreement shall prevail.

10.7 This Agreement is made and signed in seven (7) originals, each with same and equal legal effect. Each Party shall retain one (1) original executed version of this Agreement.

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[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

23

[Signature Page to Shareholders’ Agreement of Sinovac Life Sciences Co., Ltd.]

Sinovac Life Sciences Co., Ltd.

(Seal)

By: _________________________

Name: YIN Weidong

Title:Legal Representative

Signature Page to Shareholders’ Agreement

[Signature Page to Shareholders’ Agreement of Sinovac Life Sciences Co., Ltd.]

Sinovac Biotech (Hong Kong) Limited

By: _________________________

Name: YIN Weidong

Title: Director

Signature Page to Shareholders’ Agreement

[Signature Page to Shareholders’ Agreement of Sinovac Life Sciences Co., Ltd.]

Keding Investment (Hong Kong) Limited

By: _________________________

Name: YIN Weidong

Title: Director

Signature Page to Shareholders’ Agreement

[Signature Page to Shareholders’ Agreement of Sinovac Life Sciences Co., Ltd.]

VIVO CAPITAL FUND IX, L.P.

By: _________________________

Name:

Title:

Signature Page to Shareholders’ Agreement

[Signature Page to Shareholders’ Agreement of Sinovac Life Sciences Co., Ltd.]

Prime Success, L.P.

By: _________________________

Name:

Title:

Signature Page to Shareholders’ Agreement

[Signature Page to Shareholders’ Agreement of Sinovac Life Sciences Co., Ltd.]

***

By: _________________________

Name:

Signature Page to Shareholders’ Agreement

[Signature Page to Shareholders’ Agreement of Sinovac Life Sciences Co., Ltd.]

Talent Forward Limited（香港俊领有限公司）

By: _________________________

Name:

Title:

Signature Page to Shareholders’ Agreement

Exhibit I

Name of Shareholder	Registered Capital (USD)	Form of Capital Contribution	Shareholding Ratio
Sinovac HK	24,000,000.00	Currency	59.240%
Keding Investment	5,141,120.86	Currency	12.690%
Vivo	2,570,560.43	Currency	6.345%
Advantech	2,570,560.43	Currency	6.345%
***	141,796.08	Currency	0.350%
Talent Forward Limited （香港俊领有限公司）	6,089,128.97	Currency	15.030%
Total	40,513,166.77	/	100.00%

Exhibit I

Exhibit II

FORM OF JOINDER AGREEMENT

This Joinder Agreement (the “Joinder Agreement”) is executed by and among the undersigned parties below (the “Joining Party”) on the following date in accordance with the Shareholders’ Agreement (as amended or modified from time to time, hereinafter referred to as the “Shareholders’ Agreement”) executed by and among Sinovac Life Sciences Co., Ltd., Sinovac Biotech (Hong Kong) Limited, Keding Investment (Hong Kong) Limited, VIVO CAPITAL FUND IX, L.P., Prime Success, L.P., ***, and Talent Forward Limited on December 4, 2020. Capitalized terms used but not otherwise defined in this Joinder Agreement shall have the meanings given to them in the Shareholders’ Agreement.

By executing this Joinder Agreement, the Joining Party hereby agrees and acknowledges that, since the following date, the Joining Party shall be deemed as a party to the Shareholders’ Agreement, and shall assume the rights and obligations of [*] as if it had executed the Shareholders’ Agreement. Since the following date, the Joining Party fully accepts all the terms and conditions of the Shareholders’ Agreement and agrees to be bound by them.

In witness whereof, the undersigned hereby executes this Joinder Agreement on the following date.

Date:

[NAME OF THE JOINING PARTY]

By:

Name:

Title:

Address:

Exhinit II

EX-8.1

Exhibit 8.1

List of Subsidiaries

1.Sinovac Biotech (Hong Kong) Limited., a Hong Kong company

2.Sinovac Biotech Co., Ltd., a PRC company

3.Sinovac Life Sciences Co., Ltd., a PRC company

4.Sinovac (Dalian) Vaccine Technology Co., Ltd., a PRC company

5.Sinovac Biomed Co., Ltd., a PRC company

6.Sinovac Biotech (Singapore) Pte. Ltd., a Singapore company

EX-12.1

Exhibit 12.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Weidong Yin, certify that:

1.I have reviewed this annual report on Form 20-F of Sinovac Biotech Ltd. (the “Company”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: April 22, 2021
By:	/s/ Weidong Yin
Name:	Weidong Yin
Title:	Chairman and Chief Executive Officer

EX-12.2

Exhibit 12.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Nan Wang, certify that:

1.I have reviewed this annual report on Form 20-F of Sinovac Biotech Ltd. (the “Company”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: April 22, 2021
By:	/s/ Nan Wang
Name:	Nan Wang
Title:	Chief Financial Officer

EX-13.1

Exhibit 13.1

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Sinovac Biotech Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Weidong Yin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report containing the financial statements fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 22, 2021
By:	/s/ Weidong Yin
Name:	Weidong Yin
Title:	Chairman and Chief Executive Officer

EX-13.2

Exhibit 13.2

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Sinovac Biotech Ltd. (the “Company”) on Form 20-F for the year ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nan Wang, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report containing the financial statements fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 22, 2021
By:	/s/ Nan Wang
Name:	Nan Wang
Title:	Chief Financial Officer

EX-15.1

Exhibit 15.1

Independent Registered Public Accounting Firm’s Consent

We consent to the incorporation by reference in this Registration Statement of Sinovac Biotech Ltd. on Form S-8(FILE NO. 333-161827) and Form S-8 (FILE NO. 333-190980) of our report dated April 22, 2021, with respect to our audits of the consolidated financial statements of Sinovac Biotech Ltd.as of December 31, 2020 and 2019 and for the three years ended December 31, 2020 and our report dated April 22, 2021 with respect to our audit of internal control over financial reporting of Sinovac Biotech Ltd.as of December 31, 2020 appearing in the Annual Report on Form 20-F of Sinovac Biotech Ltd.for the year ended December 31, 2020.

/s/ Marcum Bernstein & Pinchuk llp

Marcum Bernstein & Pinchuk llp

Beijing, China

April 22, 2021

XML

Document And Entity Information	12 Months Ended
	Dec. 31, 2020 shares
Document Information [Line Items]
Document Type	20-F
Amendment Flag	false
Document Period End Date	Dec. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Entity Registrant Name	SINOVAC BIOTECH LTD
Entity Central Index Key	0001084201
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity File Number	001-32371
Entity Incorporation, State or Country Code	B9
Entity Address, Address Line One	No. 15 Zhi Tong Road
Entity Address, Address Line Two	Zhongguancun Science & Technology Park
Entity Address, City or Town	Beijing
Entity Address, Country	CN
Entity Address, Postal Zip Code	102200
Entity Common Stock, Shares Outstanding	99,294,743
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Document Registration Statement	false
Entity Bankruptcy Proceedings, Reporting Current	false
Document Accounting Standard	U.S. GAAP
Common Stock
Document Information [Line Items]
Title of 12(b) Security	Common Shares, par value $0.001 per share
Security Exchange Name	NASDAQ
Trading Symbol	SVA
Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	Preferred Share Purchase Rights
Security Exchange Name	NASDAQ
Trading Symbol	SVA
Business Contact
Document Information [Line Items]
Entity Address, Address Line One	No. 15 Zhi Tong Road
Entity Address, Address Line Two	Zhongguancun Science & Technology Park
Entity Address, City or Town	Beijing
Entity Address, Country	CN
Entity Address, Postal Zip Code	102200
Contact Personnel Name	Nan Wang
City Area Code	+86
Local Phone Number	10-5693-1800
Contact Personnel Fax Number	+86-10-5693-1800
Contact Personnel Email Address	ir@sinovac.com

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 1,041,008	$ 152,718
Restricted cash (note 3)	9,196	3,160
Short-term investment (note 4)	135,248	50,274
Accounts receivable – net (note 5)	253,487	113,736
Inventories (note 6)	105,813	27,846
Prepaid expenses and deposits	15,541	1,873
Total current assets	1,560,293	349,607
Property, plant and equipment – net (note 7)	200,371	74,310
Prepaid land lease payments (note 8)	8,247	7,965
Intangible assets - net (note 9)	1,474
Long–term prepaid expenses (note 12(b))	25	23
Prepayments for acquisition of equipment	20,192	2,390
Deferred tax assets (note 14)	26,891	11,368
Right-of-use assets (note 10 and 12(b))	83,833	6,636
Total assets	1,901,326	452,299
Current liabilities
Short-term bank loans and current portion of long-term bank loans (note 11)	32,941	5,934
Loan from a non-controlling shareholder (note 12 (a))	6,155	6,607
Accounts payable and accrued liabilities (note 13)	211,428	58,890
Income tax payable	35,262	1,904
Deferred revenue (note 15)	364,005	5,462
Deferred government grants (note 16)	15,159	2,738
Dividend payable (note 18)	11,143	5,128
Lease liability (note 10 and 12(b))	3,517	536
Total current liabilities	679,610	87,199
Deferred government grants (note 16)	4,229	3,986
Long-term bank loans (note 11)	2,155	0
Deferred tax liability	2,724
Loan from a non-controlling shareholder (note 12 (a))	6,130	1,436
Lease liability (note 10 and 12(b))	85,488	5,758
Other non-current liabilities (note 14)	865	1,725
Total long-term liabilities	101,591	12,905
Total liabilities	781,201	100,104
Commitments and contingencies (notes 17 and 23)
EQUITY
Preferred stock (note 18) Authorized 50,000,000 shares at par value of $0.001 each Issued and outstanding: 14,630,813, including 14,630,813 held in trust (2019 – 14,630,813, 14,630,813)	15	15
Common stock (note 18) Authorized: 100,000,000 shares at par value of $0.001 each Issued and outstanding: 99,294,743, including 27,777,341 held in trust (2019 – 98,903,243, 27,777,341)	99	99
Additional paid-in capital	538,924	207,962
Subscriptions receivable	(7,109)
Accumulated other comprehensive income (loss)	19,925	(4,321)
Statutory surplus reserves (note 20)	50,377	33,533
Accumulated earnings	144,241	56,731
Total shareholders' equity	746,472	294,019
Non-controlling interests	373,653	58,176
Total equity	1,120,125	352,195
Total liabilities and equity	$ 1,901,326	$ 452,299

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2020	Dec. 31, 2019	Mar. 07, 2018
Preferred Stock, Shares Authorized	50,000,000	50,000,000
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Issued	14,630,813	14,630,813
Preferred Stock, Shares Outstanding	14,630,813	14,630,813
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001	$ 0.001
Common Stock, Shares, Issued	99,294,743	98,903,243
Common Stock, Shares, Outstanding	99,294,743	98,903,243
Trust
Preferred Stock, Shares Issued	14,630,813	14,630,813
Common Stock, Shares, Issued	27,777,341	27,777,341

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Sales (note 22)	$ 510,624	$ 246,053	$ 229,650
Cost of sales	67,180	32,469	24,723
Gross profit	443,444	213,584	204,927
Selling, general and administrative expenses (including rent expenses incurred to a related party of 2020 - $798, 2019 - $811, 2018 - $810) (note 12(b))	176,534	121,468	137,003
Provision (recovery) for doubtful accounts	2,640	(306)	820
Research and development expenses	48,760	24,254	21,910
Loss on disposal of property, plant and equipment (note 7)	163	294	75
Government grants recognized in income	(297)	(688)	(197)
Total operating expenses	227,800	145,022	159,611
Operating income	215,644	68,562	45,316
Interest and financing expenses – (including interest expenses incurred to a related party, 2020 - $663, 2019 - $455, 2018 - $453) (note 12(a))	(1,453)	(650)	(1,070)
Interest income	1,930	1,996	2,016
Other income, net	496	912	321
Income before income taxes	216,617	70,820	46,583
Income tax expense (note 14)	(31,438)	(5,605)	(10,472)
Net income	185,179	65,215	36,111
Less: Income attributable to non-controlling interests	(74,810)	(20,286)	(14,329)
Net income attributable to shareholders of Sinovac	110,369	44,929	21,782
Preferred stock dividends	(6,015)	(5,128)	0
Net income attributable to common shareholders of Sinovac	104,354	39,801	21,782
Other comprehensive income, net of tax of nil
Foreign currency translation adjustments	32,328	(2,827)	(10,996)
Comprehensive income	217,507	62,388	25,115
Less: comprehensive income attributable to non-controlling interests	(82,892)	(19,681)	(12,507)
Comprehensive income attributable to shareholders of Sinovac	$ 134,615	$ 42,707	$ 12,608
Earnings per share (note 21)
Basic net income per share	$ 1.06	$ 0.42	$ 0.34
Diluted net income per share	$ 0.97	$ 0.41	$ 0.34
Weighted average number of shares of common stock outstanding
– Basic	98,897,345	94,876,946	64,727,146
– Diluted	113,662,362	109,691,959	64,977,554

XML

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Rent Expenses Incurred To Related Party	$ 798	$ 811	$ 810
Interest Expense, Related Party	$ 663	$ 455	$ 453

XML

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Preferred Stock	Additional Paid-in Capital	Subscriptions Receivable	AOCI (Loss) (Foreign Currency Translation Adjustment)	Statutory Surplus Reserves	Accumulated (Deficit) Earnings	Stockholders' Equity, Total	Non-controlling Interest
Balance at Dec. 31, 2017	$ 177,140	$ 57		$ 115,339		$ 7,075	$ 19,549	$ 9,132	$ 151,152	$ 25,988
Balance (in shares) at Dec. 31, 2017		57,281,861
Share-based compensation (note 19)	4,305	$ 0		4,305		0	0	0	4,305	0
Exercise of stock options (note 18)	3	$ 0		3		0	0	0	3	0
Exercise of stock options (note 17) (in shares)		109,041
Subscriptions received (note 18)	64	$ 0		64		0	0	0	64	0
Cancellation of outstanding shares (note 18)	0	$ 0		0		0	0	0	0	0
Cancellation of outstanding shares (note 17) (in shares)		(51,500)
Issuance of new and restricted shares (note 18)	85,301	$ 14		85,287		0	0	0	85,301	0
Issuance of new and restricted shares (note 17) (in shares)		13,800,000
Other comprehensive income (loss)
- Other comprehensive income (loss) attributable to non-controlling interests	(1,822)	$ 0		0		0	0	0	0	(1,822)
- Other comprehensive income (loss) attributable to shareholders of Sinovac	(9,174)	0		0		(9,174)	0	0	(9,174)	0
Net income for the year
-Net income attributable to non-controlling interests	14,329	0		0		0	0	0	0	14,329
- Net income attributable to shareholders of Sinovac	21,782	0		0		0	0	21,782	21,782	0
- Transfer to statutory surplus reserves (note 19)	0	0		0		0	7,094	(7,094)	0	0
Balance at Dec. 31, 2018	291,928	$ 71	$ 0	204,998		(2,099)	26,643	23,820	253,433	38,495
Balance (in shares) at Dec. 31, 2018		71,139,402
Balance (in shares) at Dec. 31, 2018			0
Share-based compensation (note 19)	3,003	$ 0	$ 0	3,003		0	0	0	3,003	0
Exercise of stock options (note 18)	4	$ 0	0	4		0	0	0	4	0
Exercise of stock options (note 17) (in shares)		13,500
Cancellation of outstanding shares (note 18)	0	$ 0	0	0		0	0	0	0	0
Cancellation of outstanding shares (note 17) (in shares)		(27,000)
Issuance of new shares (note 17)	0	$ 28	$ 15	(43)		0	0	0	0	0
Issuance of new shares (note 17) (in shares)		27,777,341	14,630,813
Dividend accrued (note 17)	(5,128)	$ 0	$ 0	0		0	0	(5,128)	(5,128)	0
Other comprehensive income (loss)
- Other comprehensive income (loss) attributable to non-controlling interests	(605)	0	0	0		0	0	0	0	(605)
- Other comprehensive income (loss) attributable to shareholders of Sinovac	(2,222)	0	0	0		(2,222)	0	0	(2,222)	0
Net income for the year
-Net income attributable to non-controlling interests	20,286	0	0	0		0	0	0	0	20,286
- Net income attributable to shareholders of Sinovac	44,929	0	0	0		0	0	44,929	44,929	0
- Transfer to statutory surplus reserves (note 19)	0	0	0	0		0	6,890	(6,890)	0	0
Balance at Dec. 31, 2019	$ 352,195	$ 99	$ 15	207,962	$ 0	(4,321)	33,533	56,731	294,019	58,176
Balance (in shares) at Dec. 31, 2019	98,903,243	98,903,243
Balance (in shares) at Dec. 31, 2019			14,630,813
Share-based compensation (note 19)	$ 10,203	$ 0	$ 0	10,203	0	0	0	0	10,203	0
Exercise of stock options (note 18)	$ 13,999	$ 0	0	9,108	0	0	0	0	9,108	4,891
Exercise of stock options (note 17) (in shares)	401,500	401,500
Subscriptions receivable	$ (12,000)	$ 0	0	0	(7,109)	0	0	0	(7,109)	(4,891)
Cancellation of outstanding shares (note 18)	0	$ 0	0	0	0	0	0	0	0	0
Cancellation of outstanding shares (note 17) (in shares)		(10,000)
Equity transactions of subsidiaries (note 1)	544,236	$ 0	0	311,651	0	0	0	0	311,651	232,585
Dividend accrued (note 17)	(6,015)	0	0	0	0	0	0	(6,015)	(6,015)	0
Other comprehensive income (loss)
- Other comprehensive income (loss) attributable to non-controlling interests	8,082	0	0	0	0	0	0	0	0	8,082
- Other comprehensive income (loss) attributable to shareholders of Sinovac	24,246	0	0	0	0	24,246	0	0	24,246	0
Net income for the year
-Net income attributable to non-controlling interests	74,810	0	0	0	0	0	0	0	0	74,810
- Net income attributable to shareholders of Sinovac	110,369	0	0	0	0	0	0	110,369	110,369	0
- Transfer to statutory surplus reserves (note 19)	0	0	0	0	0	0	16,844	(16,844)	0	0
Balance at Dec. 31, 2020	$ 1,120,125	$ 99	$ 15	$ 538,924	$ (7,109)	$ 19,925	$ 50,377	$ 144,241	$ 746,472	$ 373,653
Balance (in shares) at Dec. 31, 2020	99,294,743	99,294,743
Balance (in shares) at Dec. 31, 2020			14,630,813

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Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows provided by operating activities
Net Income	$ 185,179,000	$ 65,215,000	$ 36,111,000
Adjustments to reconcile net income to net cash provided by operating activities:
- Deferred income taxes (note 14)	(11,227,000)	(5,685,000)	3,146,000
- Share-based compensation (note 19)	10,203,000	3,003,000	4,305,000
- Inventory provision (note 6)	5,816,000	651,000	2,529,000
- Provision (recovery) for doubtful accounts	2,640,000	(306,000)	820,000
Loss on disposal of property, plant and equipment (note 7)	163,000	294,000	75,000
- Depreciation of property, plant and equipment and amortization of licenses (note 7)	3,693,000	4,579,000	4,887,000
- Amortization of prepaid land lease payments (note 8)	238,000	238,000	249,000
- Amortization of intangible assets (note 9)	106,000	0	0
- Government grants recognized in income	(297,000)	(688,000)	(197,000)
Changes in:
- Accounts receivable	(128,016,000)	(40,191,000)	(13,082,000)
- Inventories	(77,738,000)	(3,651,000)	(9,412,000)
- Income tax payable	31,804,000	4,904,000	(11,844,000)
- Prepaid expenses and deposits	(13,151,000)	2,645,000	(2,613,000)
- Deferred revenue	339,329,000	2,521,000	(892,000)
- Accounts payable and accrued liabilities	131,777,000	6,793,000	(6,167,000)
- Other non-current liabilities	(1,210,000)	(1,248,000)	28,000
Net cash provided by operating activities	479,309,000	39,074,000	7,943,000
Cash flows provided by financing activities
- Proceeds from bank loans	33,227,000	2,109,000	18,898,000
- Repayments of bank loans	(6,041,000)	(3,305,000)	(43,886,000)
- Proceeds from issuance of common stock, net of share issuance costs	1,999,000	0	85,304,000
- Proceeds from shares subscribed	0	0	64,000
- Proceeds from subsidiary's financing	541,043,000	0	0
- Government grants received (note 16)	16,521,000	1,476,000	3,800,000
- Loan from a non-controlling shareholder (note 12(a))	10,162,000	1,457,000	0
- Repayments of loan from a non-controlling shareholder (note 12(a))	(4,345,000)	0	0
Net cash provided by financing activities	592,566,000	1,737,000	64,180,000
Cash flows used in investing activities
- Purchase of short-term investments	(201,688,000)	(50,665,000)	(19,670,000)
- Proceeds from redemption of short-term investments	124,562,000	18,818,000	0
- Proceeds from disposal of equipment	20,000	21,000	22,000
- Acquisition of property, plant and equipment	(127,486,000)	(10,628,000)	(5,613,000)
- Acquisition of intangible assets	(164,000)	0	0
Net cash used in investing activities	(204,756,000)	(42,454,000)	(25,261,000)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	27,207,000	(649,000)	(4,656,000)
Increase (decrease) in cash and cash equivalents and restricted cash	894,326,000	(2,292,000)	42,206,000
Cash and cash equivalents and restricted cash, beginning of year	155,878,000	158,170,000	115,964,000
Cash and cash equivalents and restricted cash, end of year	1,050,204,000	155,878,000	158,170,000
Supplemental disclosure of cash flow information:
Cash paid for interest	1,041,000	717,000	1,494,000
Cash paid for income taxes	$ 11,172,000	$ 7,307,000	$ 19,151,000

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Basis of Presentation

12 Months Ended

Dec. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

1. Basis of Presentation

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). They include the accounts of Sinovac Biotech Ltd., which is incorporated under the laws of Antigua and Barbuda, and its wholly owned or controlled subsidiaries (collectively, the “Company”). All significant intercompany transactions have been eliminated. Details of the Company’s subsidiaries are as follows:

Name	Date of incorporation or establishment	Place of incorporation (or establishment) /operation	Percentage of ownership as of December 31, 2020			Percentage of ownership as of December 31, 2019			Principal activities
Sinovac Biotech   (Hong Kong) Limited   (“Sinovac Hong Kong”)	October 2008	Hong Kong		100	%		100	%	International sales   and marketing
Sinovac Biotech Co.,   Ltd. (“Sinovac Beijing”)	April 2001	People’s Republic of China (“PRC”)		73.09	%		73.09	%	Research and   development,   production and   sales of   vaccine   products
Sinovac Life Sciences   Co., Ltd. (“Sinovac LS”)   (formerly Sinovac   Research & Development   Co., Ltd.) *	May 2009	PRC		59.24	%		100	%	Research and   development,   production and   sales of   vaccine   products
Sinovac (Dalian) Vaccine   Technology Co., Ltd.   (“Sinovac Dalian”) **	January 2010	PRC		68	%		67.86	%	Research and   development,   production and   sales of   vaccine   products
Sinovac Biomed Co., Ltd.	April 2015	PRC		100	%		100	%	Distribution of   vaccine products
Sinovac Biotech (Singapore)   Pte. Ltd. ("Sinovac   Singapore")	August 2020	Singapore		100	%		—		International sales   and marketing

* In December 2020, Sinovac LS secured funding for further development, capacity expansion and manufacturing of the CoronaVac, its COVID-19 vaccine candidate. The investor, Sino Biopharmaceutical Limited, a leading innovative research and development driven pharmaceutical conglomerate in China, through its affiliates invested a total of $527,000 in exchange for 15.38% of the total equity interest of Sinovac LS. Vivo Capital Fund IX, L.P. and Prime Success, L.P., also exercised each of its right to convert its convertible loan that was issued to the Company in May 2020 with a total of $15,000, which after the investment by Sino Biopharmaceutical Limited’s affiliates, Vivo Capital Fund IX, L.P. and Prime Success, L.P. each holds 6.345% stake in Sinovac LS. In September 2020, the board of directors approved an employee share ownership plan where options were granted to officers and employees of the Company, through Keding Investment (Hong Kong) Limited, to purchase up to 15% of equity interest of Sinovac LS upon exercise of the options. The options were fully vested and exercised, and after the investment by Sino Biopharmaceutical Limited’s affiliates, Keding Investment (Hong Kong) Limited holds 12.69% stake in Sinovac LS. Total financing expenses associated with the above transactions was $1,000.

** In November 2020, the Company and Dalian Jin Gang Group, non-controlling shareholder of Sinovac Dalian, each made a capital contribution to Sinovac Dalian with a total of $6,972 and $3,193, respectively.After this capital contribution, our ownership of Sinovac Dalian increased.

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

(a) Use of Estimates

In preparation of the Company’s consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates made by management include: provision for product returns, allowance for doubtful accounts, inventory provisions, impairment of long-lived assets, fair value of options granted and related forfeiture rates, and realizability of deferred tax assets. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s consolidated financial statements could be materially impacted.

(b) Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments that are readily convertible to cash generally with maturities of three months or less when purchased.

(c) Restricted Cash

Restricted cash is cash held as collateral for transactions the Company has entered into.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts presented in the statement of cash flows. The Company adopted the new standard effective January 1, 2018, using the retrospective transition method.

The ending balance of cash and cash equivalents and restricted cash presented on the face of the consolidated statements of cash flows in 2020 is $1,050,204 (2019 - $155,878, 2018 - $158,170). It includes $ 1,041,008 cash and cash equivalents (2019 - $ 152,718, 2018 - $158,170) and $9,196 restricted cash (2019 - $3,160, 2018 - $nil) as presented in consolidated balance sheets.

(d) Short-term investments

All highly liquid investments with original maturities greater than three months, but less than twelve months, are classified as short-term investments. Investments that are expected to be realized in cash during the next twelve months are also included in short-term investments.

The Company accounts for short-term debt investments in accordance with ASC Topic 320, Investments—Debt Securities (“ASC 320”). The Company classifies the short-term investments in debt as “held-to-maturity,” “trading” or “available-for-sale,” whose classification determines the respective accounting methods stipulated by ASC 320. Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categories of investments in securities are included in earnings. Any realized gains or losses on the sale of the short-term investments are determined on a specific identification method, and such gains and losses are reflected in earnings during the period in which gains or losses are realized.

(e) Accounts Receivable

The Company extends unsecured credit to its customers in the ordinary course of business and actively pursues past due accounts. On January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The Company estimates an allowance for doubtful accounts based on historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect its customers’ ability to pay.

(f) Inventories

Inventories are stated at the lower of cost or net realizable value. The cost of work in progress and finished goods is determined on a weighted-average cost basis and includes direct material, direct labor and overhead costs. Net realizable value represents the anticipated selling price, net of distribution cost, less estimated costs to completion for work in progress.

(g) Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant additions and improvements are capitalized, while repairs and maintenance are charged to expenses as incurred. Equipment purchased for specific research and development projects with no alternative use are expensed. Assets under construction are not depreciated until construction is completed and the assets are ready for their intended use. Gains and losses from the disposal of property, plant and equipment are recorded in gain or loss on disposal and impairment of property, plant and equipment included in the consolidated statements of comprehensive income (loss).

Depreciation of property, plant and equipment is computed using the straight-line method based on the estimated useful lives of the assets as follows:

Plant and buildings	10 to 24 years
Machinery and equipment	8 to 10 years
Motor vehicles	4 to 5 years
Office equipment and furniture	3 to 5 years
Leasehold improvements	Lesser of useful lives and term of lease

(h) Prepaid Land Lease Payments

Prepaid land lease payments represent amounts paid for the rights to use land in the PRC and is recorded at purchased cost less accumulated amortization. Amortization is provided on a straight-line basis over the term of the lease agreement, which ranges from 28 to 49 years.

(i) Intangible Assets

The Company capitalizes the patent payment and the purchased cost of vaccines if the vaccine has received a new drug certificate from the National Medical Products Administration (“NMPA) of China. If the vaccine has not received a new drug certificate, the purchase cost is expensed as in-process research and development.

Licenses in relation to the production and sales of pharmaceutical products are amortized on a straight-line basis over their respective useful lives. Costs incurred to renew or extend the term of licenses are capitalized and amortized over the license’s useful life on a straight-line basis.

The costs of acquiring and developing computer software and cloud computing websites for internal use are capitalized as intangible assets. Computer software and cloud computing related intangible assets are amortized over 5 - 10 years.

(j) Impairment of Long-Lived Assets

Long-lived assets including property, plant and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable from the future undiscounted net cash flows expected to be generated by the asset group. An asset group is identified as assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. If the asset group is not fully recoverable, an impairment loss would be recognized for the difference between the carrying value of the asset group and its estimated fair value, based on the discounted net future cash flows or other appropriate methods, such as comparable market values. The Company uses estimates and judgments in its impairment tests and if different estimates or judgment had been utilized, the timing or the amount of any impairment charges could be materially different.

(k) Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the carrying values and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance is provided if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates and laws. 

The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority, based on the technical merits of the position. The tax benefits recognized from such a position are measured based on the amount that is greater than 50% likely of being realized upon settlement. The Company recognizes a change in available facts after the reporting date but before issuance of the financial statements in the period when the change in facts occur, even if that new information provides a better estimate of the ultimate outcome of an uncertainty. Liabilities associated with uncertain tax positions are classified as long−term unless expected to be settled within one year. Interest and penalties related to uncertain tax positions, if any, are recorded in the provision for income taxes and classified with the related liability on the consolidated balance sheets.

(l) Value-added Taxes

Value-added taxes (“VAT”) collected from customers relating to product sales and remitted to governmental authorities are presented on a net basis. VAT collected from customers is excluded from revenue.

(m) Revenue from Contracts with Customers

The Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”), on January 1, 2018, using the modified retrospective method.

Revenue is recognized when control of promised goods is transferred to the Company’s customers in an amount of consideration of which the Company expect to be entitled to in exchange for the goods, and the Company can reasonably estimates return provision for the goods.

Product return provisions are estimated based on historical return and exchange data as well as the inventory levels and the remaining shelf lives of the products in the distribution channels.     

As of December 31, 2020, sales return provision for the Company’s vaccine products was $12,056 (December 31, 2019 - $3,726). Sales return provision as a percentage of sales was 2.4% and 1.5% in 2020 and 2019, respectively.   

Deferred revenue is generally related to government stockpiling programs and advances received from customers. For government stockpiling programs of H5N1 vaccines, the Company generally obtains purchase authorizations from the government for a specified amount of products at a specified price and no rights of return are provided. Revenue is recognized when the government takes delivery of the products. If the products expire prior to delivery, these expired products are recognized as revenue once cash is received and the products have expired and passed government inspection. For the year ended December 31, 2020, the Company recognized sales of $4,871 related to contract liabilities at January 1, 2020.

For the year ended December 31, 2020, the Company did not have any significant incremental costs of obtaining contracts with customers incurred or costs incurred in fulfilling contracts with customers within the scope of ASC Topic 606, that shall be recognized as an asset and amortized to expenses in a pattern that matches the timing of the revenue recognition of the related contract.

The Company does not have amounts of contract assets since revenue is recognized as control of goods is transferred. The contract liabilities consist of advance payments from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. All contract liabilities are included in deferred revenue in the Consolidated Balance Sheets.

(n) Shipping and Handling

Shipping and handling fees billed to customers are included in sales. Costs related to shipping and handling are recognized in selling, general and administrative expenses in the consolidated statements of comprehensive income. For the year ended December 31, 2020, $9,609 of shipping and handling costs was included in selling, general and administrative expenses (2019 - $7,253, 2018 - $6,261).    

(o) Advertising Expenses

Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising costs were $859 for the year ended December 31, 2020 (2019 - $1,398, 2018 - $3,901).

(p) Research and Development

Research and development ("R&D") costs are expensed as incurred and are disclosed as a separate line item in the Company’s consolidated statements of comprehensive income. R&D costs consist primarily of the remuneration of R&D staff, depreciation, material, clinical trial costs as well as amortization of acquired technology and know-how used in R&D with alternative future uses. R&D costs also include costs associated with collaborative R&D and in-licensing arrangements, including upfront fees paid to collaboration partners in connection with technologies which have not reached technological feasibility and did not have an alternative future use. Reimbursement of R&D costs for arrangements with collaboration partners is recognized when the obligations are incurred.

Under certain R&D arrangements with third parties, the Company may be required to make payments that are contingent on the achievement of specific development, regulatory and/or commercial milestones. Before a product receives regulatory approval, license fees and milestone payments made to third parties are expensed as incurred. License fees and milestone payments made to third parties after regulatory approval is received are capitalized and amortized over the remaining life of the agreement with third parties.

(q) Government Grants

Government grants received from the PRC government by the PRC operating subsidiaries of the Company are recognized when there is reasonable assurance that the amount is receivable and all the conditions specified in the grant have been met. Government grants for R&D are recognized as a reduction to R&D expenses when the expenses are incurred in the same period when the conditions attached to the grants are met, or recognized as government grants recognized in income in the period when the conditions are met after the expenses are incurred. Government grants for property, plant and equipment are deferred and recognized as a reduction to the related depreciation and amortization expenses in the same manner as the property, plant and equipment are depreciated. Interest subsidies are recorded as a reduction to interest and financing expenses in the consolidated statements of comprehensive income, or recorded as a reduction to interest capitalized if the subsidies granted are related to a specific borrowing associated with building a qualifying asset. For government loans received at below market interest rate, the difference between the face value of the loan and fair value using the effective interest rate method is recorded as deferred government grants.

(r) Retirement and Other Post-retirement Benefits

Full-time employees of the Company in the PRC participate in a government mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that the Company makes contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company has no legal obligation for the benefits beyond the contributions. Total amounts for such employee benefits incurred was $10,809 for the year ended December 31, 2020 (2019 - $9,884, 2018 - $7,438).

(s) Foreign Currency Translation and Transactions

The Company maintains their accounting records in their functional currencies, U.S. dollars (“$”) for the Company, Sinovac Hong Kong and Sinovac Singapore, and Renminbi Yuan (“RMB”) for the PRC subsidiaries. The Company uses the US$ as its reporting currency.

At the transaction date, each asset, liability, revenue and expense is re-measured into the functional currency by the use of the exchange rate in effect at that date. At each period end, foreign currency monetary assets, and liabilities are re-measured into the functional currency by using the exchange rate in effect at the balance sheet date. The resulting foreign exchange gains and losses are included in selling, general and administrative expenses. The Company recognized foreign exchange gain of $2,554 for the year ended December 31, 2020 (2019 - $306, 2018 - $559).

Assets and liabilities of the PRC subsidiaries, Sinovac Beijing, Sinovac LS, Sinovac Dalian and Sinovac Biomed are translated into US$ at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at average exchange rates. Gains and losses from such translations are recorded in accumulated other comprehensive income, a component of shareholders’ equity.

Gain on intra-entity foreign currency transactions that are of a long-term-investment nature was $nil for the year ended December 31, 2020 (2019 - $62, 2018 - $268) which was recorded in accumulated other comprehensive income, a component of shareholders’ equity.

(t) Share-based Compensation

Compensation expense for costs related to all share-based payments, including grants of stock options, is recognized through a fair-value based method. The Company uses the Black-Scholes option-pricing model to determine the grant date fair value for stock options. The Company uses the grant date stock price to determine the grant date fair value of restricted shares. The Company has elected to recognize share-based compensation costs using the straight-line method over the requisite service period with a graded vesting schedule, provided that the amount of compensation costs recognized at any date is at least equal to the portion of the grant date value of the awards that are vested at that date. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share based compensation costs are recorded net of estimated forfeitures such that expense is recorded only for those awards that are expected to vest.

(u) Comprehensive Income

The Company’s comprehensive income consists of net income and foreign currency translation adjustments.

(v) Earnings Per Share

Earnings per share is calculated in accordance with Accounting Standards Codification (“ASC”) 260 Earnings per Share. Basic earnings per share is computed by dividing the net income attributable to shareholders of Sinovac by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed in accordance with the treasury stock method and based on the weighted average number of common shares and dilutive common share equivalents. Dilutive common share equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.

(w) Leases

The Company adopted ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) on January 1, 2019 by using the modified retrospective method and did not restate the comparable periods. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Company elected the short-term lease exemption for all contracts with lease terms of 12 months or less.

The Company determines if an arrangement is a lease or contains a lease at lease inception. For operating leases, the Company recognizes a right-of-use asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

(x) Fair Value Measurements

Assets and liabilities subject to fair value measurements are required to be disclosed within a specified fair value hierarchy. The fair value hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following categories based on the lowest level input used that is significant to a particular fair value measurement:

• Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.

• Level 3 — Unobservable inputs for the asset or liability.

As of December 31, 2020 and 2019, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis.

The carrying values of cash equivalents, restricted cash, short-term investment, accounts receivable, accounts payable and accrued liabilities and short-term bank loans and the current portion of long-term debt approximate their fair value because of their short-term nature. Fair value of the long-term bank loans are determined based on level 2 inputs, and the carrying amounts of long-term bank loans approximate fair value as the related interest rates approximate rates currently offered by financial institution for similar debt instruments.

The Company measures property, plant and equipment at fair value on a non-recurring basis only if an impairment charge were to be recognized. There were no non-recurring fair value measurements for the years ended December 31, 2020 and 2019.

(y) Concentration of Risks

Exchange Rate Risks

The Company operates in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between the U.S. dollars and the RMB. In 2020, foreign exchange gain of $2,554 is included in selling, general and administrative expenses (2019 - $306, 2018 - $559). As of December 31, 2020, cash and cash equivalents of $322,442 (RMB 2,104 million) is denominated in RMB and are held in PRC and Hong Kong (December 31, 2019 - $57,079 (RMB 397 million)).   

Currency Convertibility Risks

Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and signed contracts.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentration of credit risks consist primarily of cash and cash equivalents, restricted cash, short-term investment and accounts receivable, the balances of which are stated on the consolidated balance sheets which represent the Company’s maximum exposure. The Company places its cash and cash equivalents, restricted cash, and short-term investment in good credit quality financial institutions in Hong Kong and China. Concentration of credit risks with respect to accounts receivables is linked to the concentration of revenue. The Company’s customers are mainly various government agencies in China. For the year ended December 31, 2020, one of the Company’s customers accounted for 11% of the Company’s total revenue, and no single customer of the Company accounted for more than 10% of the total sales for the year ended December 31, 2019 and 2018. To manage credit risk, the Company performs ongoing credit evaluations of customers’ financial condition.

Interest Rate Risks

The Company is subject to interest rate risk. Other than loans from a non-controlling shareholder of $12,260 with fixed interest rates as of December 31, 2020 (note 12(a)), interests of other interest-bearing loans are charged at variable rates based on the People’s Bank of China (note 11).

(z) Recently Issued Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which reduces the number of accounting models for convertible debt instruments and convertible preferred stock that simplifies the accounting for convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

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Restricted Cash

12 Months Ended

Dec. 31, 2020

Cash And Cash Equivalents [Abstract]

Restricted Cash

3. Restricted Cash

As of December 31, 2020, the balance of $9,196 (December 31, 2019 – $3,160) represents cash collateral held as a guarantee relating to an EPI (Expanded Program on Immunization) sales contract, which is restricted until December 2021.

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Short-term Investments

12 Months Ended

Dec. 31, 2020

Short Term Investments [Abstract]

Short-term Investments

4. Short-term investments

As of December 31, 2020, the Company’s short-term investments comprised of only debt securities, with a total balance of $135,248 (December 31, 2019 - $50,274). All of the short-term held-to-maturity investments were deposits in commercial banks with maturities of less than one year and the Company has the intent and ability to hold those securities to maturity.

During the years ended December 31, 2020, 2019 and 2018, the Company recorded interest income from its short-term investments of $1,154, $797 and $47 in the consolidated statements of comprehensive income, respectively.

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Accounts Receivable - Net

12 Months Ended

Dec. 31, 2020

Loans And Leases Receivable Disclosure [Abstract]

Accounts Receivable – net

5. Accounts Receivable – net

	December 31,
	2020			2019
Trade receivables	$	257,311		$	116,278
Allowance for doubtful accounts		(6,680	)		(4,181	)
		250,631			112,097
Other receivables		2,856			1,639
Total accounts receivable	$	253,487		$	113,736

The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company estimates the allowance based on historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions, and other factors that may affect customers’ ability to pay.           

The Company’s maximum exposure to credit risk at the balance sheets date relating to trade receivables is summarized as follows:

	December 31,
	2020		2019
Aging within one year, net of allowance for doubtful accounts	$	240,266	$	108,635
Aging greater than one year, net of allowance for doubtful accounts		10,365		3,462
Total trade receivables	$	250,631	$	112,097

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Inventories

12 Months Ended

Dec. 31, 2020

Inventory Disclosure [Abstract]

Inventories

6. Inventories

	December 31,
	2020		2019
Raw materials	$	29,005	$	5,689
Work in progress		52,515		8,565
Finished goods		24,293		13,592
Total inventories	$	105,813	$	27,846

For the year ended December 31, 2020, the Company charged $1,697 of excessive fixed production overhead to cost of sales (2019 - $3,794, 2018 - $2,735).

For the year ended December 31, 2020, cost of sales includes $5,816 of inventory provision for products that are likely to expire before being sold (2019 - $ 651, 2018 - $2,529).

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Property, Plant, and Equipment - Net

12 Months Ended

Dec. 31, 2020

Property Plant And Equipment [Abstract]

Property, Plant and Equipment - net

7. Property, Plant and Equipment - net

	December 31,
	2020		2019
Cost
Construction in progress	$	143,465	$	29,367
Plant and buildings		29,963		28,833
Machinery and equipment		63,675		49,762
Motor vehicles		1,830		1,536
Office equipment and furniture		3,343		3,431
Leasehold improvements		15,632		12,767
Total cost	$	257,908	$	125,696
Less: Accumulated depreciation
Construction in progress	$	—	$	—
Plant and buildings		13,200		12,183
Machinery and equipment		32,398		27,012
Motor vehicles		1,184		1,057
Office equipment and furniture		1,823		2,122
Leasehold improvements		8,932		9,012
Total accumulated depreciation	$	57,537	$	51,386
Property, plant and equipment, net	$	200,371	$	74,310

Buildings of Sinovac Dalian with a net book value of $2,567 (RMB16.7 million) were pledged as collateral for a bank loan from Bank of China (note 11 (b)).

Buildings of Sinovac Dalian with a net book value of $672 (RMB4.4 million) were pledged as collateral for a bank loan from China Merchants Bank (note 11 (g)).

Buildings and Machinery and equipment of Sinovac Dalian with a net book value of $23,015 (RMB150.2 million) were pledged as collateral for a bank loan from China Everbright Bank (note 11 (h))

Net depreciation expense for the year ended December 31, 2020 was $3,693 (2019 - $4,579, 2018 - $4,887 ), after deduction of amortized government grant specifically related to qualified property, plant and equipment.

Loss on disposal of equipment for the year ended December 31, 2020 was $163 (2019 - $294, 2018 - $75).

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Prepaid Land Lease Payments

12 Months Ended

Dec. 31, 2020

Prepaid Land And Lease Payments [Abstract]

Prepaid Land Lease Payments

8. Prepaid Land Lease Payments

	December 31,
	2020		2019
Prepaid land lease payments	$	11,066	$	10,372
Less: accumulated amortization		2,819		2,407
Net carrying value	$	8,247	$	7,965

Prepaid land lease payments of Sinovac Dalian with a net book value of $2,196 (RMB 14.3 million) were pledged as collateral (note 11 (f)) for a bank loan from Guangdong Development Bank.

Amortization expense for prepaid land lease payments for the year ended December 31, 2020 was $238 (2019 - $238, 2018 - $249).

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Intangible Asset - Net

12 Months Ended

Dec. 31, 2020

Finite Lived Intangible Assets Net [Abstract]

Intangible Asset - Net

9. Intangible Assets - net

	December 31,
	2020		2019
Computer software	$	1,586	$	—
Less: accumulated amortization		112		—
Net carrying value	$	1,474	$	—

Amortization expense for intangible assets for the year ended December 31, 2020 was $106 (2019 - $nil, 2018 - $nil).

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Lease

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Lease

10. Lease

The Company’s operating leases mainly related to plants and buildings, some of which include options to extend the leases that have not been included in the calculation of the Company’s lease liabilities and right-of-use assets. The Company recognizes rent on a straight-line basis over the expected term of the lease, which includes rent holiday and scheduled rent increase. For leases with terms greater than 12 months, the Company records the related asset and lease liability at the present value of lease payments over the term.

As of December 31, 2020, there was no finance leases entered into by the Company.

As of December 31, 2020, the weighted average remaining lease term was 10.8 years and weighted average discount rate was 4.9% for the Group’s operating leases. Operating lease cost excluding cost of short-term lease for the year ended December 31, 2020 was $6,075. Short-term lease cost for the year ended December 31, 2020 was $784 (2019 - $487, 2018 - $948). Supplemental cash flow information related to operating leases was as follows:

	For the year ended December 31,
	2020		2019
Cash payments for operating leases	$	856	$	807
Right-of-use asset obtained in exchange for operating lease liabilities		71,824		135

Future lease payments under operating leases as of December 31, 2020 were as follows:

2021	$	7,700
2022		10,621
2023		10,745
2024		10,891
2025		11,016
Thereafter		63,430
Total future lease payments		114,403
Less: Imputed interest		25,398
Total lease liability balance	$	89,005

Minimum future rental payments under short-term lease for the year ending December 31, 2020 was $10.

As of December 31, 2020, additional operating leases that have not yet commenced were immaterial.

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Bank Loans

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Bank Loans

11. Bank Loans

Summarized below are bank loans as of December 31, 2020 and 2019:

	December 31,
	2020		2019
Bank of Beijing (a)	$	—	$	3,842
Bank of China (b)		1,993		1,005
Bank of Beijing (c)		4,598		—
SPD Silicon Valley Bank (d)		6,503		1,087
SPD Silicon Valley Bank (e)		18,361		—
Guangdong Development Bank (f)		1,378		—
China Merchants Bank (g)		108		—
Bank loans due within one year		32,941		5,934
China Merchants Bank (g)		163		—
China Everbright Bank (h)		1,992		—
Long-term bank loans		2,155		—
Total  bank loans	$	35,096	$	5,934

(a) On May 20, 2015, Sinovac Beijing entered into a bank loan with Bank of Beijing in the aggregate principal amount of $7,356 (RMB 48 million) with a term from July 2015 to May 2020 for construction of the pneumococcal polysaccharide vaccine facilities. The loan’s interest rate is based on the prime rate of a five-year term loan published by the People’s Bank of China at the time withdraws are made. Interest is payable quarterly and the loan was repaid on May 20, 2020.         

(b) On November 20, 2019, Sinovac Dalian entered into a maximum credit facility of $3,065 (RMB 20 million) with Bank of China to finance its working capital requirements. $1,005 (RMB 7 million) was drawn on December 24, 2019 and was repaid on December 24, 2020. On March 13, 2020, Sinovac Dalian withdrew $1,073 (RMB 7 million) with an annual interest rate at 95 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.00%. On December 9, 2020, Sinovac Dalian withdrew $920 (RMB 6 million) with an annual interest rate at 55 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 4.40%. Interest is payable monthly and the loans are repayable on March 13, 2021 and December 9, 2021, respectively. Buildings of Sinovac Dalian with a net book value of $2,567 (RMB 16.7 million) were pledged as collateral.

(c) On March 31, 2020, Sinovac LS entered into a maximum credit facility of $4,598 (RMB 30 million) with Bank of Beijing to finance its working capital requirements. $4,598 (RMB 30 million) was drawn on March 31, 2020 with an annual interest rate of 3.05%. Interest is payable quarterly and the loan is payable on March 31, 2021.

(d) On November 25, 2019, Sinovac Dalian entered into a revolving bank loan with SPD Silicon Valley Bank with the aggregate principal of $7,663 (RMB 50 million) to finance its working capital requirements. The revolving loan bears interest at 125 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.1% and interest is payable quarterly. Each withdraw from the revolving loan has a maximum term of 12 months. $1,087 (RMB 7.6 million) was drawn in 2019 and repaid in December 2020. The outstanding balance of $6,503 (RMB 42.4 million) was drawn during 2020 and is payable on or before August 6, 2021.  

(e) On May 14, 2020 and September 3, 2020, Sinovac LS entered into two revolving bank loans with SPD Silicon Valley Bank with the aggregate principal of $7,663 (RMB 50 million) and $10,728 (RMB 70 million) to finance its working capital requirements. The revolving loan bears interest at 120 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.05% and interest is payable quarterly. Each withdraw from the revolving loan has a maximum term of 12 months. The outstanding balance of $18,361 (RMB 119.8 million) was drawn during 2020 and is payable on or before October 15, 2021.  

(f) On November 5, 2020, Sinovac Dalian entered into a maximum credit facility of $1,379 (RMB 9 million) with Guangdong Development Bank to finance its working capital requirements. $1,378 (RMB 9.0 million) was drawn during 2020 and payable on or before November 29, 2021. The loan bears interest at 115 basis point above the prime rate of one year term loan published by the People’s Bank of China, at 5% and interest is payable monthly. Prepaid land lease payments of Sinovac Dalian with a net book value of $2,196 (RMB 14.3 million) were pledged as collateral.

(g) On May 26, 2020, Sinovac Dalian entered into four mortgages in the total amount of $333 (RMB 2.1 million) with China Merchants Bank to purchase four apartments. The loans bears annual interest rate at 175 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.6%. Principals and interests are repaid monthly over a term of 36 months. Sinovac Dalian repaid $58 (RMB 0.4 million) in principal and interest in 2020. As of December 31, 2020, $108 (RMB 0.7 million) is recorded in bank loans due within one year and $163 (RMB 1.1 million) is recorded in long-term bank loans. Buildings of Sinovac Dalian with a net book value of $672 (RMB 4.4 million) were pledged as collateral.

(h) On November 17, 2020, Sinovac Dalian entered into a maximum credit facility of $30,651 (RMB 200 million) is to finance Sinovac Dalian’s purchase of property plant and equipment, with a term from November 17, 2020 to November 16, 2028. The loan bears annual interest rate at 123 basis point above the prime rate of a five year term loan published by the People’s Bank of China, at 5.88%. Interest is payable quarterly and principal installment repayments begin in 2023 and shall be fully paid by November 16, 2028. Certain machinery and equipment of Sinovac Dalian with a net book value of $23,015 (RMB 150.2 million) were pledged as collateral. Sinovac Dalian withdrew $1,992 (RMB 13 million) on December 14, 2020, which will be repaid during 2023 to 2028.

Aggregate maturities of loans for each of the next 5 years following December 31, 2020 are as follows:

Within 1 year	$	32,941
In 2022		114
In 2023		98
In 2024		249
After 2024		1,694
Total	$	35,096

The weighted average interest rate for all short-term and long-term bank loans was 4.84% in 2020 (2019 - 5.09%, 2018 - 4.91%). The weighted average interest rate for short-term loans was 4.77% in 2020 (2019 – 5.09%, 2018 – 5.04%). The Company incurred $1,485 in interest and financing expenses for the year ended December 31, 2020 (2019 - $715, 2018 - $1,470 ), of which $32 was capitalized in property, plant and equipment for the year ended December 31, 2020 (2019 - $65, 2018 - $400 ).

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Related Party Transactions and Balances

12 Months Ended

Dec. 31, 2020

Related Party Transactions [Abstract]

Related Party Transactions and Balances

12. Related Party Transactions and Balances

(a) Loan from a non-controlling shareholder

	December 31,
	2020		2019
Loan -  current	$	6,155	$	6,607
Loan -  non - current		6,130		1,436
	$	12,285	$	8,043

The Company has four loans due to Dalian Jin Gang Group, the non-controlling shareholder of Sinovac Dalian, with a total amount of $12,260, of which two loans totalling $6,130 (RMB40 million) were borrowed in August 2020 and are repayable on August 18, 2021. $1,533 (RMB10 million) was borrowed in September 2019 and is repayable on September 19, 2022. $4,597 (RMB30 million) was borrowed in August 2020 and is repayable on August 9, 2023. These four loans are unsecured, bearing interest at 6.5% per year and payable monthly. Interest expense was $663 in 2020 (2019 - $455, 2018 - $453). As of December 31, 2020, $25 interest is owed on the loan from the non-controlling shareholder (December 31, 2019 - $nil). Interests of $640, $470 and $438 were paid to the non-controlling shareholder for the years ended December 31, 2020, 2019 and 2018, respectively.

(b) The Company entered into the following transactions in the normal course of operations at the exchange amount with related parties:

	For the year ended December 31,
	2020		2019		2018
Rent expenses to SinoBioway Biotech Group Co. Ltd. (“SinoBioway”).	$	776	$	775	$	810
Rent expenses to Dalian Jin Gang Group (“Jin Gang”).		22		36		—
	$	798	$	811	$	810

In 2004, the Company entered into two operating lease agreements with SinoBioway, the non-controlling shareholder of Sinovac Beijing, with respect to Sinovac Beijing’s production plant and laboratory in Beijing, China with annual lease payments totaling $197 (RMB 1.4 million). The leases commenced on August 12, 2004 and have a term of 20 years. One of the lease agreements was amended on August 12, 2010 with the rent increasing from $75 (RMB 0.5 million) to $197 (RMB1.4 million) per year.

In June 2007, the Company entered into another operating lease agreement with SinoBioway, with respect to the expansion of Sinovac Beijing’s production plant in Beijing, China, for an annual lease payment of $296 (RMB2.0 million). The lease commenced in June 2007 and has a term of 20 years.

In September 2010, the Company entered into another operating lease agreement with SinoBioway with respect to expansion of Sinovac R&D’s business in research and development activities for an annual lease payment of $146 (RMB1.0 million). The lease commenced on September 30, 2010 and has a term of 5 years.

On April 8, 2013, the Company entered into four supplemental agreements with SinoBioway, under which the expiration date of all operating lease agreements was extended to April 7, 2033.

In 2019, the Company entered into an operating lease agreement with Jin Gang, the non-controlling shareholder of Sinovac Dalian, to rent refrigeration storage with the space of 2,000 sq.m. with an annual rent amounted $49 (RMB0.3 million). The lease commenced on January 1, 2019 and has a term of 5 years. On June 30, 2019, the lease agreement was amended for a remaining 5.5 years, and the annual rent was changed to $22(RMB0.2 million) as the space of the leased refrigeration storage was reduced to 1,000 sq.m. In 2019, the Company also entered into a management service agreement with Jin Gang, pursuant to which it provided the Company with management service related to the operating lease agreement with an annual management service fee of $14 (RMB0.1 million). The management service agreement was amended on June 30, 2019, and the annual management service fee was changed to $7 (RMB 44,000).

As of December 31, 2020, $7,796 in right-of use asset and $7,423 in current and non-current lease liability are related to the lease with SinoBioway and Jin Gang.

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Accounts Payable and Accrued Liabilities

12 Months Ended

Dec. 31, 2020

Payables And Accruals [Abstract]

Accounts Payable and Accrued Liabilities

13. Accounts Payable and Accrued Liabilities

	December 31,
	2020		2019
Trade payables	$	30,543	$	5,783
Machinery and equipment payables		13,044		2,106
Accrued expenses		113,688		31,145
Value added tax payable		4,682		515
Other tax payable		1,885		488
Withholding tax payable		301		74
Bonus and benefit payables		44,098		10,884
Other payables		3,187		7,895
Total accounts payable and accrued liabilities	$	211,428	$	58,890

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Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

Antigua and Barbuda

Under the current laws of Antigua and Barbuda, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no Antigua and Barbuda withholding tax will be imposed.

Hong Kong

Under Hong Kong tax laws, Sinovac Hong Kong is subject to Hong Kong Profits Tax rate at 16.5%, and is exempted from income tax on its foreign-derived income. There are no withholding taxes in Hong Kong on remittance of dividends.

Singapore

Under Singapore tax laws, Sinovac Singapore is subject to Singapore Income Tax rate at 17%, and is exempted from income tax on its foreign-derived income. There are no withholding taxes in Singapore on remittance of dividends.

China

Effective from January 1, 2008, the PRC’s statutory income tax rate is 25%. The Company’s PRC subsidiaries are subject to income tax at the statutory rate of 25% except for Sinovac Beijing, Sinovac Dalian and Sinovac LS. Sinovac Beijing and Sinovac Dalian, have been reconfirmed as a “High and New Technology Enterprise” (“HNTE”) in 2020 for a period of 3 years, are subject to a preferential income tax rate of 15% from 2020 to 2022. Sinovac LS, has been confirmed as a “High and New Technology Enterprise” (“HNTE”) in 2020 for a period of 3 years, is subject to a preferential income tax rate of 15% from 2020 to 2022.

The Company’s income before income tax consists of:

	For the year ended December 31,
	2020		2019			2018
Non-PRC	$	5,866	$	(7,337	)	$	(16,308	)
PRC		210,751		78,157			62,891
Total	$	216,617	$	70,820		$	46,583

Income taxes attributed in China consists of:

	For the year ended December 31,
	2020			2019			2018
Current income tax expenses	$	(42,665	)	$	(11,290	)	$	(7,326	)
Deferred tax benefits		11,227			5,685			(3,146	)
Total income tax expense	$	(31,438	)	$	(5,605	)	$	(10,472	)

The following is a reconciliation of the Company’s total income tax expenses to the amount computed by applying the PRC statutory income tax rate of 25% to its income before income taxes for the years ended December 31, 2020, 2019 and 2018:

	For the year ended December 31,
	2020			2019			2018
Income before income taxes	$	216,617		$	70,820		$	46,583
Income tax expense at the PRC statutory rate		(54,154	)		(17,705	)		(11,646	)
International tax rate differential		(419	)		(1,827	)		(3,929	)
Super deduction for research and development expenses		7,229			2,310			1,835
Non-deductible expenses		(2,225	)		685			(1,865	)
Other adjustments		(1,002	)		(486	)		14
Effect of preferential tax rate		19,224			7,018			6,562
Change in valuation allowance		2,656			4,415			(1,429	)
Effect of PRC withholding tax		(2,747	)		(15	)		(14	)
Income tax expense	$	(31,438	)	$	(5,605	)	$	(10,472	)

The tax effects of temporary differences that give rise to the Company’s deferred tax assets are as follows:

	December 31,
	2020			2019
Inventories		1,212			394
Accrued expenses		17,240			4,184
Deferred government grants		2,838			985
Fixed assets		5,382			4,160
Tax losses carried forward		338			4,420
Less: valuation allowance		(119	)		(2,775	)
Deferred tax assets	$	26,891		$	11,368

In assessing the realizbility of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible or utilized. The Company considers projected future taxable income and tax planning strategies in making this assessment. Based upon an assessment of the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible or can be utilized, the Company provided valuation allowance of $119 as of December 31, 2020 (December 31, 2019 - $2,775).

The Company evaluates its valuation allowance requirements at end of each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When circumstances cause a change in management’s judgment about the realizability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carry forward period available under applicable tax law. The Company’s valuation allowance decreased by $2,656 from $2,775 as of December 31, 2019 to $119 as of December 31, 2020.

Tax losses of the Company’s PRC subsidiaries in the amount of $1,932 (RMB 12.6 million) as of December 31, 2020 will expire from 2021 to 2030, if not utilized.

As of December 31, 2020, deferred tax liabilities of $2,724 represents withholding tax for the potential remittance of earnings from the PRC subsidiaries to Sinovac Hong Kong, accrued at a 5% withholding tax rate. Under the PRC tax regulations, dividends from PRC companies to their overseas parents in respect of earnings derived from January 1, 2008 onwards are subject to PRC dividend withholding tax at 10%, which could be reduced to 5% should treaty benefits be applicable.

As of December 31, 2020, the Company has not recognized any deferred tax liability on Sinovac Beijing’s undistributed earnings of approximately $189,898, in view of the Company's permanent reinvestment plan. The Company would be subject to PRC withholding income taxes at 5% or 10%, depending on the availability of treaty benefit between China and Hong Kong, upon the distribution of such profits outside of China. As of December 31, 2020, the Company’s portion on the amount of unrecognized deferred tax liability was ranging from $9,495 to $18,990.

The changes in unrecognized tax benefits are as follows:

	For the year ended December 31,
	2020			2019			2018
Balance at January 1		904			1,681			1,873
Additions for tax positions of the current year		—			—			7
Additions for tax positions of the prior years		—			—			—
Settlement with the taxing authority		—			—			—
Lapse of statute of limitations		(343	)		(777	)		(199	)
Balance at December 31	$	561		$	904		$	1,681

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits, and such interest and penalties are reversed when statute of limitations lapse. For the year ended December 31, 2020, the Company reversed $107 in interest (December 31, 2019 -

$458 interest recorded) and nil in penalties (December 31, 2019 - nil). The Company had $305 accrued interest as of December 31, 2020 (December 31, 2019 - $412). The PRC tax law provides statute of limitations ranging from 3 to 5 years and for transfer pricing related matters, it could be extended to 10 years. In general, the PRC tax authorities have up to five years to conduct examinations of the tax filings of the Company’s PRC subsidiaries. Accordingly, the PRC subsidiaries’ tax years of 2015 - 2020 remain open to examination by the respective tax authorities.

As of December 31, 2020, the Company had unrecognized tax benefits of approximately $561 (December 31, 2019 - $904, December 31, 2018 - $1,681) and such balance was included in “other non-current liabilities”. As of December 31, 2020, unrecognized tax benefits amounting to $561 would affect the effective tax rate if recognized (December 31, 2019 - $904, December 31, 2018 - $1,681). The Company does not expect the amount of unrecognized tax benefits would change significantly in the next 12 months.

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Deferred Revenue

12 Months Ended

Dec. 31, 2020

Deferred Revenue [Abstract]

Deferred Revenue

15. Deferred Revenue

Current deferred revenue included $363,787 of advances from customers (December 31, 2019 - $5,258) and $218 from Chinese government for stockpiling of H5N1 and hepatitis A vaccines (December 31, 2019 - $204).

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Deferred Government Grants

12 Months Ended

Dec. 31, 2020

Deferred Government Grant [Abstract]

Deferred Government Grants

16. Deferred Government Grants

Deferred government grants represent funding received from the government for research and development (“R&D”) or investment in building or improving production facility. The amount of deferred government grants as of year end is net of research and development expenditures, deduction of depreciation expenses, and the amount recognized as government grant income. The Company received $14,162 of government grant in 2020 (2019 - $975, 2018 - $3,546) that were deferred. In addition, the Company received $3,137 in other government grants and subsidies for the year ended December 31, 2020 and recognized as income in the statements of comprehensive income (2019 - $501, 2018 - $254).

Summarized below are deferred government grants As of December 31, 2020 and 2019:

	December 31,
	2020		2019
Government grants for property, plant and equipment (a)	$	565	$	486
Government grants for research and development (b)		14,594		2,252
Current deferred government grants		15,159		2,738
Government grants for property, plant and equipment (a)		3,003		2,137
Government grants for research and development (b)		1,226		1,849
Non-current deferred government grants		4,229		3,986
Total deferred government grants		19,388		6,724

(a) The Company has four deferred government grants related to property, plant and equipment. The Company has fulfilled one of the grants’ conditions and expect to fulfill another one in 2021. $565 will be amortized in 2021 which was included in the current portion of deferred government grant and $1,714 will be amortized after 2021 which was included in the non-current portion of deferred government grants. $412 was recorded as a reduction to depreciation expense for the year ended December 31, 2020 (2019 - $412, 2018 - $430), and $80 was recorded as government grant recognized in income for the year ended December 31, 2020 (2019 - $79, 2018 - $82). $1,289 represents the unamortized portion of one grant where the Company received but has not fulfilled the conditions attached to the grant. As the Company does not expect to fulfill the conditions within one year, the grant is recorded as a non-current deferred government grant.

(b) The Company has ten deferred government grants related to various research and development projects. The Company expects to fulfill nine grants’ conditions in 2021 and recorded $14,594 as current portion of deferred government grants, while the remaining one grant’s condition is expected to be fulfilled after 2021 and $1,226 is recorded in the non-current portion of deferred government grants.  

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

17. Commitments and Contingencies

(a) Other Commitments

In addition to commitments disclosed in note 23, commitments related to R&D expenditures are $3,886 as of December 31, 2020.

Commitments related to capital expenditures for the Company are approximately $45,306 as of December 31, 2020.

(b) Foreign Corrupt Practice Act Matters

The Company may be subject to legal proceedings, investigations and claims relating to the conduct of the Company’s business from time to time.

The Beijing People’s Court issued five judgments in 2016 and 2017. These judgments were related to corrupt conduct allegedly engaged in by a former official of the Center for Drug Evaluation in NMPA, his wife and his son. These judgments found that the official and his wife had engaged in a practice of improperly soliciting and accepting payments from various individuals involved in the vaccine products industry. According to the judgments, one of the individuals solicited by the official was Mr. Weidong Yin, the Company’s chairman, president and chief executive officer. It was asserted in the judgments that Mr. Weidong Yin made three payments, and arranged for a loan, to the official and his wife, in the total amount of $77 (RMB 0.6 million) between 2002 and 2011. Mr. Weidong Yin was not charged with any offense or improper conduct and he cooperated as a witness with the procuratorate. To the Company’s knowledge, the Chinese authorities have not commenced any legal proceedings or government inquiries against Mr. Yin. In December 2016, the Company’s audit committee authorized the commencement of an internal investigation into the allegations made in the judgments. The audit committee engaged Latham & Watkins as independent counsel to assist with the investigation.

In 2017 and 2018, the Company became aware of certain judgments based on bribery charges issued by Chinese courts in four provinces against various officials of the CDC. While these judgments appear to reflect an industry-wide investigation focused on CDC officials, they also referenced nine of our former salespersons, together with sales personnel from several other Chinese vaccine companies and distributors. These judgments did not name, and no charges were brought against, our company or any of our directors or officers as defendants. To the best of the Company’s knowledge, the nine referenced employees cooperated with the procuratorate. The procuratorate did not contact the Company for cooperation. Upon becoming aware of these judgments, the Company’s Audit Committee expanded its internal investigation to review matters related to these judgments and our sales practices and policies, and further engaged Latham & Watkins LLP to continue the independent investigation with the expanded scope. One of the nine former sales employees has been convicted for giving bribes. The judgment states that this former sales employee took these actions without knowledge of the Company. His criminal penalty was waived by the court.

After the Company publicly announced the internal investigation arising from the allegations in a research report in December 2016, the Company was notified by the SEC in February 2017 of an enforcement inquiry related to the matters discussed in the report, and in April 2017 the Company received a subpoena from the SEC requesting documents. In September 2017, the Company received an inquiry from the Department of Justice (the “DOJ”) and the Company has been cooperating with the DOJ. The SEC and DOJ have requested information regarding the judgments discussed above, and the Company is cooperating with these requests.

Also in February 2017, the Company received an inquiry from NASDAQ related to the same matter. Further, in May 2018, the Company received an inquiry from NASDAQ requesting information related to the actions by Sinobioway and their impact on the Company’s operations and financial reporting. The Company has cooperated with both of these NASDAQ inquiries.

On August 14, 2018, the SEC notified the Company that the SEC had concluded its investigation and would not recommend an enforcement action against the Company at this time. On September 12, 2018, the DOJ notified the Company that it had closed its investigation, with no charges.

With the closure of the DOJ’s investigation, the Company is not aware of any pending U.S. government investigations of the Company related to these matters.

(c) Other Litigation Matters

On March 5, 2018, the Company filed a lawsuit in the Court of Chancery of the State of Delaware seeking a determination whether 1Globe, The Chiang Li Family, OrbiMed and other shareholders of Sinovac Biotech Ltd. had triggered the Rights Agreement by forming a group holding approximately 45% of outstanding shares of Sinovac Biotech Ltd., in excess of the plan’s threshold of 15%, and acting in concert prior to the 2017 AGM. The Rights Agreement is intended to promote the fair and equal treatment of all Sinovac shareholders and ensure that no person or group can gain control of Sinovac through undisclosed voting arrangements, open market accumulation or other tactics potentially disadvantaging the interest of all shareholders.

On April 12, 2018, 1Globe filed an amended answer to the Company’s complaint, counterclaims, and a third-party complaint against Mr. Weidong Yin alleging, among other allegations, that the Rights Agreement is not valid, that Mr. Weidong Yin and the Buyer Consortium had previously triggered the Rights Agreement, and that 1Globe did not trigger the Rights Agreement. The Company and its board of directors believes that the actions taken by the board of directors were appropriate under the circumstances and that the allegations of the counterclaims and third-party complaint are without merit. 1Globe asks for various measures of equitable relief and also includes a claim for its costs, including attorneys’ fees.

On July 31, 2018, following the Company motions for partial summary judgment and an expedited trial date, the Delaware Chancery Court effectively stayed the action pending receipt of a post-trial decision from the Antigua Court in the matter captioned 1Globe Capital, LLC and Sinovac Biotech Ltd., Claim No. ANUHCV 2018/0120. On December 19, 2018, the Antigua Court issued a judgment affirming the validity of Sinovac Antigua’s Rights Agreement under Antigua law, and finding that “there was a secret plan to take control” of the Company at the 2017 AGM.

Based upon the Antigua Court’s judgment and other facts known to the board of directors, the Company’s board of directors determined that the Collaborating Shareholders became Acquiring Persons on or prior to the 2017 AGM and their conduct resulted in a “Trigger Event” under the Company’s Rights Agreement. As a result of becoming Acquiring Persons, the approximately 28.7 million Rights held by the Collaborating Shareholders automatically became void under the terms of the Rights Agreement. Pursuant to the Rights Agreement, the board of directors elected to exchange the approximately 42.4 million valid and outstanding Rights held by the Company’s shareholders (not including the Collaborating Shareholders) for a combination of approximately 27.8 million Common Shares and approximately 14.6 million Series B Preferred Shares, all of which the Company issued into a trust on February 22, 2019 for the benefit of the holders of the valid and outstanding Rights.

On March 6, 2019, the Delaware Chancery Court entered a status quo order providing that the Company not distribute any of the Exchange Shares to rights holders until the final disposition of the pending Delaware litigation or further order of the Court. On April 4, 2019, the Eastern Caribbean Supreme Court, Court of Appeal issued an order that restrains the Company from taking further action under its Rights Agreement, including the distribution of the previously issued Exchange Shares to the holders of valid Rights, until the conclusion of 1Globe Capital, LLC’s appeal of the December 19, 2018 Judgment of the High Court of Justice of Antigua and Barbuda. On April 8, 2019, the Delaware Chancery Court stayed the Delaware litigation pending the outcome of 1Globe’s appeal of the Antigua Judgment. The Company cannot predict whether an ultimate outcome will be favorable or unfavorable, nor estimate the amount or range of potential loss (if any) at this time.

On March 5, 2018, the Company also filed a lawsuit in the United States District Court for Massachusetts alleging violations of Section 13(d) of the Securities Exchange Act of 1934 by 1Globe and The Chiang Li Family. The lawsuit alleges, among other things, that the defendant shareholders failed to make required disclosures on Schedule 13D regarding their intentions to attempt to replace the Company's board of directors.

On April 9, 2018, the Company received a document request from SEC requesting all of the Company’s documents concerning 1Globe, the Chiang Li Family, OrbiMed, certain other shareholders, and their affiliates. The Company has been cooperating with the SEC. The Company understands the SEC is investigating whether 1Globe, and possibly other shareholders, violated the U.S. securities laws. The Company does not have any information to suggest the SEC is investigating the actions of the Company or its officers and directors.

On May 21, 2018, 1Globe answered and filed counterclaims against the Company and certain of its executives, alleging violations of Section 10(b) of the Exchange Act and various state law claims. In response to the Company’s motion to dismiss 1Globe’s counterclaims, on August 1, 2018, 1Globe filed amended counterclaims against the Company and certain of its executives, alleging violations of Section 10(b) of the Exchange Act and Rule 10b-5, as well as state law claims of abuse of process, fraudulent misrepresentation, negligent misrepresentation, and aiding and abetting such violations, primarily arising out of allegedly false and/or misleading statements made by the Company regarding its business, operational, and financial results.

On August 17, 2018, the Massachusetts Court granted a consent motion to extend the deadline for the Company’s response to 1Globe’s counterclaims (and for any subsequent opposition by 1Globe) until after the Antigua Court issued a ruling in the matter captioned 1Globe Capital, LLC and Sinovac Biotech Ltd., Claim No. ANUHCV 2018/0120. On December 19, 2018, the Antigua Court issued a judgment, which 1Globe appealed on January 29, 2019. Per the Massachusetts Court’s order, the parties have filed periodic status reports regarding the pending court proceedings in Antigua. No date for the Company’s response to 1Globe’s counterclaims has been set. The Company is vigorously pursuing this lawsuit; however, the Company cannot predict whether an ultimate outcome will be favorable or unfavorable, nor estimate the amount or range of potential loss (if any) at this time.

Also on August 1, 2018, 1Globe filed a motion for preliminary injunction seeking to enjoin the Company from, inter alia, altering the capital structure of the Company. On October 15, 2018, the Massachusetts Court denied 1Globe’s motion. On November 14, 2018, 1Globe filed an appeal of the denial of its motion for preliminary injunction to the United States Court of Appeals for the First Circuit. On January 10, 2019, 1Globe filed a motion to hold its appeal in abeyance pending the outcome of its separate appeal of the Antigua Court’s judgment, which the Company opposed. In October 2019, 1Globe voluntarily dismissed the appeal.

Separately, Heng Ren Investments LP (“Heng Ren”) filed suit against the Company and Weidong Yin for alleged breach of fiduciary duties and wrongful equity dilution on May 31, 2019, in Massachusetts state court. The Company removed the matter from state court to the United States District Court for the District of Massachusetts. Heng Ren alleged that Mr. Yin breached fiduciary duties owed to minority shareholders, that the Company aided and abetted breaches of fiduciary duties, and that both the Company and Mr. Yin engaged in wrongful equity dilution. Heng Ren requested damages, attorneys’ fees, and prejudgment interest. On September 14, 2020, the Company filed a motion to dismiss Heng Ren’s claims and the court’s decision on that motion is pending as of the date of this annual report.

On March 13, 2018, 1Globe filed a complaint against the Company in the Antigua Court. The complaint seeks a declaration that the five persons purportedly proposed on the Non-Public Submission at the 2017 AGM were elected as directors of the Company at that meeting, an order of the Antigua Court that those directors be installed as the Company’s board of directors, and a declaration that any actions taken on behalf of the Company at the direction of the board of directors since the 2017 AGM are null and void. On April 10, 2018, 1Globe filed a notice of application in the Antigua Court seeking an order declaring the result of the disputed election, an urgent order restraining the Company’s board of directors from acting, pending determination of the dispute, including acting to initiate or continue litigation against the Shareholder Group, and other related relief. The Company attended the first hearing on May 9, 2018. In July 2018, the Antigua court heard an application by 1Globe for interim injunctive relief preventing the Company from exercising its rights under the Rights Agreement. This application was unsuccessful, but the judge set an expedited timetable to trial. The trial of the matter took place from December 3 to 5, 2018. On December 19, 2018, the judge handed down his judgment, finding in Sinovac’s favor in full, dismissing 1Globe’s claim and declaring that the Rights Agreement was validly adopted as a matter of Antigua law. On January 29, 2019, 1Globe filed a Notice of Appeal. On March 4, 2019, 1Globe filed an application for urgent interim relief, seeking an injunction to prevent Sinovac from continuing to implement its Rights Agreement until the resolution of the appeal. This urgent interim relief application was heard on April 4, 2019, at which the Court of Appeal made an order restraining the Company in similar terms to the Delaware Court order of March 6, 2019, together with restraint from operating the Rights Agreement in any way that affects 1Globe’s rights or shareholding until determination of the appeal. 1Globe’s appeal of the Antigua Court’s Judgment was heard on September 18, 2019, and the appeal decision is pending as of the date of this annual report. The Company cannot predict or estimate an outcome or economic burden for this case at this time.

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Preferred and Common Stock

12 Months Ended

Dec. 31, 2020

Equity [Abstract]

Preferred and Common Stock

18. Preferred and Common Stock

Share Capital

On February 22, 2019, pursuant to the Rights Agreement, the Company’s board of directors elected to exchange the approximately 42.4 million valid and outstanding Rights held by the Company’s shareholders (not including the Collaborating Shareholders) for a combination of 27,777,341 common shares and 14,630,813 Series B Convertible Preferred Shares (the “Preferred Shares”), all of which the Company issued into a trust on February 22, 2019 for the benefit of the holders of the valid and outstanding Rights under the Company’s Rights Agreement. The Preferred Shares issued share equally in all dividends and distributions made on the common shares and vote together with the common shares on all matters brought before the shareholders, in each case on an as-converted basis and subject to applicable law. Each preferred share is convertible into one common share at the option of the Company, or automatically upon a successful shareholder vote to increase the authorized number of common shares of the Company. Until the Preferred Shares are converted into common shares (or until the Preferred Shares are listed on a nationally recognized securities exchange), they will earn a preferred dividend equal to $0.41 per share per annum, payable quarterly in arrears. As of December 31, 2020, there were 14,630,813 preferred stock issued and outstanding, and the Company accrued $6,015 in preferred stock dividend for the year ended December 31, 2020.

Each share of common stock is entitled to one vote per share and is entitled to dividends when declared by the Company’s board of directors. As of December 31, 2020 and 2019, there were 99,294,743 and 98,903,243 shares of common stock outstanding, respectively.  

In 2018, the Company issued 1,219 shares of common stock on the exercise of employee stock options with exercise price of $2.37 per share and 107,822 shares of common stock on the exercise of employee stock options with exercise price of $4.98 per share, for 156,300 shares of stock options exercised under cashless excise with total proceeds of $3. In 2018, the Company cancelled 51,500 restricted shares previously issued to employees of the Company due to employee termination. On July 2, 2018, in connection with a private placement transaction, the Company issued 11,800,000 shares of common stock at $7.35 per share with a nine months restricted period. The Company received net proceeds of $85,299 after deducting offering expenses of approximately $1,431.

In 2019, the Company issued 13,500 shares of common stock on the exercise of employee stock options with exercise price of $4.98 per share. In 2019, the Company cancelled 27,000 restricted shares previously issued to employees of the Company due to employee termination.

In 2020, the Company issued 401,500 shares of common stock on the exercise of employee stock options with exercise price of $4.98 per share. In 2020, the Company cancelled 10,000 restricted shares previously issued to employees of the Company due to employee termination.

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Stock Options

12 Months Ended

Dec. 31, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Options

19. Stock Options

(a) Stock Option Plan

The board of directors approved a stock option plan (the “2003 Plan”) effective on November 1, 2003, pursuant to which directors, officers, employees and consultants of the Company are eligible to receive grants of options for the Company’s common stock. The 2003 Plan expires on November 1, 2023. Up to 10% of the Company’s then outstanding common stocks were reserved for issuance under the 2003 Plan. As of December 31, 2020, 42,800 shares of common stock under the 2003 Plan remain available for issuance. Each stock option entitles its holder to purchase one share of common stock of the Company. Options may be granted for a term not exceeding 10 years from the date of grant. The 2003 Plan is administered by the board of directors.

In December 2011, the Company granted 767,000 options to employees with an exercise price of $2.37, being the quoted market price of the Company’s shares at the time of grant. 10% of the options vest every three months from December 26, 2012 to March 26, 2015 and expired on December 25, 2017. This grant was fully vested on March 26, 2015.

On August 22, 2012, the board of directors approved a new stock option plan (the “2012 Plan”), which allowed the Company to issue up to 4,000,000 options for common shares and restricted shares of the Company to directors, officers, employees and consultants of the Company. Each stock option entitles its holder to purchase one share of common stock of the Company. Options and restricted shares may be granted for a term not exceeding 10 years from the date of grant. The 2012 Plan is administered by the board of directors. The 2012 Plan will expire on August 22, 2022. Any awards that are outstanding on August 22, 2022 will remain in force according to the terms of the 2012 Plan and the applicable award agreement.

On May 1, 2015, the Company granted 729,000 restricted shares (the “Restricted Shares”) at par value of $0.001 and 1,341,000 options (the “Options”) under the 2012 Plan with an exercise price of $4.98, being the quoted market price of the Company’s shares at the time of grant. The options will expire on April 30, 2023. One-fifth of the Restricted Shares and Options shall vest on the first, second, third, fourth and fifth anniversaries of date of grant, respectively. The Restricted Shares are not subject to any restriction on transfer and repurchase after they are vested. 20% of the Options and Restricted Shares were vested on May 1, 2016.  On December 16, 2016, the board of directors approved that an additional 30% of the Options to be vested on December 16, 2016, and restrictions of an additional 30% of the Restricted Shares were removed on December 16, 2016. On April 25, 2018, the board of directors approved that all remaining unvested Options and Restricted Shares that were granted on May 1, 2015 were fully vested on April 25, 2018.

On March 7, 2018, the Company granted 2,000,000 restricted shares (the “2018 Restricted Shares”) at par value of $0.001 under the 2012 Plan, to certain officers and employees of the Company. 60% of the 2018 Restricted Shares will vest on the third anniversary of the date of grant, the remaining 40% 2018 Restricted Shares will vest on the fourth and the fifth anniversary evenly.

On September 16, 2020, the board of directors approved an employee share ownership plan (the “2020 ESOP”), where options were granted to officers and employees of the Company the right to purchase up to a 15% equity interest in Sinovac LS upon exercise of the options. The options have an exercise price of $12,000 that vested immediately and have a life of 8 years.

(b) Valuation Assumptions

The Company used the Black-Scholes option-pricing model in determining the fair value of stock options issued under the 2020 ESOP, and valuation assumptions include expected volatility of 73.22%, an expected life of 2 years, a risk-free interest rate of 2.72%, and a dividend rate of 0%. As Sinovac LS is a private company with limited equity transactions in the past, expected volatility is estimated based on share price volatilities of a group of public traded development stage vaccine companies and development stage East Asian pharmaceutical companies that most closely represent the stage of Sinovac LS at the time. The expected life represents the amount of time that options granted are expected to be outstanding based on forecasted exercise behavior. The risk-free interest rate is based on the rate at grant date of Chinese government bond yield with an average term equal to the expected term of the option. There were no options granted in the years ended December 31, 2019 and 2018.

(c) Share-based Payment Award Activity

A summary of the Company’s stock options activity for the 2003 and 2012 Plan is presented below:

	Number of Options			Weighted Average Exercise Price ($/option)		Aggregate Intrinsic Value ($)
Outstanding as of January 1, 2020		785,500		$	4.98	$	1,170,395
Granted		—			—		—
Exercised		(401,500	)		4.98		—
Forfeited / Expired		(4,000	)		—		—
Outstanding as of December 31, 2020		380,000		$	4.98	$	566,200
Vested and expected to vest at December 31, 2020		380,000		$	4.98		566,200
Exercisable as of December 31, 2020		380,000		$	4.98	$	566,200

A summary of the Company’s non-vested restricted share activity for the 2012 plan is presented below:

	Number of Non-Vested Restricted Shares			Weighted Average Grant Date Fair Value ($)
Non-vested as of January 1, 2020		1,973,000		$	8.25
Granted		—			—
Vested		—			—
Forfeited		(10,000	)		8.25
Non-vested as of  December 31, 2020		1,963,000		$	8.25

As at December 31, 2020

Exercise Prices ($/option)		Number of Options Outstanding		Remaining Average Contractual Life (years)		Average Exercise Price ($/option)		Number of Options Exercisable		Remaining Contractual Life (years)		Average Exercise Price ($/option)
$	4.98		380,000		2.33		4.98		380,000	$	2.33	$	4.98
			380,000		2.33		4.98		380,000		2.33		4.98

The grant date fair value of options issued under the 2020 ESOP is $7,200 and the options can acquire 15% of Sinovac LS’s equity interest upon exercise. The options were fully exercised in 2020. The aggregate intrinsic value of the options exercised under the 2020 ESOP was $3,000.

Share-based compensation expense, included in cost of sales, selling, general and administrative expenses and R&D expenses is charged to operations over the vesting period of the options using the straight-line amortization method. The share-based compensation expense was $10,203 in 2020 (2019 - $3,003, 2018 - $4,305 ). As of December 31, 2020, there was $nil and $6,555 of unrecognized compensation cost related to non-vested stock options and non-vested restricted shares, respectively, granted under the 2012 Plan. The unrecognized compensation cost related to the non-vested restrict shares will be recognized over a weighted average period of 26 months.

The aggregate intrinsic value of the Company’s stock options is calculated as the difference between the exercise price of the options and the quoted price of the common shares that were in the money. The aggregate intrinsic value of the Company’s stock options exercised under the 2003 Plan and the 2012 Plan was $nil and $598 for year ended December 31, 2020, respectively, determined as of the date of option exercise (2019 - $27, 2018 - $426).

The estimated fair value of stock options vested during the year ended December 31, 2020 was nil (2019 - $nil, 2018 – $1,135).

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Statutory Surplus Reserves

12 Months Ended

Dec. 31, 2020

Statutory Surplus Reserves [Abstract]

Statutory Surplus Reserves

20. Statutory Surplus Reserves

Pursuant to Chinese company law applicable to foreign investment companies, the Company’s PRC subsidiaries are required to maintain statutory surplus reserves. The statutory surplus reserves are to be appropriated from net income after taxes, and should be at least 10% of the after tax net income determined in accordance with accounting principles and relevant financial regulations applicable to PRC enterprises (“PRC GAAP”). The Company has an option of not appropriating the statutory surplus reserve after the statutory surplus reserve is equal to 50% of the subsidiary’s registered capital. Statutory surplus reserves are recorded as a component of shareholders’ equity. The statutory surplus reserve as of December 31, 2020 is $50,377 (2019 - $33,533).

Sinovac Biomed have not accumulated any profit since inception. No appropriation to the statutory surplus reserves and staff welfare and bonus were made.

Dividends declared by the Company’s PRC subsidiaries are based on the distributable profits as reported in their statutory financial statements reported in accordance with PRC GAAP, which differ from the results of operations reflected in the consolidated financial statements prepared in accordance with US GAAP. The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its PRC subsidiaries. As of December 31, 2020, the Company has $nil dividend payable to the common shareholders (December 31, 2019 - $nil), and has $11,143 dividend payable to preferred shareholders (December 31, 2019 - $5,128).

Under PRC laws and regulations, statutory surplus reserves are restricted to set-off against losses, expansion of production and operation and increasing registered capital of the respective company, and are not distributable other than upon liquidation. Staff welfare and bonus funds are restricted to expenditures for the collective welfare of employees. The reserves are not allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor are they allowed for distribution except under liquidation. Amounts restricted include the PRC subsidiaries’ paid-in capital, additional paid-in capital and statutory surplus reserves of the Company’s PRC subsidiaries totaling $442,562 (RMB 2,947 million) as of December 31, 2020 (December 31, 2019, $85,446 (RMB 588 million)). Further, foreign exchange and other regulations in the PRC further restrict the Company’s PRC subsidiaries from transferring funds to the Company in the form of loans, advances or cash dividends. As of December 31, 2020, amounts restricted include the net assets of the Company’s PRC subsidiaries, which amounted to $698,552 (December 31, 2019 - $225,014).

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Earnings per Share

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Earnings per Share

21. Earnings per Share

The following table sets forth the computation of basic and diluted income attributable to common shareholders of Sinovac per share (in thousands, except for number of shares and per share data):

	For the year ended December 31
	2020		2019		2018
Numerator
Net income	$	185,179	$	65,215	$	36,111
Less: Income attributable to non-controlling interests		74,810		20,286		14,329
Income attributable to shareholders of Sinovac		110,369		44,929		21,782
Less: Preferred stock dividends		6,015		5,128		—
Net income attributable to shareholders of Sinovac		104,354		39,801		21,782
Net income attributable to shareholders of Sinovac for computing diluted net    income per share		110,369		44,929		21,782
Denominator
Basic weighted average number of common shares outstanding		98,897,345		94,876,946		64,727,146
Dilutive effect of stock options and preferred shares		14,765,017		14,815,013		250,408
Diluted weighted average number of common shares outstanding		113,662,362		109,691,959		64,977,554
Earnings per share
Basic net income per share		1.06		0.42		0.34
Diluted net income per share		0.97		0.41		0.34

As the Company announced on February 22, 2019, the Company’s Board of Directors determined that certain shareholders became Acquiring Persons, and a Trigger Event occurred under the Rights Agreement. As a result, 27,777,341 new common and 14,630,813 preferred shares of the Company were issued into a trust for the benefit of the holders of the valid and outstanding Rights. Releasing these shares from the trust is contingent on an outcome from the Company's legal proceeding in Antigua. Without the effect of the implementation of the Rights Agreement and the newly issued common and preferred shares, basic weighted average number of common shares outstanding and diluted weighted average number of common shares outstanding would be 71,120,004 and 85,885,021, respectively. And the basic and diluted earnings per share for 2020 would be $1.55 and $ 1.29, respectively.

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Segment Information

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Information

22. Segment Information

The Company operates exclusively in the biotechnology sector. The Company’s business is considered as operating in one segment. The Company’s Chief Executive Officer is the chief operating decision maker and reviews the consolidated results of operations when making decisions about resources allocation and assessing performance of the Company as a whole. All revenues are generated from the subsidiaries located in China. Total long-lived assets of $208,618 including prepaid land lease payments, property, plant and equipment are all located in mainland China (December 31, 2019 - $82,275). The Company’s total assets by geographic location are as follows:

	December 31,
	2020		2019
Assets
Mainland China	$	1,824,380	$	384,297
Outside Mainland China		76,946		68,002
Total Assets	$	1,901,326	$	452,299

The Company’s revenues by market type are as follows:

	For the year ended December 31,
	2020		2019		2018
Sales
EPI	$	96,799	$	6,896	$	10,357
Private Pay		268,821		220,217		204,764
Export		145,004		18,940		14,529
Total Sales	$	510,624	$	246,053	$	229,650

The Company’s revenues are attributed to geographic locations as follows:

	For the year ended December 31,
	2020		2019		2018
Sales
Mainland China	$	365,620	$	227,113	$	215,121
Outside Mainland China		145,004		18,940		14,529
Total Sales	$	510,624	$	246,053	$	229,650

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Collaboration Agreements

12 Months Ended

Dec. 31, 2020

Collaboration Agreements Disclosure [Abstract]

Collaboration Agreements

23. Collaboration Agreements

(a) On March 12, 2009, the Company entered into a technology transfer agreement (with an amendment agreement entered into on December 14, 2011) with Tianjin CanSino Biotechnology Inc. (“Tianjin Cansino”). According to the agreement, Tianjing Cansino will transfer the technology related to pneumococcal vaccine to the Company and jointly develop the technology with the Company. The collaboration term under the technology transfer agreement is from March 12, 2009 to eight years after the first sale of the vaccine developed under the technology transfer agreement in the Chinese market.

Under the terms of the technology transfer agreement, the Company will make milestone payments of up to $3,000 and royalty payments ranging from 6% to 10% of net sales in China. Both parties will work together to develop international markets for the products. On November 17, 2009 and December 14, 2011, two amendment agreements were signed for the payment of $300 for the transfer of an additional six serotypes and related technology. As of December 31, 2016, the Company made total milestone payments of $1,200 ($1,000 under the agreement dated as of March 12, 2009 and $200 under the amendment agreement dated as of December 14, 2011). The remaining milestone payments will be paid when the Company achieves each specific milestone, which includes obtaining clinical trials approval, completing clinical trials and achievement of desired results, and achievement of commercial sales.

On January 29, 2015, the Company entered into the third amendment to the technology transfer agreement dated March 12, 2009 and the two amendment agreements dated November 17, 2009 and December 24, 2011, respectively. By entering into this third amendment, the technology transfer agreement was amended to be a licensing agreement. The remaining milestone and royalty payments under the technology transfer agreement have been reduced. Both the Company and Tianjin Cansino are free to develop pneumococcal vaccines or to collaborate with other companies for the same purpose. The Company did not make any payment or recorded any research and development expenses for the years ended December 31, 2020, 2019 and 2018, respectively.

(b) On August 18, 2009, the Company entered into a patent license agreement with the National Institutes of Health (“NIH”), an agency of the United States Public Health Services within the Department of Health and Human Services. NIH has granted us a non-exclusive license to import and use certain Rotavirus Strains and Monoclonal Antibodies (“Biological Materials”) to develop an oral rotavirus vaccine and produce the vaccine in commercial sales and launch into market. NIH has also granted us the right to use certain documentation associated with the Biological Materials for this research and development project. The term of the license under the patent license agreement is from August 18, 2009 to the later of (a) the expiration of all royalty obligations under the licensed rights where such rights exist and (b) eight years after the first commercial sale by the Company, unless the agreement is terminated earlier per the provisions included therein.

The Company has agreed to pay NIH a license issue royalty of $80 upon execution of the agreement and a non-refundable minimum annual royalty of $8, and royalty payments on net sales ranging from 1.5% to 4% depending on the sales territory and the customers. The Company has also agreed to pay NIH benchmark royalties of $330 upon achieving each benchmark as specified in the patent license agreement, including completion of clinical trials, obtaining regulatory approval for marketing, and achievement of commercial sales. The Company recorded a license royalty of $1 for the year ended December 31, 2020 as R&D expenses (2019 - $1, 2018 - $16).

(c) On August 15, 2011, the Company licensed from Medimmune, LLC, a US based pharmaceutical company, certain non-exclusive rights to use patented reverse genetics technology pertaining to H5N1 influenza virus strain production for vaccines. The Company has agreed to pay an upfront license fee and milestone payments of up to an aggregate of $9.9 million based upon achievement of cumulative net sales of licensed products in China (including Hong Kong and Macau), as well as royalty payments in single digit of net sales of the licensed products in China (including Hong Kong and Macau). License fee and royalties of $3,400 accrued at the end of 2011 were paid in 2012. In 2013, the Company obtained a new stockpile order of 3 million doses of H5N1 vaccines from the Chinese government. The Company accrued a royal payment of $9 as of December 31, 2018, which was paid in 2019. The Company did not accrue any royalty payment in 2020 and 2019.

(d) On April 3, 2014, the Company entered into a non-exclusive license agreement (the “Agreement”) with The Institute for Translational Vaccinology (“INTRAVACC”), a governmental institute working under the Dutch Ministry of Public Health, Welfare and Sports, to develop and commercialize the Sabin Inactivated Polio Vaccine (“sIPV”) for distribution in China and other countries. The Company expects to develop and commercialize the vaccine in China, as well as seeking regulatory approval in other countries. The agreement has a term of 50 years.

The Company has agreed to pay INTRAVACC up to $2,406 (€1.5 million), net of PRC tax, including an entrance fee and milestone payments upon achieving specific milestones. The Company has also agreed to pay royalty payments in a single digit percentage of net sales generated worldwide from the product or products developed under the Agreement. The Company recorded a milestone fee of $35 (€30,000) and $611 (€0.5 million) for the year ended December 31, 2020 and 2018 as research and development expense. There was no expense incurred or paid to INTRAVACC for the year ended December 31, 2019.

(e) In September 2015, Sinovac Dalian entered into a technology transfer and supply agreement with GlaxoSmithKline Biologicals SA, or GSK, to use GSK’s measles seeds to develop combination vaccines containing measles for the China market. Under this agreement, GSK agreed to transfer its measles seeds, provide reasonable assistance and relevant technical materials to Sinovac Dalian for the purpose of developing and producing combination vaccines containing measles. The Company did not make any payment for purchasing measles seeds to GSK for the year ended December 31, 2020, 2019 and 2018.

(f) In June 2020, the Company entered into a clinical development collaboration agreement with Instituto Butantan, a leading Brazilian producer of immunobiologic products, to advance the clinical trials of CoronaVac, Sinovac’s inactivated vaccine candidate against COVID-19 to Phase III. Through the collaboration, Instituto Butantan sponsored our phase III clinical trials in Brazil. A series of agreements completed or to be completed between the parties help establish extensive collaboration that includes technology licensing, market authorization and commercialization of CoronaVac. In this way, Instituto Butantan can ensure that the Brazilian population has access to this vaccine.

(g) In September 2020, the Company signed two agreements with PT Bio Farma, a leading biopharmaceutical company in Indonesia, for the supply, local production and technology licensing in respect of CoronaVac. Under these agreements the Company will supply PT Bio Farma bulk vaccine to enable the latter to produce at least 140 million doses of CoronaVac in Indonesia.

(h) In November 2020, the Company signed two agreements with KEYMEN Ilac Sanayi. Ve Tic. A.S. (“KEYMEN”), an active in supplying of pharmaceutical products in Turkey, for the supply, local production and technology and know-how licensing of CoronaVac. Under the agreements the Company and KEYMEN will cooperate to enable local filling and packaging from the bulk vaccine supplied by the Company in designated facilities in Turkey.

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Subsequent Events

12 Months Ended

Dec. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

24.Subsequent Events

Aside from those disclosed in note 17 to the financial statements, no other reportable events or transactions take place after the balance sheet date.

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Condensed Financial Information of the Parent Company

12 Months Ended

Dec. 31, 2020

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of the Parent Company

25. Condensed Financial Information of the Parent Company

Balance Sheets

	December 31,
	2020		2019
ASSETS
Current assets
Cash and cash equivalents	$	56,666	$	70,201
Prepaid expenses and other receivables		2,461		1,166
Amount due from subsidiaries		93,665		86,006
Dividend receivables		3,195		3,195
Total current assets		155,987		160,568
Investment in subsidiaries		609,057		149,087
Total assets	$	765,044	$	309,655
LIABILITIES AND EQUITY
Current liabilities
Accrued expenses and other payables	$	4,236	$	1,544
Amount due to subsidiaries		3,193		8,964
Dividend payable		11,143		5,128
Total current liabilities		18,572		15,636
Total liabilities	$	18,572	$	15,636
EQUITY
Preferred stock		15		15
Authorized 50,000,000 shares at par value of $0.001 each
Issued and outstanding: 14,630,813 (2019 – 14,630,813)
Common stock		99		99
Authorized: 100,000,000 shares at par value of $0.001 each
Issued and outstanding: 99,294,743 (2019 – 98,903,243)
Additional paid-in capital		531,815		207,962
Accumulated other comprehensive income (loss)		19,925		(4,321	)
Retained earnings		194,618		90,264
Total shareholders' equity		746,472		294,019
Total liabilities and equity	$	765,044	$	309,655

Statements of Comprehensive Income

	For the year ended December 31
	2020			2019			2018
Selling, general and administrative expenses		7,013			7,750			15,615
Total operating expenses		7,013			7,750			15,615
Loss from operations		(7,013	)		(7,750	)		(15,615	)
Other expenses		(23	)		(16	)		(13	)
Interest income		532			871			798
Equity earnings of subsidiaries, net of tax		116,873			51,824			36,612
Net income		110,369			44,929			21,782
Preferred stock dividends		(6,015	)		(5,128	)		—
Net income attributable to common shareholders		104,354			39,801			21,782
Net income		110,369			44,929			21,782
Foreign currency translation adjustments		24,246			(2,222	)		(9,174	)
Total comprehensive income	$	134,615		$	42,707		$	12,608

Statements of Cash Flows

	For the year ended December 31
	2020			2019			2018
Cash flows used in operating activities
Net income	$	110,369		$	44,929		$	21,782
Adjustments to reconcile net loss to net cash provided by (used in)    operating activities:
- Share-based compensation		3,003			3,003			445
- Equity in earnings of subsidiaries		(116,873	)		(51,824	)		(36,612	)
Changes in:
- Amount due from subsidiaries		(7,659	)		(3,425	)		(7,624	)
- Prepaid expenses and other receivables		(1,295	)		172			(861	)
- Dividend receivables		—			—			18,085
- Amount due to subsidiaries		(5,771	)		(7,584	)		2,602
- Accrued expenses and other payables		2,692			(119	)		(276	)
Net cash used in operating activities		(15,534	)		(14,848	)		(2,459	)
Cash flows provided by financing activities
- Proceeds from issuance of common stock, net of share issuance costs		1,999			—			85,304
- Proceeds from shares subscribed		—			—			64
Net cash provided by financing activities		1,999			—			85,368
Increase (decrease) in cash and cash equivalents		(13,535	)		(14,848	)		82,909
Cash and cash equivalents, beginning of year		70,201			85,049			2,140
Cash and cash equivalents, end of year	$	56,666		$	70,201		$	85,049

(a) Basis of presentation

The condensed financial information has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements except that the Company used the equity method to account for investment in its subsidiaries.

The Company records its investment in its subsidiaries under the equity method of accounting. Such investment is presented on the balance sheets as “Investment in subsidiaries” and share of their income (loss) as “Equity earnings (losses) of subsidiaries” in the statements of comprehensive income (loss).

Each of the Company’s PRC subsidiaries has restrictions on its ability to pay dividends to the Company under PRC laws and regulations (Note 20). The subsidiaries did not pay any dividends to the Company for the years presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted by reference to the consolidated financial statements.

(b) Commitments

The Company does not have any significant commitments or long-term obligations as of any of the periods presented, except for those disclosed in the consolidated financial statements (notes 17 and 23).

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Use of Estimates

(a) Use of Estimates

In preparation of the Company’s consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates made by management include: provision for product returns, allowance for doubtful accounts, inventory provisions, impairment of long-lived assets, fair value of options granted and related forfeiture rates, and realizability of deferred tax assets. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s consolidated financial statements could be materially impacted.

Cash and Cash Equivalents

(b) Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments that are readily convertible to cash generally with maturities of three months or less when purchased.

Restricted Cash

(c) Restricted Cash

Restricted cash is cash held as collateral for transactions the Company has entered into.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts presented in the statement of cash flows. The Company adopted the new standard effective January 1, 2018, using the retrospective transition method.

The ending balance of cash and cash equivalents and restricted cash presented on the face of the consolidated statements of cash flows in 2020 is $1,050,204 (2019 - $155,878, 2018 - $158,170). It includes $ 1,041,008 cash and cash equivalents (2019 - $ 152,718, 2018 - $158,170) and $9,196 restricted cash (2019 - $3,160, 2018 - $nil) as presented in consolidated balance sheets.

Short-term Investments

(d) Short-term investments

All highly liquid investments with original maturities greater than three months, but less than twelve months, are classified as short-term investments. Investments that are expected to be realized in cash during the next twelve months are also included in short-term investments.

The Company accounts for short-term debt investments in accordance with ASC Topic 320, Investments—Debt Securities (“ASC 320”). The Company classifies the short-term investments in debt as “held-to-maturity,” “trading” or “available-for-sale,” whose classification determines the respective accounting methods stipulated by ASC 320. Dividend and interest income, including amortization of the premium and discount arising at acquisition, for all categories of investments in securities are included in earnings. Any realized gains or losses on the sale of the short-term investments are determined on a specific identification method, and such gains and losses are reflected in earnings during the period in which gains or losses are realized.

Accounts Receivable

(e) Accounts Receivable

The Company extends unsecured credit to its customers in the ordinary course of business and actively pursues past due accounts. On January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. The Company estimates an allowance for doubtful accounts based on historical experience, the age of the accounts receivable balances, credit quality of the Company’s customers, current economic conditions and other factors that may affect its customers’ ability to pay.

Inventories

(f) Inventories

Inventories are stated at the lower of cost or net realizable value. The cost of work in progress and finished goods is determined on a weighted-average cost basis and includes direct material, direct labor and overhead costs. Net realizable value represents the anticipated selling price, net of distribution cost, less estimated costs to completion for work in progress.

Property, Plant and Equipment

(g) Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant additions and improvements are capitalized, while repairs and maintenance are charged to expenses as incurred. Equipment purchased for specific research and development projects with no alternative use are expensed. Assets under construction are not depreciated until construction is completed and the assets are ready for their intended use. Gains and losses from the disposal of property, plant and equipment are recorded in gain or loss on disposal and impairment of property, plant and equipment included in the consolidated statements of comprehensive income (loss).

Depreciation of property, plant and equipment is computed using the straight-line method based on the estimated useful lives of the assets as follows:

Plant and buildings	10 to 24 years
Machinery and equipment	8 to 10 years
Motor vehicles	4 to 5 years
Office equipment and furniture	3 to 5 years
Leasehold improvements	Lesser of useful lives and term of lease

Prepaid Land Lease Payments

(h) Prepaid Land Lease Payments

Prepaid land lease payments represent amounts paid for the rights to use land in the PRC and is recorded at purchased cost less accumulated amortization. Amortization is provided on a straight-line basis over the term of the lease agreement, which ranges from 28 to 49 years.

Intangible Assets

(i) Intangible Assets

The Company capitalizes the patent payment and the purchased cost of vaccines if the vaccine has received a new drug certificate from the National Medical Products Administration (“NMPA) of China. If the vaccine has not received a new drug certificate, the purchase cost is expensed as in-process research and development.

Licenses in relation to the production and sales of pharmaceutical products are amortized on a straight-line basis over their respective useful lives. Costs incurred to renew or extend the term of licenses are capitalized and amortized over the license’s useful life on a straight-line basis.

The costs of acquiring and developing computer software and cloud computing websites for internal use are capitalized as intangible assets. Computer software and cloud computing related intangible assets are amortized over 5 - 10 years.

Impairment of Long-Lived Assets

(j) Impairment of Long-Lived Assets

Long-lived assets including property, plant and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable from the future undiscounted net cash flows expected to be generated by the asset group. An asset group is identified as assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. If the asset group is not fully recoverable, an impairment loss would be recognized for the difference between the carrying value of the asset group and its estimated fair value, based on the discounted net future cash flows or other appropriate methods, such as comparable market values. The Company uses estimates and judgments in its impairment tests and if different estimates or judgment had been utilized, the timing or the amount of any impairment charges could be materially different.

Income Taxes

(k) Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the carrying values and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance is provided if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates and laws. 

The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority, based on the technical merits of the position. The tax benefits recognized from such a position are measured based on the amount that is greater than 50% likely of being realized upon settlement. The Company recognizes a change in available facts after the reporting date but before issuance of the financial statements in the period when the change in facts occur, even if that new information provides a better estimate of the ultimate outcome of an uncertainty. Liabilities associated with uncertain tax positions are classified as long−term unless expected to be settled within one year. Interest and penalties related to uncertain tax positions, if any, are recorded in the provision for income taxes and classified with the related liability on the consolidated balance sheets.

Value-Added Taxes

(l) Value-added Taxes

Value-added taxes (“VAT”) collected from customers relating to product sales and remitted to governmental authorities are presented on a net basis. VAT collected from customers is excluded from revenue.

Revenue from Contracts with Customers

(m) Revenue from Contracts with Customers

The Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”), on January 1, 2018, using the modified retrospective method.

Revenue is recognized when control of promised goods is transferred to the Company’s customers in an amount of consideration of which the Company expect to be entitled to in exchange for the goods, and the Company can reasonably estimates return provision for the goods.

Product return provisions are estimated based on historical return and exchange data as well as the inventory levels and the remaining shelf lives of the products in the distribution channels.     

As of December 31, 2020, sales return provision for the Company’s vaccine products was $12,056 (December 31, 2019 - $3,726). Sales return provision as a percentage of sales was 2.4% and 1.5% in 2020 and 2019, respectively.   

Deferred revenue is generally related to government stockpiling programs and advances received from customers. For government stockpiling programs of H5N1 vaccines, the Company generally obtains purchase authorizations from the government for a specified amount of products at a specified price and no rights of return are provided. Revenue is recognized when the government takes delivery of the products. If the products expire prior to delivery, these expired products are recognized as revenue once cash is received and the products have expired and passed government inspection. For the year ended December 31, 2020, the Company recognized sales of $4,871 related to contract liabilities at January 1, 2020.

For the year ended December 31, 2020, the Company did not have any significant incremental costs of obtaining contracts with customers incurred or costs incurred in fulfilling contracts with customers within the scope of ASC Topic 606, that shall be recognized as an asset and amortized to expenses in a pattern that matches the timing of the revenue recognition of the related contract.

The Company does not have amounts of contract assets since revenue is recognized as control of goods is transferred. The contract liabilities consist of advance payments from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. All contract liabilities are included in deferred revenue in the Consolidated Balance Sheets.

Shipping and Handling

(n) Shipping and Handling

Shipping and handling fees billed to customers are included in sales. Costs related to shipping and handling are recognized in selling, general and administrative expenses in the consolidated statements of comprehensive income. For the year ended December 31, 2020, $9,609 of shipping and handling costs was included in selling, general and administrative expenses (2019 - $7,253, 2018 - $6,261).    

Advertising Expenses

(o) Advertising Expenses

Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising costs were $859 for the year ended December 31, 2020 (2019 - $1,398, 2018 - $3,901).

Research and Development Expense

(p) Research and Development

Research and development ("R&D") costs are expensed as incurred and are disclosed as a separate line item in the Company’s consolidated statements of comprehensive income. R&D costs consist primarily of the remuneration of R&D staff, depreciation, material, clinical trial costs as well as amortization of acquired technology and know-how used in R&D with alternative future uses. R&D costs also include costs associated with collaborative R&D and in-licensing arrangements, including upfront fees paid to collaboration partners in connection with technologies which have not reached technological feasibility and did not have an alternative future use. Reimbursement of R&D costs for arrangements with collaboration partners is recognized when the obligations are incurred.

Under certain R&D arrangements with third parties, the Company may be required to make payments that are contingent on the achievement of specific development, regulatory and/or commercial milestones. Before a product receives regulatory approval, license fees and milestone payments made to third parties are expensed as incurred. License fees and milestone payments made to third parties after regulatory approval is received are capitalized and amortized over the remaining life of the agreement with third parties.

Government Grants

(q) Government Grants

Government grants received from the PRC government by the PRC operating subsidiaries of the Company are recognized when there is reasonable assurance that the amount is receivable and all the conditions specified in the grant have been met. Government grants for R&D are recognized as a reduction to R&D expenses when the expenses are incurred in the same period when the conditions attached to the grants are met, or recognized as government grants recognized in income in the period when the conditions are met after the expenses are incurred. Government grants for property, plant and equipment are deferred and recognized as a reduction to the related depreciation and amortization expenses in the same manner as the property, plant and equipment are depreciated. Interest subsidies are recorded as a reduction to interest and financing expenses in the consolidated statements of comprehensive income, or recorded as a reduction to interest capitalized if the subsidies granted are related to a specific borrowing associated with building a qualifying asset. For government loans received at below market interest rate, the difference between the face value of the loan and fair value using the effective interest rate method is recorded as deferred government grants.

Retirement and Other Post-retirement Benefits

(r) Retirement and Other Post-retirement Benefits

Full-time employees of the Company in the PRC participate in a government mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require that the Company makes contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company has no legal obligation for the benefits beyond the contributions. Total amounts for such employee benefits incurred was $10,809 for the year ended December 31, 2020 (2019 - $9,884, 2018 - $7,438).

Foreign Currency Translation And Transactions

(s) Foreign Currency Translation and Transactions

The Company maintains their accounting records in their functional currencies, U.S. dollars (“$”) for the Company, Sinovac Hong Kong and Sinovac Singapore, and Renminbi Yuan (“RMB”) for the PRC subsidiaries. The Company uses the US$ as its reporting currency.

At the transaction date, each asset, liability, revenue and expense is re-measured into the functional currency by the use of the exchange rate in effect at that date. At each period end, foreign currency monetary assets, and liabilities are re-measured into the functional currency by using the exchange rate in effect at the balance sheet date. The resulting foreign exchange gains and losses are included in selling, general and administrative expenses. The Company recognized foreign exchange gain of $2,554 for the year ended December 31, 2020 (2019 - $306, 2018 - $559).

Assets and liabilities of the PRC subsidiaries, Sinovac Beijing, Sinovac LS, Sinovac Dalian and Sinovac Biomed are translated into US$ at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at average exchange rates. Gains and losses from such translations are recorded in accumulated other comprehensive income, a component of shareholders’ equity.

Gain on intra-entity foreign currency transactions that are of a long-term-investment nature was $nil for the year ended December 31, 2020 (2019 - $62, 2018 - $268) which was recorded in accumulated other comprehensive income, a component of shareholders’ equity.

Share-based Compensation

(t) Share-based Compensation

Compensation expense for costs related to all share-based payments, including grants of stock options, is recognized through a fair-value based method. The Company uses the Black-Scholes option-pricing model to determine the grant date fair value for stock options. The Company uses the grant date stock price to determine the grant date fair value of restricted shares. The Company has elected to recognize share-based compensation costs using the straight-line method over the requisite service period with a graded vesting schedule, provided that the amount of compensation costs recognized at any date is at least equal to the portion of the grant date value of the awards that are vested at that date. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share based compensation costs are recorded net of estimated forfeitures such that expense is recorded only for those awards that are expected to vest.

Comprehensive Income

(u) Comprehensive Income

The Company’s comprehensive income consists of net income and foreign currency translation adjustments.

Earnings Per Share

(v) Earnings Per Share

Earnings per share is calculated in accordance with Accounting Standards Codification (“ASC”) 260 Earnings per Share. Basic earnings per share is computed by dividing the net income attributable to shareholders of Sinovac by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed in accordance with the treasury stock method and based on the weighted average number of common shares and dilutive common share equivalents. Dilutive common share equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.

Leases

(w) Leases

The Company adopted ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) on January 1, 2019 by using the modified retrospective method and did not restate the comparable periods. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Company elected the short-term lease exemption for all contracts with lease terms of 12 months or less.

The Company determines if an arrangement is a lease or contains a lease at lease inception. For operating leases, the Company recognizes a right-of-use asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

Fair Value Measurements

(x) Fair Value Measurements

Assets and liabilities subject to fair value measurements are required to be disclosed within a specified fair value hierarchy. The fair value hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following categories based on the lowest level input used that is significant to a particular fair value measurement:

• Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.

• Level 3 — Unobservable inputs for the asset or liability.

As of December 31, 2020 and 2019, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis.

The carrying values of cash equivalents, restricted cash, short-term investment, accounts receivable, accounts payable and accrued liabilities and short-term bank loans and the current portion of long-term debt approximate their fair value because of their short-term nature. Fair value of the long-term bank loans are determined based on level 2 inputs, and the carrying amounts of long-term bank loans approximate fair value as the related interest rates approximate rates currently offered by financial institution for similar debt instruments.

The Company measures property, plant and equipment at fair value on a non-recurring basis only if an impairment charge were to be recognized. There were no non-recurring fair value measurements for the years ended December 31, 2020 and 2019.

Concentration of Risks

(y) Concentration of Risks

Exchange Rate Risks

The Company operates in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility of foreign exchange rates between the U.S. dollars and the RMB. In 2020, foreign exchange gain of $2,554 is included in selling, general and administrative expenses (2019 - $306, 2018 - $559). As of December 31, 2020, cash and cash equivalents of $322,442 (RMB 2,104 million) is denominated in RMB and are held in PRC and Hong Kong (December 31, 2019 - $57,079 (RMB 397 million)).   

Currency Convertibility Risks

Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and signed contracts.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentration of credit risks consist primarily of cash and cash equivalents, restricted cash, short-term investment and accounts receivable, the balances of which are stated on the consolidated balance sheets which represent the Company’s maximum exposure. The Company places its cash and cash equivalents, restricted cash, and short-term investment in good credit quality financial institutions in Hong Kong and China. Concentration of credit risks with respect to accounts receivables is linked to the concentration of revenue. The Company’s customers are mainly various government agencies in China. For the year ended December 31, 2020, one of the Company’s customers accounted for 11% of the Company’s total revenue, and no single customer of the Company accounted for more than 10% of the total sales for the year ended December 31, 2019 and 2018. To manage credit risk, the Company performs ongoing credit evaluations of customers’ financial condition.

Interest Rate Risks

The Company is subject to interest rate risk. Other than loans from a non-controlling shareholder of $12,260 with fixed interest rates as of December 31, 2020 (note 12(a)), interests of other interest-bearing loans are charged at variable rates based on the People’s Bank of China (note 11).

Recently Issued Accounting Standards

(z) Recently Issued Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which reduces the number of accounting models for convertible debt instruments and convertible preferred stock that simplifies the accounting for convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

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Basis of Presentation (Tables)

12 Months Ended

Dec. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Schedule of Significant Intercompany Transactions

All significant intercompany transactions have been eliminated. Details of the Company’s subsidiaries are as follows:

Name	Date of incorporation or establishment	Place of incorporation (or establishment) /operation	Percentage of ownership as of December 31, 2020			Percentage of ownership as of December 31, 2019			Principal activities
Sinovac Biotech   (Hong Kong) Limited   (“Sinovac Hong Kong”)	October 2008	Hong Kong		100	%		100	%	International sales   and marketing
Sinovac Biotech Co.,   Ltd. (“Sinovac Beijing”)	April 2001	People’s Republic of China (“PRC”)		73.09	%		73.09	%	Research and   development,   production and   sales of   vaccine   products
Sinovac Life Sciences   Co., Ltd. (“Sinovac LS”)   (formerly Sinovac   Research & Development   Co., Ltd.) *	May 2009	PRC		59.24	%		100	%	Research and   development,   production and   sales of   vaccine   products
Sinovac (Dalian) Vaccine   Technology Co., Ltd.   (“Sinovac Dalian”) **	January 2010	PRC		68	%		67.86	%	Research and   development,   production and   sales of   vaccine   products
Sinovac Biomed Co., Ltd.	April 2015	PRC		100	%		100	%	Distribution of   vaccine products
Sinovac Biotech (Singapore)   Pte. Ltd. ("Sinovac   Singapore")	August 2020	Singapore		100	%		—		International sales   and marketing

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Schedule of Estimated Useful Lives of Assets

Depreciation of property, plant and equipment is computed using the straight-line method based on the estimated useful lives of the assets as follows:

Plant and buildings	10 to 24 years
Machinery and equipment	8 to 10 years
Motor vehicles	4 to 5 years
Office equipment and furniture	3 to 5 years
Leasehold improvements	Lesser of useful lives and term of lease

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Accounts Receivable - Net (Tables)

12 Months Ended

Dec. 31, 2020

Loans And Leases Receivable Disclosure [Abstract]

Schedule of Accounts Receivable

	December 31,
	2020			2019
Trade receivables	$	257,311		$	116,278
Allowance for doubtful accounts		(6,680	)		(4,181	)
		250,631			112,097
Other receivables		2,856			1,639
Total accounts receivable	$	253,487		$	113,736

Schedule of Maximum Exposure to Credit Risk Relating to Trade Receivables

The Company’s maximum exposure to credit risk at the balance sheets date relating to trade receivables is summarized as follows:

	December 31,
	2020		2019
Aging within one year, net of allowance for doubtful accounts	$	240,266	$	108,635
Aging greater than one year, net of allowance for doubtful accounts		10,365		3,462
Total trade receivables	$	250,631	$	112,097

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Inventories (Tables)

12 Months Ended

Dec. 31, 2020

Inventory Disclosure [Abstract]

Summary of Inventories

	December 31,
	2020		2019
Raw materials	$	29,005	$	5,689
Work in progress		52,515		8,565
Finished goods		24,293		13,592
Total inventories	$	105,813	$	27,846

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Property, Plant, and Equipment - Net (Tables)

12 Months Ended

Dec. 31, 2020

Property Plant And Equipment [Abstract]

Summary of Property, Plant And Equipment - net

	December 31,
	2020		2019
Cost
Construction in progress	$	143,465	$	29,367
Plant and buildings		29,963		28,833
Machinery and equipment		63,675		49,762
Motor vehicles		1,830		1,536
Office equipment and furniture		3,343		3,431
Leasehold improvements		15,632		12,767
Total cost	$	257,908	$	125,696
Less: Accumulated depreciation
Construction in progress	$	—	$	—
Plant and buildings		13,200		12,183
Machinery and equipment		32,398		27,012
Motor vehicles		1,184		1,057
Office equipment and furniture		1,823		2,122
Leasehold improvements		8,932		9,012
Total accumulated depreciation	$	57,537	$	51,386
Property, plant and equipment, net	$	200,371	$	74,310

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Prepaid Land Lease Payments (Tables)

12 Months Ended

Dec. 31, 2020

Prepaid Land And Lease Payments [Abstract]

Schedule of Prepaid Land Lease Payments

	December 31,
	2020		2019
Prepaid land lease payments	$	11,066	$	10,372
Less: accumulated amortization		2,819		2,407
Net carrying value	$	8,247	$	7,965

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Intangible Asset - Net (Tables)

12 Months Ended

Dec. 31, 2020

Finite Lived Intangible Assets Net [Abstract]

Schedule of Intangible Asset - Net

	December 31,
	2020		2019
Computer software	$	1,586	$	—
Less: accumulated amortization		112		—
Net carrying value	$	1,474	$	—

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Lease (Tables)

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Supplemental Cash Flow Information Relating to Operating Lease

Supplemental cash flow information related to operating leases was as follows:

	For the year ended December 31,
	2020		2019
Cash payments for operating leases	$	856	$	807
Right-of-use asset obtained in exchange for operating lease liabilities		71,824		135

Schedule of Future Lease Payments under Operating Leases

Future lease payments under operating leases as of December 31, 2020 were as follows:

2021	$	7,700
2022		10,621
2023		10,745
2024		10,891
2025		11,016
Thereafter		63,430
Total future lease payments		114,403
Less: Imputed interest		25,398
Total lease liability balance	$	89,005

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Bank Loans (Tables)

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Summary of Bank Loans

Summarized below are bank loans as of December 31, 2020 and 2019:

	December 31,
	2020		2019
Bank of Beijing (a)	$	—	$	3,842
Bank of China (b)		1,993		1,005
Bank of Beijing (c)		4,598		—
SPD Silicon Valley Bank (d)		6,503		1,087
SPD Silicon Valley Bank (e)		18,361		—
Guangdong Development Bank (f)		1,378		—
China Merchants Bank (g)		108		—
Bank loans due within one year		32,941		5,934
China Merchants Bank (g)		163		—
China Everbright Bank (h)		1,992		—
Long-term bank loans		2,155		—
Total  bank loans	$	35,096	$	5,934

(a) On May 20, 2015, Sinovac Beijing entered into a bank loan with Bank of Beijing in the aggregate principal amount of $7,356 (RMB 48 million) with a term from July 2015 to May 2020 for construction of the pneumococcal polysaccharide vaccine facilities. The loan’s interest rate is based on the prime rate of a five-year term loan published by the People’s Bank of China at the time withdraws are made. Interest is payable quarterly and the loan was repaid on May 20, 2020.         

(b) On November 20, 2019, Sinovac Dalian entered into a maximum credit facility of $3,065 (RMB 20 million) with Bank of China to finance its working capital requirements. $1,005 (RMB 7 million) was drawn on December 24, 2019 and was repaid on December 24, 2020. On March 13, 2020, Sinovac Dalian withdrew $1,073 (RMB 7 million) with an annual interest rate at 95 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.00%. On December 9, 2020, Sinovac Dalian withdrew $920 (RMB 6 million) with an annual interest rate at 55 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 4.40%. Interest is payable monthly and the loans are repayable on March 13, 2021 and December 9, 2021, respectively. Buildings of Sinovac Dalian with a net book value of $2,567 (RMB 16.7 million) were pledged as collateral.

(c) On March 31, 2020, Sinovac LS entered into a maximum credit facility of $4,598 (RMB 30 million) with Bank of Beijing to finance its working capital requirements. $4,598 (RMB 30 million) was drawn on March 31, 2020 with an annual interest rate of 3.05%. Interest is payable quarterly and the loan is payable on March 31, 2021.

(d) On November 25, 2019, Sinovac Dalian entered into a revolving bank loan with SPD Silicon Valley Bank with the aggregate principal of $7,663 (RMB 50 million) to finance its working capital requirements. The revolving loan bears interest at 125 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.1% and interest is payable quarterly. Each withdraw from the revolving loan has a maximum term of 12 months. $1,087 (RMB 7.6 million) was drawn in 2019 and repaid in December 2020. The outstanding balance of $6,503 (RMB 42.4 million) was drawn during 2020 and is payable on or before August 6, 2021.  

(e) On May 14, 2020 and September 3, 2020, Sinovac LS entered into two revolving bank loans with SPD Silicon Valley Bank with the aggregate principal of $7,663 (RMB 50 million) and $10,728 (RMB 70 million) to finance its working capital requirements. The revolving loan bears interest at 120 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.05% and interest is payable quarterly. Each withdraw from the revolving loan has a maximum term of 12 months. The outstanding balance of $18,361 (RMB 119.8 million) was drawn during 2020 and is payable on or before October 15, 2021.  

(f) On November 5, 2020, Sinovac Dalian entered into a maximum credit facility of $1,379 (RMB 9 million) with Guangdong Development Bank to finance its working capital requirements. $1,378 (RMB 9.0 million) was drawn during 2020 and payable on or before November 29, 2021. The loan bears interest at 115 basis point above the prime rate of one year term loan published by the People’s Bank of China, at 5% and interest is payable monthly. Prepaid land lease payments of Sinovac Dalian with a net book value of $2,196 (RMB 14.3 million) were pledged as collateral.

(g) On May 26, 2020, Sinovac Dalian entered into four mortgages in the total amount of $333 (RMB 2.1 million) with China Merchants Bank to purchase four apartments. The loans bears annual interest rate at 175 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.6%. Principals and interests are repaid monthly over a term of 36 months. Sinovac Dalian repaid $58 (RMB 0.4 million) in principal and interest in 2020. As of December 31, 2020, $108 (RMB 0.7 million) is recorded in bank loans due within one year and $163 (RMB 1.1 million) is recorded in long-term bank loans. Buildings of Sinovac Dalian with a net book value of $672 (RMB 4.4 million) were pledged as collateral.

(h) On November 17, 2020, Sinovac Dalian entered into a maximum credit facility of $30,651 (RMB 200 million) is to finance Sinovac Dalian’s purchase of property plant and equipment, with a term from November 17, 2020 to November 16, 2028. The loan bears annual interest rate at 123 basis point above the prime rate of a five year term loan published by the People’s Bank of China, at 5.88%. Interest is payable quarterly and principal installment repayments begin in 2023 and shall be fully paid by November 16, 2028. Certain machinery and equipment of Sinovac Dalian with a net book value of $23,015 (RMB 150.2 million) were pledged as collateral. Sinovac Dalian withdrew $1,992 (RMB 13 million) on December 14, 2020, which will be repaid during 2023 to 2028.

Schedule of Aggregate Maturities of Loans

Aggregate maturities of loans for each of the next 5 years following December 31, 2020 are as follows:

Within 1 year	$	32,941
In 2022		114
In 2023		98
In 2024		249
After 2024		1,694
Total	$	35,096

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Related Party Transactions and Balances (Tables)

12 Months Ended

Dec. 31, 2020

Related Party Transactions [Abstract]

Schedule of Loan From Non-controlling Shareholder

(a) Loan from a non-controlling shareholder

	December 31,
	2020		2019
Loan -  current	$	6,155	$	6,607
Loan -  non - current		6,130		1,436
	$	12,285	$	8,043

Schedule of Related Party Transactions and Balances

(b) The Company entered into the following transactions in the normal course of operations at the exchange amount with related parties:

	For the year ended December 31,
	2020		2019		2018
Rent expenses to SinoBioway Biotech Group Co. Ltd. (“SinoBioway”).	$	776	$	775	$	810
Rent expenses to Dalian Jin Gang Group (“Jin Gang”).		22		36		—
	$	798	$	811	$	810

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Accounts Payable and Accrued Liabilities (Table)

12 Months Ended

Dec. 31, 2020

Payables And Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

	December 31,
	2020		2019
Trade payables	$	30,543	$	5,783
Machinery and equipment payables		13,044		2,106
Accrued expenses		113,688		31,145
Value added tax payable		4,682		515
Other tax payable		1,885		488
Withholding tax payable		301		74
Bonus and benefit payables		44,098		10,884
Other payables		3,187		7,895
Total accounts payable and accrued liabilities	$	211,428	$	58,890

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of Income Before Income Tax

The Company’s income before income tax consists of:

	For the year ended December 31,
	2020		2019			2018
Non-PRC	$	5,866	$	(7,337	)	$	(16,308	)
PRC		210,751		78,157			62,891
Total	$	216,617	$	70,820		$	46,583

Schedule of Income Taxes Attributed

Income taxes attributed in China consists of:

	For the year ended December 31,
	2020			2019			2018
Current income tax expenses	$	(42,665	)	$	(11,290	)	$	(7,326	)
Deferred tax benefits		11,227			5,685			(3,146	)
Total income tax expense	$	(31,438	)	$	(5,605	)	$	(10,472	)

Schedule of Income Before Income Taxes

The following is a reconciliation of the Company’s total income tax expenses to the amount computed by applying the PRC statutory income tax rate of 25% to its income before income taxes for the years ended December 31, 2020, 2019 and 2018:

	For the year ended December 31,
	2020			2019			2018
Income before income taxes	$	216,617		$	70,820		$	46,583
Income tax expense at the PRC statutory rate		(54,154	)		(17,705	)		(11,646	)
International tax rate differential		(419	)		(1,827	)		(3,929	)
Super deduction for research and development expenses		7,229			2,310			1,835
Non-deductible expenses		(2,225	)		685			(1,865	)
Other adjustments		(1,002	)		(486	)		14
Effect of preferential tax rate		19,224			7,018			6,562
Change in valuation allowance		2,656			4,415			(1,429	)
Effect of PRC withholding tax		(2,747	)		(15	)		(14	)
Income tax expense	$	(31,438	)	$	(5,605	)	$	(10,472	)

Schedule Company's Deferred Tax Assets

The tax effects of temporary differences that give rise to the Company’s deferred tax assets are as follows:

	December 31,
	2020			2019
Inventories		1,212			394
Accrued expenses		17,240			4,184
Deferred government grants		2,838			985
Fixed assets		5,382			4,160
Tax losses carried forward		338			4,420
Less: valuation allowance		(119	)		(2,775	)
Deferred tax assets	$	26,891		$	11,368

Schedule of Changes in Unrecognized Tax Benefits

The changes in unrecognized tax benefits are as follows:

	For the year ended December 31,
	2020			2019			2018
Balance at January 1		904			1,681			1,873
Additions for tax positions of the current year		—			—			7
Additions for tax positions of the prior years		—			—			—
Settlement with the taxing authority		—			—			—
Lapse of statute of limitations		(343	)		(777	)		(199	)
Balance at December 31	$	561		$	904		$	1,681

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Deferred Government Grants (Tables)

12 Months Ended

Dec. 31, 2020

Deferred Government Grant [Abstract]

Summary of Deferred Government Grants

Summarized below are deferred government grants As of December 31, 2020 and 2019:

	December 31,
	2020		2019
Government grants for property, plant and equipment (a)	$	565	$	486
Government grants for research and development (b)		14,594		2,252
Current deferred government grants		15,159		2,738
Government grants for property, plant and equipment (a)		3,003		2,137
Government grants for research and development (b)		1,226		1,849
Non-current deferred government grants		4,229		3,986
Total deferred government grants		19,388		6,724

(a) The Company has four deferred government grants related to property, plant and equipment. The Company has fulfilled one of the grants’ conditions and expect to fulfill another one in 2021. $565 will be amortized in 2021 which was included in the current portion of deferred government grant and $1,714 will be amortized after 2021 which was included in the non-current portion of deferred government grants. $412 was recorded as a reduction to depreciation expense for the year ended December 31, 2020 (2019 - $412, 2018 - $430), and $80 was recorded as government grant recognized in income for the year ended December 31, 2020 (2019 - $79, 2018 - $82). $1,289 represents the unamortized portion of one grant where the Company received but has not fulfilled the conditions attached to the grant. As the Company does not expect to fulfill the conditions within one year, the grant is recorded as a non-current deferred government grant.

(b) The Company has ten deferred government grants related to various research and development projects. The Company expects to fulfill nine grants’ conditions in 2021 and recorded $14,594 as current portion of deferred government grants, while the remaining one grant’s condition is expected to be fulfilled after 2021 and $1,226 is recorded in the non-current portion of deferred government grants.  

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Stock Options (Tables)

12 Months Ended

Dec. 31, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Company's Stock Options Activity

A summary of the Company’s stock options activity for the 2003 and 2012 Plan is presented below:

	Number of Options			Weighted Average Exercise Price ($/option)		Aggregate Intrinsic Value ($)
Outstanding as of January 1, 2020		785,500		$	4.98	$	1,170,395
Granted		—			—		—
Exercised		(401,500	)		4.98		—
Forfeited / Expired		(4,000	)		—		—
Outstanding as of December 31, 2020		380,000		$	4.98	$	566,200
Vested and expected to vest at December 31, 2020		380,000		$	4.98		566,200
Exercisable as of December 31, 2020		380,000		$	4.98	$	566,200

Summary of Company's Non-Vested Restricted Shares Activity

A summary of the Company’s non-vested restricted share activity for the 2012 plan is presented below:

	Number of Non-Vested Restricted Shares			Weighted Average Grant Date Fair Value ($)
Non-vested as of January 1, 2020		1,973,000		$	8.25
Granted		—			—
Vested		—			—
Forfeited		(10,000	)		8.25
Non-vested as of  December 31, 2020		1,963,000		$	8.25

Summary of Company's Non-Vested Restricted Shares Activity

As at December 31, 2020

Exercise Prices ($/option)		Number of Options Outstanding		Remaining Average Contractual Life (years)		Average Exercise Price ($/option)		Number of Options Exercisable		Remaining Contractual Life (years)		Average Exercise Price ($/option)
$	4.98		380,000		2.33		4.98		380,000	$	2.33	$	4.98
			380,000		2.33		4.98		380,000		2.33		4.98

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Earnings per Share (Tables)

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Income Attributable to Shareholders

The following table sets forth the computation of basic and diluted income attributable to common shareholders of Sinovac per share (in thousands, except for number of shares and per share data):

	For the year ended December 31
	2020		2019		2018
Numerator
Net income	$	185,179	$	65,215	$	36,111
Less: Income attributable to non-controlling interests		74,810		20,286		14,329
Income attributable to shareholders of Sinovac		110,369		44,929		21,782
Less: Preferred stock dividends		6,015		5,128		—
Net income attributable to shareholders of Sinovac		104,354		39,801		21,782
Net income attributable to shareholders of Sinovac for computing diluted net    income per share		110,369		44,929		21,782
Denominator
Basic weighted average number of common shares outstanding		98,897,345		94,876,946		64,727,146
Dilutive effect of stock options and preferred shares		14,765,017		14,815,013		250,408
Diluted weighted average number of common shares outstanding		113,662,362		109,691,959		64,977,554
Earnings per share
Basic net income per share		1.06		0.42		0.34
Diluted net income per share		0.97		0.41		0.34

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Segment Information (Table)

12 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Schedule of Total Assets by Geographic Area

The Company’s total assets by geographic location are as follows

	December 31,
	2020		2019
Assets
Mainland China	$	1,824,380	$	384,297
Outside Mainland China		76,946		68,002
Total Assets	$	1,901,326	$	452,299

Schedule of Revenues by Market Type

The Company’s revenues by market type are as follows:

	For the year ended December 31,
	2020		2019		2018
Sales
EPI	$	96,799	$	6,896	$	10,357
Private Pay		268,821		220,217		204,764
Export		145,004		18,940		14,529
Total Sales	$	510,624	$	246,053	$	229,650

Schedule of Revenues are Attributed to Geographic Locations

The Company’s revenues are attributed to geographic locations as follows:

	For the year ended December 31,
	2020		2019		2018
Sales
Mainland China	$	365,620	$	227,113	$	215,121
Outside Mainland China		145,004		18,940		14,529
Total Sales	$	510,624	$	246,053	$	229,650

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Condensed Financial Information of the Parent Company (Tables)

12 Months Ended

Dec. 31, 2020

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Schedule of Balance Sheets

Balance Sheets

	December 31,
	2020		2019
ASSETS
Current assets
Cash and cash equivalents	$	56,666	$	70,201
Prepaid expenses and other receivables		2,461		1,166
Amount due from subsidiaries		93,665		86,006
Dividend receivables		3,195		3,195
Total current assets		155,987		160,568
Investment in subsidiaries		609,057		149,087
Total assets	$	765,044	$	309,655
LIABILITIES AND EQUITY
Current liabilities
Accrued expenses and other payables	$	4,236	$	1,544
Amount due to subsidiaries		3,193		8,964
Dividend payable		11,143		5,128
Total current liabilities		18,572		15,636
Total liabilities	$	18,572	$	15,636
EQUITY
Preferred stock		15		15
Authorized 50,000,000 shares at par value of $0.001 each
Issued and outstanding: 14,630,813 (2019 – 14,630,813)
Common stock		99		99
Authorized: 100,000,000 shares at par value of $0.001 each
Issued and outstanding: 99,294,743 (2019 – 98,903,243)
Additional paid-in capital		531,815		207,962
Accumulated other comprehensive income (loss)		19,925		(4,321	)
Retained earnings		194,618		90,264
Total shareholders' equity		746,472		294,019
Total liabilities and equity	$	765,044	$	309,655

Schedule of Statements of Comprehensive Income

Statements of Comprehensive Income

	For the year ended December 31
	2020			2019			2018
Selling, general and administrative expenses		7,013			7,750			15,615
Total operating expenses		7,013			7,750			15,615
Loss from operations		(7,013	)		(7,750	)		(15,615	)
Other expenses		(23	)		(16	)		(13	)
Interest income		532			871			798
Equity earnings of subsidiaries, net of tax		116,873			51,824			36,612
Net income		110,369			44,929			21,782
Preferred stock dividends		(6,015	)		(5,128	)		—
Net income attributable to common shareholders		104,354			39,801			21,782
Net income		110,369			44,929			21,782
Foreign currency translation adjustments		24,246			(2,222	)		(9,174	)
Total comprehensive income	$	134,615		$	42,707		$	12,608

Schedule of Statements of Cash Flows

Statements of Cash Flows

	For the year ended December 31
	2020			2019			2018
Cash flows used in operating activities
Net income	$	110,369		$	44,929		$	21,782
Adjustments to reconcile net loss to net cash provided by (used in)    operating activities:
- Share-based compensation		3,003			3,003			445
- Equity in earnings of subsidiaries		(116,873	)		(51,824	)		(36,612	)
Changes in:
- Amount due from subsidiaries		(7,659	)		(3,425	)		(7,624	)
- Prepaid expenses and other receivables		(1,295	)		172			(861	)
- Dividend receivables		—			—			18,085
- Amount due to subsidiaries		(5,771	)		(7,584	)		2,602
- Accrued expenses and other payables		2,692			(119	)		(276	)
Net cash used in operating activities		(15,534	)		(14,848	)		(2,459	)
Cash flows provided by financing activities
- Proceeds from issuance of common stock, net of share issuance costs		1,999			—			85,304
- Proceeds from shares subscribed		—			—			64
Net cash provided by financing activities		1,999			—			85,368
Increase (decrease) in cash and cash equivalents		(13,535	)		(14,848	)		82,909
Cash and cash equivalents, beginning of year		70,201			85,049			2,140
Cash and cash equivalents, end of year	$	56,666		$	70,201		$	85,049

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Basis of Presentation - Schedule of Significant Intercompany Transactions (Details)	Dec. 31, 2020	Dec. 31, 2019
Sinovac Hong Kong
Minority Interest [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	100.00%	100.00%
Sinovac Beijing
Minority Interest [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	73.09%	73.09%
Sinovac LS
Minority Interest [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	59.24%	100.00%
Sinovac Dalian
Minority Interest [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	68.00%	67.86%
Sinovac Biomed Co., Ltd.
Minority Interest [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	100.00%	100.00%
Sinovac Singapore
Minority Interest [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	100.00%

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Basis of Presentation - Additional Information (Details) - USD ($) $ in Thousands	1 Months Ended			12 Months Ended
	Nov. 30, 2020	Sep. 30, 2020	May 31, 2020	Dec. 31, 2020
Sinovac LS
Minority Interest [Line Items]
Debt conversion, converted instrument, amount			$ 15,000
Ownership percentage				12.69%
Total financing expenses				$ 1,000
Sinovac LS | Sino Biopharmaceutical Limited
Minority Interest [Line Items]
Proceeds from investment in subsidiary				$ 527,000
Equity interest percentage				15.38%
Sinovac LS | Vivo Capital
Minority Interest [Line Items]
Ownership percentage				6.345%
Sinovac Dalian
Minority Interest [Line Items]
Capital contribution in subsidiary	$ 6,972
Prime Success L P | Sinovac LS
Minority Interest [Line Items]
Ownership percentage				6.345%
Dalian Jin Gang Group | Sinovac Dalian
Minority Interest [Line Items]
Capital contribution by non controlling shareholder	$ 3,193
Maximum [Member] | 2020 ESOP | Sinovac LS
Minority Interest [Line Items]
Percentage of equity interest purchased upon exercise of stock options		15.00%

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Significant Accounting Policies - Additional Information (Details) $ in Thousands, ¥ in Millions		12 Months Ended
	Jan. 01, 2020 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2020 CNY (¥)	Dec. 31, 2019 CNY (¥)	Dec. 31, 2017 USD ($)
Significant Accounting Policies [Line Items]
Cash and cash equivalents and restricted cash		$ 1,050,204	$ 155,878	$ 158,170			$ 115,964
Cash and cash equivalents		1,041,008	152,718	158,170
Restricted cash		9,196	3,160	0
Revenue Recognition, Sales Returns, Reserve for Sales Returns		$ 12,056	$ 3,726
Percentage of sales return provision		2.40%	1.50%
Sales	$ 4,871
Advertising Expense		$ 859	$ 1,398	3,901
Defined Contribution Plan, Cost Recognized		10,809	9,884	7,438
Foreign Currency Transaction Gain (Loss), before Tax		2,554	306	559
Gains Losses On Intra-entity Foreign Currency Transactions Long Term Investment Nature		0	62	268
Cash and Cash Equivalents, at Carrying Value, Total		322,442	57,079		¥ 2,104	¥ 397
Due to Related Parties, current and noncurrent		12,285	8,043
Interest Rate Risk [Member]
Significant Accounting Policies [Line Items]
Due to Related Parties, current and noncurrent		12,260
Shipping and Handling [Member]
Significant Accounting Policies [Line Items]
Shipping, Handling and Transportation Costs		$ 9,609	$ 7,253	$ 6,261
Use Rights [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Finite-Lived Intangible Asset, Useful Life		28 years
Use Rights [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Finite-Lived Intangible Asset, Useful Life		49 years
Computer Software and Cloud Computing Websites [Member] | Minimum [Member]
Significant Accounting Policies [Line Items]
Finite-Lived Intangible Asset, Useful Life		5 years
Computer Software and Cloud Computing Websites [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Finite-Lived Intangible Asset, Useful Life		10 years

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Significant Accounting Policies - Schedule of Estimated Useful Lives of Assets (Details)	12 Months Ended
	Dec. 31, 2020
Plant And Building [Member] | Maximum [Member]
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, Useful Life	24 years
Plant And Building [Member] | Minimum [Member]
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Machinery and Equipment [Member] | Maximum [Member]
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Machinery and Equipment [Member] | Minimum [Member]
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, Useful Life	8 years
Motor vehicles [Member] | Maximum [Member]
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Motor vehicles [Member] | Minimum [Member]
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, Useful Life	4 years
Office Equipment And Furniture [Member] | Maximum [Member]
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Office Equipment And Furniture [Member] | Minimum [Member]
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years
Leasehold Improvements [Member]
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	Lesser of useful lives and term of lease

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Restricted Cash - Additional Information (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash And Cash Equivalents [Abstract]
Restricted cash	$ 9,196	$ 3,160	$ 0

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Short-term Investments - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Short Term Investments [Line Items]
Total balance of short-term investments	$ 135,248	$ 50,274
Interest income	1,930	1,996	$ 2,016
Short-term Investments
Short Term Investments [Line Items]
Total balance of short-term investments	135,248	50,274
Interest income	$ 1,154	$ 797	$ 47

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Accounts Receivable - Net - Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Accounts receivables, net, current, total	$ 253,487	$ 113,736
Trade Accounts Receivable
Accounts Notes And Loans Receivable [Line Items]
Accounts receivables, gross, current	257,311	116,278
Allowance for doubtful accounts	(6,680)	(4,181)
Accounts receivables, net, current, total	250,631	112,097
Other Receivables
Accounts Notes And Loans Receivable [Line Items]
Accounts receivables, net, current, total	$ 2,856	$ 1,639

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Accounts Receivable - Net - Schedule of Maximum Exposure to Credit Risk Relating to Trade Receivables (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Accounts Notes And Loans Receivable [Line Items]
Accounts receivables, net, current, total	$ 253,487	$ 113,736
Trade Accounts Receivable Aging Within One Year
Accounts Notes And Loans Receivable [Line Items]
Accounts receivables, net, current, total	240,266	108,635
Trade Accounts Receivable Aging Greater Than One Year
Accounts Notes And Loans Receivable [Line Items]
Accounts receivables, net, current, total	10,365	3,462
Trade Accounts Receivable
Accounts Notes And Loans Receivable [Line Items]
Accounts receivables, net, current, total	$ 250,631	$ 112,097

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Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 29,005	$ 5,689
Work in progress	52,515	8,565
Finished goods	24,293	13,592
Total inventories	$ 105,813	$ 27,846

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Inventories - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Fixed Production Overhead To Cost Of Sales	$ 1,697	$ 3,794	$ 2,735
- Inventory provision (note 6)	$ 5,816	$ 651	$ 2,529

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Property, Plant and Equipment - Net - Summary of Property,Plant And Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Property Plant And Equipment [Line Items]
Cost	$ 257,908	$ 125,696
Less: Accumulated depreciation	57,537	51,386
Property, plant and equipment, net	200,371	74,310
Construction in Progress [Member]
Property Plant And Equipment [Line Items]
Cost	143,465	29,367
Less: Accumulated depreciation	0	0
Plant And Building [Member]
Property Plant And Equipment [Line Items]
Cost	29,963	28,833
Less: Accumulated depreciation	13,200	12,183
Machinery and Equipment [Member]
Property Plant And Equipment [Line Items]
Cost	63,675	49,762
Less: Accumulated depreciation	32,398	27,012
Motor vehicles [Member]
Property Plant And Equipment [Line Items]
Cost	1,830	1,536
Less: Accumulated depreciation	1,184	1,057
Office Equipment And Furniture [Member]
Property Plant And Equipment [Line Items]
Cost	3,343	3,431
Less: Accumulated depreciation	1,823	2,122
Leasehold Improvements [Member]
Property Plant And Equipment [Line Items]
Cost	15,632	12,767
Less: Accumulated depreciation	$ 8,932	$ 9,012

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Property, Plant and Equipment - Net - Additional Information (Details) $ in Thousands, ¥ in Millions	12 Months Ended
	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2020 CNY (¥)
Property Plant And Equipment [Line Items]
Depreciation, Total	$ 3,693	$ 4,579	$ 4,887
Gain (Loss) on Disposition of Assets, Total	163	$ 294	$ 75
Sinovac Dalian Vaccine Technology Company Ltd | Bank of China [Member] | Bank of China Term Loan [Member] | Building [Member]
Property Plant And Equipment [Line Items]
Debt Instrument, Collateral Amount	2,567			¥ 16.7
Sinovac Dalian Vaccine Technology Company Ltd | China Merchants Bank [Member] | China Merchants Bank Term Loan [Member] | Building [Member]
Property Plant And Equipment [Line Items]
Debt Instrument, Collateral Amount	672			4.4
Sinovac Dalian Vaccine Technology Company Ltd | China Everbright Bank [Member] | China Everbright Bank Term Loan [Member] | Buildings And Machinery And Equipment [Member]
Property Plant And Equipment [Line Items]
Debt Instrument, Collateral Amount	$ 23,015			¥ 150.2

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Prepaid Land Lease Payments - Schedule of Prepaid Land Lease Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Finite Lived Intangible Assets [Line Items]
Prepaid land lease payments	$ 1,586
Less: accumulated amortization	(112)
Net carrying value	1,474
Use Rights [Member]
Finite Lived Intangible Assets [Line Items]
Prepaid land lease payments	11,066	$ 10,372
Less: accumulated amortization	2,819	2,407
Net carrying value	$ 8,247	$ 7,965

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Prepaid Land Lease Payments - Additional Information (Details) ¥ in Millions	12 Months Ended
	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2020 CNY (¥)	Nov. 17, 2020 USD ($)	Nov. 17, 2020 CNY (¥)	Nov. 05, 2020 USD ($)	Nov. 05, 2020 CNY (¥)	Nov. 20, 2019 USD ($)	Nov. 20, 2019 CNY (¥)
Finite Lived Intangible Assets [Line Items]
- Amortization of intangible assets (note 9)	$ 106,000	$ 0	$ 0
Sinovac Dalian
Finite Lived Intangible Assets [Line Items]
Debt Instrument, Collateral Amount					$ 23,015,000	¥ 150.2			$ 2,567,000	¥ 16.7
Sinovac Dalian | Guangdong Development Bank [Member]
Finite Lived Intangible Assets [Line Items]
Debt Instrument, Collateral Amount							$ 2,196,000	¥ 14.3
Use Rights [Member]
Finite Lived Intangible Assets [Line Items]
- Amortization of intangible assets (note 9)	238,000	$ 238,000	$ 249,000
Use Rights [Member] | Sinovac Dalian | Bank Loan from Guangdong Development Bank [Member] | Guangdong Development Bank [Member]
Finite Lived Intangible Assets [Line Items]
Debt Instrument, Collateral Amount	$ 2,196,000			¥ 14.3

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Intangible Asset - Net - Schedule of Intangible Asset - Net (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Finite Lived Intangible Assets Net [Abstract]
Computer software	$ 1,586
Less: accumulated amortization	112
Net carrying value	$ 1,474

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Intangible Asset - Net - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Finite Lived Intangible Assets Net [Abstract]
- Amortization of intangible assets (note 9)	$ 106,000	$ 0	$ 0

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Lease - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Leases [Abstract]
Weighted average remaining lease term	10 years 9 months 18 days
Weighted average discount rate	4.90%
Operating lease cost	$ 6,075
Short term lease cost	784	$ 487	$ 948
Minimum future rental payments	$ 10

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Lease - Supplemental Cash Flow Information Relating to Operating Lease (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Cash payments for operating leases	$ 856	$ 807
Right-of-use asset obtained in exchange for operating lease liabilities	$ 71,824	$ 135

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Lease - Schedule of Future Lease Payments under Operating Leases (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Future lease payments under operating leases
2021	$ 7,700
2022	10,621
2023	10,745
2024	10,891
2025	11,016
Thereafter	63,430
Total future lease payments	114,403
Less: Imputed interest	25,398
Total lease liability balance	$ 89,005

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Bank Loans - Summary of Bank Loans (Details) - USD ($) $ in Thousands		Dec. 31, 2020	Dec. 31, 2019
Line of Credit Facility [Line Items]
Bank loans		$ 32,941	$ 5,934
Long-term bank loans		2,155	0
Total bank loans		35,096	5,934
Bank Of Beijing One [Member]
Line of Credit Facility [Line Items]
Bank loans	[1]		3,842
Bank of China [Member]
Line of Credit Facility [Line Items]
Bank loans	[2]	1,993	1,005
Bank of Beijing Two [Member]
Line of Credit Facility [Line Items]
Bank loans	[3]	4,598
SPD Silicon Valley Bank [Member]
Line of Credit Facility [Line Items]
Bank loans	[4]	6,503	$ 1,087
SPD Silicon Valley Bank [Member]
Line of Credit Facility [Line Items]
Bank loans	[5]	18,361
Guangdong Development Bank [Member]
Line of Credit Facility [Line Items]
Bank loans	[6]	1,378
China Merchants Bank [Member]
Line of Credit Facility [Line Items]
Bank loans	[7]	108
Long-term bank loans	[7]	163
China Everbright Bank [Member]
Line of Credit Facility [Line Items]
Long-term bank loans	[8]	$ 1,992

[1] On May 20, 2015, Sinovac Beijing entered into a bank loan with Bank of Beijing in the aggregate principal amount of $7,356 (RMB 48 million) with a term from July 2015 to May 2020 for construction of the pneumococcal polysaccharide vaccine facilities. The loan’s interest rate is based on the prime rate of a five-year term loan published by the People’s Bank of China at the time withdraws are made. Interest is payable quarterly and the loan was repaid on May 20, 2020.         

[2] On November 20, 2019, Sinovac Dalian entered into a maximum credit facility of $3,065 (RMB 20 million) with Bank of China to finance its working capital requirements. $1,005 (RMB 7 million) was drawn on December 24, 2019 and was repaid on December 24, 2020. On March 13, 2020, Sinovac Dalian withdrew $1,073 (RMB 7 million) with an annual interest rate at 95 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.00%. On December 9, 2020, Sinovac Dalian withdrew $920 (RMB 6 million) with an annual interest rate at 55 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 4.40%. Interest is payable monthly and the loans are repayable on March 13, 2021 and December 9, 2021, respectively. Buildings of Sinovac Dalian with a net book value of $2,567 (RMB 16.7 million) were pledged as collateral.

[3] On March 31, 2020, Sinovac LS entered into a maximum credit facility of $4,598 (RMB 30 million) with Bank of Beijing to finance its working capital requirements. $4,598 (RMB 30 million) was drawn on March 31, 2020 with an annual interest rate of 3.05%. Interest is payable quarterly and the loan is payable on March 31, 2021.

[4] On November 25, 2019, Sinovac Dalian entered into a revolving bank loan with SPD Silicon Valley Bank with the aggregate principal of $7,663 (RMB 50 million) to finance its working capital requirements. The revolving loan bears interest at 125 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.1% and interest is payable quarterly. Each withdraw from the revolving loan has a maximum term of 12 months. $1,087 (RMB 7.6 million) was drawn in 2019 and repaid in December 2020. The outstanding balance of $6,503 (RMB 42.4 million) was drawn during 2020 and is payable on or before August 6, 2021.

[5] On May 14, 2020 and September 3, 2020, Sinovac LS entered into two revolving bank loans with SPD Silicon Valley Bank with the aggregate principal of $7,663 (RMB 50 million) and $10,728 (RMB 70 million) to finance its working capital requirements. The revolving loan bears interest at 120 basis points above the prime rate of a one-year term loan published by the People’s Bank of China, with a weighted average rate at 5.05% and interest is payable quarterly. Each withdraw from the revolving loan has a maximum term of 12 months. The outstanding balance of $18,361 (RMB 119.8 million) was drawn during 2020 and is payable on or before October 15, 2021.

[6] On November 5, 2020, Sinovac Dalian entered into a maximum credit facility of $1,379 (RMB 9 million) with Guangdong Development Bank to finance its working capital requirements. $1,378 (RMB 9.0 million) was drawn during 2020 and payable on or before November 29, 2021. The loan bears interest at 115 basis point above the prime rate of one year term loan published by the People’s Bank of China, at 5% and interest is payable monthly. Prepaid land lease payments of Sinovac Dalian with a net book value of $2,196 (RMB 14.3 million) were pledged as collateral.

[7] On May 26, 2020, Sinovac Dalian entered into four mortgages in the total amount of $333 (RMB 2.1 million) with China Merchants Bank to purchase four apartments. The loans bears annual interest rate at 175 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.6%. Principals and interests are repaid monthly over a term of 36 months. Sinovac Dalian repaid $58 (RMB 0.4 million) in principal and interest in 2020. As of December 31, 2020, $108 (RMB 0.7 million) is recorded in bank loans due within one year and $163 (RMB 1.1 million) is recorded in long-term bank loans. Buildings of Sinovac Dalian with a net book value of $672 (RMB 4.4 million) were pledged as collateral.

[8] On November 17, 2020, Sinovac Dalian entered into a maximum credit facility of $30,651 (RMB 200 million) is to finance Sinovac Dalian’s purchase of property plant and equipment, with a term from November 17, 2020 to November 16, 2028. The loan bears annual interest rate at 123 basis point above the prime rate of a five year term loan published by the People’s Bank of China, at 5.88%. Interest is payable quarterly and principal installment repayments begin in 2023 and shall be fully paid by November 16, 2028. Certain machinery and equipment of Sinovac Dalian with a net book value of $23,015 (RMB 150.2 million) were pledged as collateral. Sinovac Dalian withdrew $1,992 (RMB 13 million) on December 14, 2020, which will be repaid during 2023 to 2028.

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Bank Loans - Summary of Bank Loans (Parenthetical) (Details) $ in Thousands, ¥ in Millions																		1 Months Ended			12 Months Ended
		Dec. 24, 2020 USD ($)	Dec. 24, 2020 CNY (¥)	Dec. 14, 2020 USD ($)	Dec. 14, 2020 CNY (¥)	Dec. 09, 2020 USD ($)	Dec. 09, 2020 CNY (¥)	Nov. 17, 2020 USD ($)	Nov. 05, 2020 USD ($)	Sep. 03, 2020 USD ($)	May 26, 2020 USD ($) Mortgage Apartment	May 26, 2020 CNY (¥) Mortgage Apartment	May 14, 2020 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2020 CNY (¥)	Mar. 13, 2020 USD ($)	Mar. 13, 2020 CNY (¥)	Dec. 24, 2019 USD ($)	Dec. 24, 2019 CNY (¥)	Nov. 25, 2019 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2020 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 CNY (¥)	Dec. 31, 2018 USD ($)	Dec. 31, 2020 CNY (¥)	Nov. 17, 2020 CNY (¥)	Nov. 05, 2020 CNY (¥)	Sep. 03, 2020 CNY (¥)	May 26, 2020 CNY (¥)	May 14, 2020 CNY (¥)	Mar. 31, 2020 CNY (¥)	Nov. 25, 2019 CNY (¥)	Nov. 20, 2019 USD ($)	Nov. 20, 2019 CNY (¥)	May 20, 2015 USD ($)	May 20, 2015 CNY (¥)
Line of Credit Facility [Line Items]
- Proceeds from bank loans																					$ 33,227		$ 2,109		$ 18,898
Short-term bank loans and current portion of long-term bank loans (note 11)																					32,941		5,934
Long-term bank loans																					2,155		0
Sinovac Dalian
Line of Credit Facility [Line Items]
Debt instrument, interest rate, effective percentage								5.88%																			5.88%
Line of credit facility, maximum borrowing capacity								$ 30,651																			¥ 200.0
- Proceeds from bank loans				$ 1,992	¥ 13.0
Debt instrument, description of variable rate basis								123 basis point
Debt instrument, basis spread on variable rate								1.23%
Debt Instrument, Collateral Amount								$ 23,015																			¥ 150.2							$ 2,567	¥ 16.7
Bank of Beijing [Member] | Sinovac LS
Line of Credit Facility [Line Items]
Debt instrument, interest rate, effective percentage														3.05%																		3.05%
Line of credit facility, maximum borrowing capacity														$ 4,598																		¥ 30.0
- Proceeds from bank loans														$ 4,598	¥ 30.0
Bank of China [Member]
Line of Credit Facility [Line Items]
Short-term bank loans and current portion of long-term bank loans (note 11)	[1]																				1,993		1,005
Bank of China [Member] | Sinovac Dalian
Line of Credit Facility [Line Items]
Debt instrument, interest rate, effective percentage						4.40%	4.40%									5.00%	5.00%
Line of credit facility, maximum borrowing capacity																																		$ 3,065	¥ 20.0
- Proceeds from bank loans						$ 920	¥ 6.0									$ 1,073	¥ 7.0	$ 1,005	¥ 7.0
Repayments of debt		$ 1,005	¥ 7.0
Debt instrument, description of variable rate basis						55 basis point	55 basis point									95 basis point	95 basis point
Debt instrument, basis spread on variable rate						0.55%	0.55%									0.95%	0.95%
Silicon Valley Bank | Sinovac Dalian
Line of Credit Facility [Line Items]
Proceeds from lines of credit																					6,503	¥ 42.4	$ 1,087	¥ 7.6
Repayments of lines of credit																					1,087	7.6
Silicon Valley Bank | Sinovac Dalian | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt Instrument, face amount																				$ 7,663													¥ 50.0
Debt instrument, description of variable rate basis																				125 basis points
Debt instrument, basis spread on variable rate																				1.25%
Debt instrument, interest rate, stated percentage																				5.10%													5.10%
Silicon Valley Bank | Sinovac LS
Line of Credit Facility [Line Items]
Proceeds from lines of credit																					18,361	119.8
Silicon Valley Bank | Sinovac LS | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt Instrument, face amount										$ 10,728			$ 7,663																¥ 70.0		¥ 50.0
Debt instrument, description of variable rate basis										120 basis points			120 basis points
Debt instrument, basis spread on variable rate										1.20%			1.20%
Debt instrument, interest rate, stated percentage										5.05%			5.05%																5.05%		5.05%
Guangdong Development Bank [Member]
Line of Credit Facility [Line Items]
Short-term bank loans and current portion of long-term bank loans (note 11)	[2]																				1,378
Guangdong Development Bank [Member] | Sinovac Dalian
Line of Credit Facility [Line Items]
Debt instrument, interest rate, effective percentage									5.00%																			5.00%
Line of credit facility, maximum borrowing capacity									$ 1,379																			¥ 9.0
- Proceeds from bank loans																					1,378	¥ 9.0
Debt instrument, description of variable rate basis									115 basis point
Debt instrument, basis spread on variable rate									1.15%
Debt Instrument, Collateral Amount									$ 2,196																			¥ 14.3
China Merchants Bank [Member]
Line of Credit Facility [Line Items]
Short-term bank loans and current portion of long-term bank loans (note 11)	[3]																				108
Long-term bank loans	[3]																				$ 163
China Merchants Bank [Member] | Sinovac Dalian
Line of Credit Facility [Line Items]
Debt instrument, interest rate, effective percentage											5.60%																			5.60%
Debt instrument, description of variable rate basis											175 basis point	175 basis point
Debt instrument, basis spread on variable rate											1.75%	1.75%
Debt Instrument, Collateral Amount											$ 672																			¥ 4.4
Number of mortgage entered | Mortgage											4	4
Aggregate mortgage amount											$ 333																			¥ 2.1
Number of apartments purchased | Apartment											4	4
Mortgage loans, description of terms																					Principals and interests are repaid monthly over a term of 36 months.	Principals and interests are repaid monthly over a term of 36 months.
Mortgage loan principal and interest repaid											$ 58	¥ 0.4
Short-term bank loans and current portion of long-term bank loans (note 11)																					$ 108					¥ 0.7
Long-term bank loans																					$ 163					¥ 1.1
Bank Term Loan Drawn On July 2015 | Bank of Beijing [Member] | Sinovac Beijing
Line of Credit Facility [Line Items]
Debt Instrument, face amount																																				$ 7,356	¥ 48.0

[1] On November 20, 2019, Sinovac Dalian entered into a maximum credit facility of $3,065 (RMB 20 million) with Bank of China to finance its working capital requirements. $1,005 (RMB 7 million) was drawn on December 24, 2019 and was repaid on December 24, 2020. On March 13, 2020, Sinovac Dalian withdrew $1,073 (RMB 7 million) with an annual interest rate at 95 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.00%. On December 9, 2020, Sinovac Dalian withdrew $920 (RMB 6 million) with an annual interest rate at 55 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 4.40%. Interest is payable monthly and the loans are repayable on March 13, 2021 and December 9, 2021, respectively. Buildings of Sinovac Dalian with a net book value of $2,567 (RMB 16.7 million) were pledged as collateral.

[2] On November 5, 2020, Sinovac Dalian entered into a maximum credit facility of $1,379 (RMB 9 million) with Guangdong Development Bank to finance its working capital requirements. $1,378 (RMB 9.0 million) was drawn during 2020 and payable on or before November 29, 2021. The loan bears interest at 115 basis point above the prime rate of one year term loan published by the People’s Bank of China, at 5% and interest is payable monthly. Prepaid land lease payments of Sinovac Dalian with a net book value of $2,196 (RMB 14.3 million) were pledged as collateral.

[3] On May 26, 2020, Sinovac Dalian entered into four mortgages in the total amount of $333 (RMB 2.1 million) with China Merchants Bank to purchase four apartments. The loans bears annual interest rate at 175 basis point above the prime rate of a one year term loan published by the People’s Bank of China, at 5.6%. Principals and interests are repaid monthly over a term of 36 months. Sinovac Dalian repaid $58 (RMB 0.4 million) in principal and interest in 2020. As of December 31, 2020, $108 (RMB 0.7 million) is recorded in bank loans due within one year and $163 (RMB 1.1 million) is recorded in long-term bank loans. Buildings of Sinovac Dalian with a net book value of $672 (RMB 4.4 million) were pledged as collateral.

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Bank Loans - Schedule of Aggregate Maturities of Loans (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Aggregate annual principal payments of loans payable
Within 1 year	$ 32,941
In 2022	114
In 2023	98
In 2024	249
After 2024	1,694
Total	$ 35,096

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Bank Loans - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Line of Credit Facility [Line Items]
Short-term debt, weighted average interest rate	4.77%	5.09%	5.04%
Interest costs incurred, total	$ 1,485	$ 715	$ 1,470
Interest costs capitalized	$ 32	$ 65	$ 400
Short Term And Long Term Bank Loans
Line of Credit Facility [Line Items]
Debt, weighted average interest rate	4.84%	5.09%	4.91%

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Related Party Transactions and Balances - Schedule of Loan From Non-controlling Shareholder (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Related Party Transactions [Abstract]
Loan - current	$ 6,155	$ 6,607
Loan - non - current	6,130	1,436
Due to related parties	$ 12,285	$ 8,043

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Related Party Transactions and Balances - Additional Information (Details) $ in Thousands				1 Months Ended																12 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 CNY (¥)	Jan. 01, 2019	Sep. 20, 2019 USD ($)	Sep. 20, 2019 CNY (¥)	Jun. 30, 2019 USD ($)	Jun. 30, 2019 CNY (¥)	Aug. 23, 2017 USD ($)	Aug. 23, 2017 CNY (¥)	Apr. 08, 2013	Dec. 31, 2012 USD ($)	Dec. 31, 2012 CNY (¥)	Sep. 30, 2010 USD ($)	Sep. 30, 2010 CNY (¥)	Aug. 12, 2010 USD ($)	Aug. 12, 2010 CNY (¥)	Jun. 30, 2007 USD ($)	Jun. 30, 2007 CNY (¥)	Aug. 12, 2004 CNY (¥)	Dec. 31, 2020 USD ($) Loan	Dec. 31, 2019 USD ($)	Dec. 31, 2019 CNY (¥)	Dec. 31, 2018 USD ($)	Dec. 31, 2004 USD ($) Agreement	Dec. 31, 2019 CNY (¥)
Related Party Transaction [Line Items]
Due to related parties																				$ 12,285	$ 8,043
Proceeds from related party debt																				10,162	1,457		$ 0
Interest expense, related party																				$ 663	455		453
Dalian Jin Gang Group
Related Party Transaction [Line Items]
Number of loans due to related party | Loan																				4
Due to related parties																				$ 12,260
Interest expense, related party																				$ 663	455		453
Frequency of periodic payment of interest																				monthly
Interest owed on loan from noncontrolling shareholder																				$ 25	0
Interests paid to noncontrolling shareholder																				640	470		$ 438
Related party transaction, lease term			5 years
Related party transaction, operating lease annual rent																					49				¥ 300,000
Related party transaction, current and non-current lease liability																				7,423
Dalian Jin Gang Group | Operating Lease Agreement After Amendment
Related Party Transaction [Line Items]
Related party transaction, operating lease annual rent						$ 22	¥ 200,000
Related party transaction, lease term						5 years 6 months	5 years 6 months
Dalian Jin Gang Group | Management Service Agreement
Related Party Transaction [Line Items]
Related party transaction, annual management fee																					$ 14	¥ 100,000
Dalian Jin Gang Group | Management Service Agreement Amended
Related Party Transaction [Line Items]
Related party transaction, annual management fee	$ 7	¥ 44,000
Sino Bioway Biotech Group Holding Limited
Related Party Transaction [Line Items]
Related party transaction number of supplemental agreements with related party										4
Related party transaction operating leases number of lease agreements amended										4
Related party transaction, operating lease annual rent																				$ 7,796
Sino Bioway Biotech Group Holding Limited | Operating Lease Agreements Production Plant And Laboratory
Related Party Transaction [Line Items]
Number of operating lease agreements | Agreement																								2
Related party transaction, operating lease annual rent																			¥ 1,400,000					$ 197
Related party transaction, lease term																			20 years
Sino Bioway Biotech Group Holding Limited | Operating Lease Agreement After Amendment Production Plant And Laboratory
Related Party Transaction [Line Items]
Related party transaction, operating lease annual rent															$ 197	¥ 1,400,000
Sino Bioway Biotech Group Holding Limited | Operating Lease Agreement Before Amendment Production Plant And Laboratory
Related Party Transaction [Line Items]
Related party transaction, operating lease annual rent															$ 75	¥ 500,000
Sino Bioway Biotech Group Holding Limited | Operating Lease Agreement Expansion Of Production Plant
Related Party Transaction [Line Items]
Related party transaction, operating lease annual rent																	$ 296
Sino Bioway Biotech Group Holding Limited | Operating Lease Agreement Expansion Of Research And Development Business
Related Party Transaction [Line Items]
Related party transaction, operating lease annual rent													$ 146	¥ 1,000,000.0				¥ 2,000,000.0
Related party transaction, lease term													5 years	5 years			20 years	20 years
Loan One and Two
Related Party Transaction [Line Items]
Proceeds from related party debt								$ 6,130	¥ 40,000,000
Loan Three
Related Party Transaction [Line Items]
Proceeds from related party debt											$ 1,533	¥ 10,000,000
Loan Three | Dalian Jin Gang Group
Related Party Transaction [Line Items]
Debt instrument, interest rate, stated percentage																				6.50%
Loan Four
Related Party Transaction [Line Items]
Proceeds from related party debt				$ 4,597	¥ 30,000,000
Loan Four | Dalian Jin Gang Group
Related Party Transaction [Line Items]
Debt instrument, interest rate, stated percentage																				6.50%
Loan One | Dalian Jin Gang Group
Related Party Transaction [Line Items]
Debt instrument, interest rate, stated percentage																				6.50%
Loan Two | Dalian Jin Gang Group
Related Party Transaction [Line Items]
Debt instrument, interest rate, stated percentage																				6.50%

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Related Party Transactions and Balances - Schedule of Related Party Transactions and Balances (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Related Party Transaction [Line Items]
Related party transactions, rent expenses	$ 798	$ 811	$ 810
Sino Bioway Biotech Group Holding Limited
Related Party Transaction [Line Items]
Related party transactions, rent expenses	776	775	810
Dalian Jin Gang Group
Related Party Transaction [Line Items]
Related party transactions, rent expenses	$ 22	$ 36	$ 0

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Accounts Payable and Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Payables And Accruals [Abstract]
Trade payables	$ 30,543	$ 5,783
Machinery and equipment payables	13,044	2,106
Accrued expenses	113,688	31,145
Value added tax payable	4,682	515
Other tax payable	1,885	488
Withholding tax payable	301	74
Bonus and benefit payables	44,098	10,884
Other payables	3,187	7,895
Total accounts payable and accrued liabilities	$ 211,428	$ 58,890

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Income Taxes - Additional Information (Details) $ in Thousands, ¥ in Millions	12 Months Ended
	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2008	Dec. 31, 2020 CNY (¥)	Dec. 31, 2018 USD ($)
Income Tax [Line Items]
Effective income tax rate reconciliation, at federal statutory income tax rate, percent	25.00%	25.00%	25.00%	25.00%	25.00%	25.00%
Deferred tax assets, valuation allowance	$ 119	$ 2,775
Decrease in valuation allowance	2,656
Deferred tax liabilities represents withholding tax	$ 2,724
Withholding tax rate	5.00%
Withholding tax rate before treaty benefits	10.00%
Withholding tax rate after treaty benefits	5.00%
Unrecognized Tax Benefits	$ 561	904	$ 1,873					$ 1,681
Unrecognized tax benefits that would impact effective tax rate	561	904						$ 1,681
Unrecognized tax benefits, interest on income taxes expense	107	458
Unrecognized tax benefits, interest on income taxes accrued	305	$ 412
Minimum [Member]
Income Tax [Line Items]
Deferred tax liability not recognized, amount of unrecognized deferred tax liability, undistributed earnings of domestic subsidiaries	9,495
Maximum [Member]
Income Tax [Line Items]
Deferred tax liability not recognized, amount of unrecognized deferred tax liability, undistributed earnings of domestic subsidiaries	18,990
Sinovac Beijing
Income Tax [Line Items]
Undistributed earnings of domestic subsidiaries	189,898
PRC Subsidiaries
Income Tax [Line Items]
Operating loss carryforwards	$ 1,932						¥ 12.6
Operating loss carryforwards expiration period	will expire from 2021 to 2030
Income tax statute of limitation for transfer pricing related matters	10 years
PRC Subsidiaries | Earliest Tax Year
Income Tax [Line Items]
Tax years remain open to examination	2015
PRC Subsidiaries | Latest Tax Year
Income Tax [Line Items]
Tax years remain open to examination	2020
PRC Subsidiaries | Minimum [Member]
Income Tax [Line Items]
Income tax statute of limitation for transfer pricing related matters	3 years
PRC Subsidiaries | Maximum [Member]
Income Tax [Line Items]
Income tax statute of limitation for transfer pricing related matters	5 years
Income tax examination conduct years	5 years
Hong Kong
Income Tax [Line Items]
Effective income tax rate reconciliation, at federal statutory income tax rate, percent	16.50%
Singapore
Income Tax [Line Items]
Effective income tax rate reconciliation, at federal statutory income tax rate, percent	17.00%
PRC
Income Tax [Line Items]
Lower withholding tax rate on dividends distributed by foreign invested enterprises	5.00%
Higher withholding tax rate on dividends distributed by foreign invested enterprises	10.00%
PRC | Sinovac Beijing
Income Tax [Line Items]
Income tax statute of limitation for transfer pricing related matters	3 years
Income taxes preferential income tax rate	15.00%
PRC | PRC Subsidiaries
Income Tax [Line Items]
Effective income tax rate reconciliation, at federal statutory income tax rate, percent	25.00%

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Income Taxes - Schedule of Income Before Income Tax (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income (loss) before income tax from continuing operations
Non-PRC	$ 5,866	$ (7,337)	$ (16,308)
PRC	210,751	78,157	62,891
Total	$ 216,617	$ 70,820	$ 46,583

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Income Taxes - Schedule of Income Taxes Attributed (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Tax Expense Benefit Continuing Operations [Abstract]
Current	$ (42,665)	$ (11,290)	$ (7,326)
Deferred	11,227	5,685	(3,146)
Total income tax expense	$ (31,438)	$ (5,605)	$ (10,472)

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Income Taxes - Schedule of Income Before Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Tax Expense Benefit Continuing Operations Income Tax Reconciliation [Abstract]
Income before income taxes	$ 216,617	$ 70,820	$ 46,583
Income tax expense at the PRC statutory rate	(54,154)	(17,705)	(11,646)
International tax rate differential	(419)	(1,827)	(3,929)
Super deduction for research and development expenses	7,229	2,310	1,835
Non-deductible expenses	(2,225)	685	(1,865)
Other adjustments	(1,002)	(486)	14
Effect of preferential tax rate	19,224	7,018	6,562
Change in valuation allowance	2,656	4,415	(1,429)
Effect of PRC withholding tax	(2,747)	(15)	(14)
Total income tax expense	$ (31,438)	$ (5,605)	$ (10,472)

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Income Taxes - Schedule Company's Deferred Tax Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Components Of Deferred Tax Assets [Abstract]
Inventories	$ 1,212	$ 394
Accrued expenses	17,240	4,184
Deferred government grants	2,838	985
Fixed assets	5,382	4,160
Tax losses carried forward	338	4,420
Less: valuation allowance	(119)	(2,775)
Deferred tax assets	$ 26,891	$ 11,368

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Income Taxes - Schedule of Changes in Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Unrecognized tax benefit
Balance at January 1	$ 904	$ 1,681	$ 1,873
Additions for tax positions of the current year			7
Additions for tax positions of the prior years			0
Settlement with the taxing authority			0
Lapse of statute of limitations	(343)	(777)	(199)
Balance at December 31	$ 561	$ 904	$ 1,681

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Deferred Revenue - Additional Information (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Advances From Customers
Deferred Revenue Arrangement [Line Items]
Deferred Revenue, Current	$ 363,787	$ 5,258
PRC Government for Stockpiling of H5N1 and Hepatitis A Vaccines
Deferred Revenue Arrangement [Line Items]
Deferred Revenue, Current	$ 218	$ 204

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Deferred Government Grants - Additional Information (Details) $ in Thousands		12 Months Ended
		Dec. 31, 2020 USD ($) Grant	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Deferred Government Grants [Line Items]
Proceeds from government grants received		$ 14,162	$ 975	$ 3,546
Current deferred government grants		15,159	2,738
Non-current deferred government grants		4,229	3,986
Deferred government grants current and noncurrent		19,388	6,724
Interest subsidy, Rental Fees Subsidy and Other Government Grants
Deferred Government Grants [Line Items]
Additional income from government grants		$ 3,137	501	254
Government Grants for Property, Plant and Equipment
Deferred Government Grants [Line Items]
Number of deferred government grants | Grant		4
Number of deferred government grants conditions fulfilled | Grant		1
Number of deferred government grants conditions expected to be fulfilled in remainder of fiscal year | Grant		1
Current deferred government grants		$ 565
Non-current deferred government grants		1,714
Government grant recorded as reduction To depreciation		412	412	430
Revenue from grants		80	79	$ 82
Deferred government grants current and noncurrent		$ 1,289
Government Grants For Research And Development
Deferred Government Grants [Line Items]
Number of deferred government grants | Grant		10
Current deferred government grants	[1]	$ 14,594	2,252
Non-current deferred government grants	[1]	$ 1,226	$ 1,849
Number of deferred government grants expects to fulfill | Grant		9

[1] The Company has ten deferred government grants related to various research and development projects. The Company expects to fulfill nine grants’ conditions in 2021 and recorded $14,594 as current portion of deferred government grants, while the remaining one grant’s condition is expected to be fulfilled after 2021 and $1,226 is recorded in the non-current portion of deferred government grants.  

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Deferred Government Grants - Summary of Deferred Government Grants (Details) - USD ($) $ in Thousands		Dec. 31, 2020	Dec. 31, 2019
Current deferred government grants		$ 15,159	$ 2,738
Non-current deferred government grants		4,229	3,986
Total deferred government grants		19,388	6,724
Government Grants for Property, Plant and Equipment
Current deferred government grants	[1]	565	486
Non-current deferred government grants	[1]	3,003	2,137
Government Grants For Research And Development
Current deferred government grants	[2]	14,594	2,252
Non-current deferred government grants	[2]	$ 1,226	$ 1,849

[1] The Company has four deferred government grants related to property, plant and equipment. The Company has fulfilled one of the grants’ conditions and expect to fulfill another one in 2021. $565 will be amortized in 2021 which was included in the current portion of deferred government grant and $1,714 will be amortized after 2021 which was included in the non-current portion of deferred government grants. $412 was recorded as a reduction to depreciation expense for the year ended December 31, 2020 (2019 - $412, 2018 - $430), and $80 was recorded as government grant recognized in income for the year ended December 31, 2020 (2019 - $79, 2018 - $82). $1,289 represents the unamortized portion of one grant where the Company received but has not fulfilled the conditions attached to the grant. As the Company does not expect to fulfill the conditions within one year, the grant is recorded as a non-current deferred government grant.

[2] The Company has ten deferred government grants related to various research and development projects. The Company expects to fulfill nine grants’ conditions in 2021 and recorded $14,594 as current portion of deferred government grants, while the remaining one grant’s condition is expected to be fulfilled after 2021 and $1,226 is recorded in the non-current portion of deferred government grants.  

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Commitments and Contingencies - Additional Information (Details) ¥ in Millions		12 Months Ended	108 Months Ended
	Dec. 19, 2018 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2011 CNY (¥)
Operating Lease Commitments
Litigation charge awarded to other party		$ 0
Description of information regarding lawsuit filed about right plan		On March 5, 2018, the Company filed a lawsuit in the Court of Chancery of the State of Delaware seeking a determination whether 1Globe, The Chiang Li Family, OrbiMed and other shareholders of Sinovac Biotech Ltd. had triggered the Rights Agreement by forming a group holding approximately 45% of outstanding shares of Sinovac Biotech Ltd., in excess of the plan’s threshold of 15%, and acting in concert prior to the 2017 AGM.
Rights Agreement
Operating Lease Commitments
Rights held by collaborating shareholders to void	$ 28,700,000
Outstanding rights held by shareholders valid	42,400,000
Rights Agreement | Common Shares
Operating Lease Commitments
Outstanding rights held by shareholders valid	27,800,000
Rights Agreement | Series B Preferred Shares
Operating Lease Commitments
Outstanding rights held by shareholders valid	$ 14,600,000
Mr. Weidong Yin
Operating Lease Commitments
Loan amount given to former official			$ 77,000	¥ 0.6
Research and Development Arrangement
Operating Lease Commitments
Long-term purchase commitment, amount		$ 3,886,000
Capital Addition Purchase Commitments
Operating Lease Commitments
Long-term purchase commitment, amount		$ 45,306,000

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Preferred and Common Stock - Additional Information (Details)			2 Months Ended	12 Months Ended
	Feb. 22, 2019 $ / shares shares	Jul. 02, 2018 USD ($) $ / shares shares	Feb. 22, 2019 shares	Dec. 31, 2020 USD ($) Vote $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares	Mar. 07, 2018 $ / shares	May 01, 2015 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Preferred Stock, Shares Issued				14,630,813	14,630,813
Preferred Stock, Shares Outstanding				14,630,813	14,630,813
Preferred stock dividend for the period | $				$ 6,015,000	$ 5,128,000	$ 0
Common Stock, Shares, Outstanding				99,294,743	98,903,243
Common stock vote per share | Vote				1
Share-based compensation arrangement by share-based payment award, options, exercises in period				401,500
Share-based compensation arrangements by share-based payment award, options, exercises in period, weighted average exercise price | $ / shares				$ 4.98
Proceeds from stock options exercised | $						3,000
Common Stock, Par or Stated Value Per Share | $ / shares				$ 0.001	$ 0.001		$ 0.001
- Proceeds from issuance of common stock, net of share issuance costs | $				$ 1,999,000	$ 0	$ 85,304,000
Private Placement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of new shares		11,800,000
Common Stock, Par or Stated Value Per Share | $ / shares		$ 7.35
- Proceeds from issuance of common stock, net of share issuance costs | $		$ 85,299
Net proceeds, after deducting offering expenses | $		$ 1,431,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued during period, shares, restricted stock award, forfeited				10,000	27,000	51,500
Common Stock, Par or Stated Value Per Share | $ / shares								$ 0.001
Series B Convertible Preferred Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Each preferred share is convertible into common share	1		1
Preferred shares, dividend payment terms	Until the Preferred Shares are converted into common shares (or until the Preferred Shares are listed on a nationally recognized securities exchange), they will earn a preferred dividend equal to $0.41 per share per annum, payable quarterly in arrears.
Preferred dividend per share, per annum | $ / shares	$ 0.41
Preferred Stock, Shares Outstanding				14,630,813
Preferred stock dividend for the period | $				$ 6,015,000
Common Stock | Range Of Exercise Prices Dollars 2.37
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, exercises in period						1,219
Share-based compensation arrangements by share-based payment award, options, exercises in period, weighted average exercise price | $ / shares						$ 2.37
Common Stock | Range Of Exercise Prices Dollars 4.98
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, exercises in period				401,500	13,500	107,822
Share-based compensation arrangements by share-based payment award, options, exercises in period, weighted average exercise price | $ / shares				$ 4.98	$ 4.98	$ 4.98
Common Stock | Cashless excisable.
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, exercises in period						156,300
Rights Agreement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding rights held by shareholders valid	42,400,000
Issuance of new shares			14,630,813
Rights Agreement | Series B Convertible Preferred Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of new shares	14,630,813
Rights Agreement | Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of new shares	27,777,341

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Stock Options - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands						1 Months Ended	12 Months Ended
	Sep. 16, 2020	Mar. 07, 2018	May 01, 2016	May 01, 2015	Aug. 22, 2012	Dec. 31, 2011	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued during period, shares, restricted stock award, net of forfeitures		2,000,000
Common Stock, Par or Stated Value Per Share		$ 0.001					$ 0.001	$ 0.001
Allocated Share-based Compensation Expense							$ 10,203	$ 3,003	$ 4,305
Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage		60.00%
Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage		40.00%
Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage		40.00%
2012 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued during period, shares, restricted stock award, net of forfeitures				729,000
Share-based compensation arrangement by share-based payment award, options, grants in period, net of forfeitures				1,341,000
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price				$ 4.98
Share-based compensation arrangement by share-based payment award, expiration date				Apr. 30, 2023
Share-based compensation arrangement by share-based payment award, plan modification, description and terms							the board of directors approved that an additional 30% of the Options to be vested on December 16, 2016, and restrictions of an additional 30% of the Restricted Shares were removed on December 16, 2016. On April 25, 2018, the board of directors approved that all remaining unvested Options and Restricted Shares that were granted on May 1, 2015 were fully vested on April 25, 2018.
2012 Plan | Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage			20.00%
2020 ESOP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options, grants in period, gross								0	0
Exercise price of options vested, granted to officers and employees	$ 12,000
Share-based compensation arrangement by share-based payment Award, options vesting period	8 years
Expected volatility							73.22%
Expected life							2 years
Risk-free interest rate							2.72%
Dividend rate							0.00%
2020 ESOP | Maximum [Member] | Sinovac LS
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of equity interest right to purchase upon exercise of stock options	15.00%
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, percentage of outstanding Stock maximum							10.00%
Share-based compensation arrangement by share-based payment award, options, grants in period, gross						767,000
Share-based compensation arrangement by share-based payment award, fair value assumptions, exercise Price						$ 2.37
Share-based compensation arrangement by share-based payment award, options, vested in period, fair value							$ 0	$ 0	$ 1,135
Stock options | 2012 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, number of shares authorized					4,000,000
Share-based compensation arrangement by share-based payment award, options, exercises in period, intrinsic value							598
Employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options							$ 0
Stock options | 2012 Plan | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, expiration period					10 years
Stock options | 2003 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, number of shares available for grant							42,800
Share based compensation arrangements by share Based payment award options vesting rights percentage							10.00%
Share-based compensation arrangement by share-based payment award, options, exercises in period, intrinsic value							$ 0	$ 27	$ 426
Stock options | 2003 Plan | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, expiration period							10 years
Stock options | 2020 ESOP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant date fair value of options issued							$ 7,200
Share-based compensation arrangement by share-based payment award, options, exercises in period, intrinsic value							$ 3,000
Stock options | 2020 ESOP | Sinovac LS
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of equity upon exercise of options							15.00%
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Par or Stated Value Per Share				$ 0.001
Restricted Stock | 2012 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options							$ 6,555
Employee service Share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition							26 months

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Stock Options - Summary of Company's stock Options Activity (Details)	12 Months Ended
	Dec. 31, 2020 USD ($) $ / shares shares
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Outstanding at the beginning of the period	785,500
Exercised	(401,500)
Forfeited / Expired	(4,000)
Outstanding at the end of the period	380,000
Vested and expected to vest at the end of the period	380,000
Exercisable at the end of the period	380,000
Outstanding at the beginning of the period | $ / shares	$ 4.98
Exercised | $ / shares	4.98
Outstanding at the end of the period | $ / shares	4.98
Vested and expected to vest at the end of the period | $ / shares	4.98
Exercisable at the end of the period | $ / shares	$ 4.98
Outstanding at the beginning of the period | $	$ 1,170,395
Outstanding at the end of the period | $	566,200
Vested and expected to vest at the end of the period | $	566,200
Exercisable at the end of the period | $	$ 566,200

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Stock Options - Summary of Company's Non-Vested Restricted Shares Activity (Details)	12 Months Ended
	Dec. 31, 2020 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested at the beginning of the period | shares	1,973,000
Forfeited | shares	(10,000)
Non-vested at the end of the period | shares	1,963,000
Non-vested at the beginning of the period | $ / shares	$ 8.25
Forfeited | $ / shares	8.25
Non-vested at the end of the period | $ / shares	$ 8.25
Options Outstanding- Number of Options Outstanding | shares	380,000
Options Outstanding-Remaining Average Contractual Life (years)	2 years 3 months 29 days
Options Outstanding-Average Exercise Price | $ / shares	$ 4.98
Options Exercisable-Number of Options Exercisable | shares	380,000
Options Exercisable-Remaining Contractual Life (years)	2 years 3 months 29 days
Options Exercisable-Average Exercise Price | $ / shares	$ 4.98
Range Of Exercise Prices Dollars 4.98
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding- Number of Options Outstanding | shares	380,000
Options Outstanding-Remaining Average Contractual Life (years)	2 years 3 months 29 days
Options Outstanding-Average Exercise Price | $ / shares	$ 4.98
Options Exercisable-Number of Options Exercisable | shares	380,000
Options Exercisable-Remaining Contractual Life (years)	2 years 3 months 29 days
Options Exercisable-Average Exercise Price | $ / shares	$ 4.98

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Statutory Surplus Reserves - Additional Information (Details) $ in Thousands, ¥ in Millions	12 Months Ended
	Dec. 31, 2020 USD ($)	Dec. 31, 2020 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 CNY (¥)
Schedule Of Distribution Of Profits [Line Items]
Appropriation of net income after taxes to statutory surplus reserve fund required minimum percentage	10.00%
Reserve level threshold for mandatory transfer percentage	50.00%
Retained earnings, appropriated	$ 50,377		$ 33,533
Dividends payable, current	11,143		5,128
Restricted paid in capital, additional paid in capital and statutory surplus reserves	442,562	¥ 2,947	85,446	¥ 588
Amount of restricted net assets for consolidated and unconsolidated subsidiaries	698,552		225,014
Common Shares
Schedule Of Distribution Of Profits [Line Items]
Dividends payable, current	0		0
Preferred shareholders
Schedule Of Distribution Of Profits [Line Items]
Dividends payable, current	$ 11,143		$ 5,128

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Earnings per Share - Schedule of Computation of Basic and Diluted Income Attributable to Shareholders (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Numerator
Net Income	$ 185,179	$ 65,215	$ 36,111
Less: Income attributable to non-controlling interests	74,810	20,286	14,329
Net income attributable to shareholders of Sinovac	110,369	44,929	21,782
Less: Preferred stock dividends	6,015	5,128	0
Net income attributable to common shareholders of Sinovac	104,354	39,801	21,782
Net income attributable to shareholders of Sinovac for computing diluted net income per share	$ 110,369	$ 44,929	$ 21,782
Denominator
Basic weighted average number of common shares outstanding	98,897,345	94,876,946	64,727,146
Dilutive effect of stock options and preferred shares	14,765,017	14,815,013	250,408
Diluted weighted average number of common shares outstanding	113,662,362	109,691,959	64,977,554
Earnings per share
Basic net income per share	$ 1.06	$ 0.42	$ 0.34
Diluted net income per share	$ 0.97	$ 0.41	$ 0.34

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Earnings per Share - Additional Information (Details) - $ / shares	2 Months Ended	12 Months Ended
	Feb. 22, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Earnings Per Share Basic [Line Items]
Basic weighted average number of common shares outstanding		98,897,345	94,876,946	64,727,146
Diluted weighted average number of common shares outstanding		113,662,362	109,691,959	64,977,554
Basic net income per share		$ 1.06	$ 0.42	$ 0.34
Diluted net income per share		$ 0.97	$ 0.41	$ 0.34
Common Stock
Earnings Per Share Basic [Line Items]
Issuance of new shares			27,777,341
Rights Agreement
Earnings Per Share Basic [Line Items]
Issuance of new shares	14,630,813
Rights Agreement | Common Stock
Earnings Per Share Basic [Line Items]
Issuance of new shares	27,777,341
Implementation of Rights Agreement and Newly Issued Common and Preferred Shares Not in Effect
Earnings Per Share Basic [Line Items]
Basic weighted average number of common shares outstanding		71,120,004
Diluted weighted average number of common shares outstanding		85,885,021
Basic net income per share		$ 1.55
Diluted net income per share		$ 1.29

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Segment Information - Additional Information (Details)	12 Months Ended
	Dec. 31, 2020 USD ($) Segment	Dec. 31, 2019 USD ($)
Segment Reporting [Abstract]
Long-lived assets | $	$ 208,618	$ 82,275
Number of operating segment | Segment	1

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Segment Information - Schedule of Total Assets by Geographic Area (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Assets	$ 1,901,326	$ 452,299
PRC
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Assets	1,824,380	384,297
Outside Mainland China
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Assets	$ 76,946	$ 68,002

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Segment Information - Schedule of Revenues by Market Type (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]
Sales	$ 510,624	$ 246,053	$ 229,650
EPI
Revenues from External Customers and Long-Lived Assets [Line Items]
Sales	96,799	6,896	10,357
Private Pay
Revenues from External Customers and Long-Lived Assets [Line Items]
Sales	268,821	220,217	204,764
Export
Revenues from External Customers and Long-Lived Assets [Line Items]
Sales	$ 145,004	$ 18,940	$ 14,529

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Segment Information - Schedule of Revenues are Attributed to Geographic Locations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]
Sales	$ 510,624	$ 246,053	$ 229,650
PRC
Revenues from External Customers and Long-Lived Assets [Line Items]
Sales	365,620	227,113	215,121
Outside Mainland China
Revenues from External Customers and Long-Lived Assets [Line Items]
Sales	$ 145,004	$ 18,940	$ 14,529

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Collaboration Agreements - Additional Information (Details)					12 Months Ended
	Apr. 03, 2014	Dec. 14, 2011 USD ($) Serotype	Aug. 18, 2009 USD ($)	Mar. 12, 2009 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2020 EUR (€)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2018 EUR (€)	Dec. 31, 2014 USD ($)	Dec. 31, 2014 EUR (€)	Dec. 31, 2013 Dose	Dec. 31, 2012 USD ($)	Nov. 30, 2020 Agreement	Sep. 30, 2020 Agreement Dose	Dec. 31, 2016 USD ($)
Accrued royalties, current					$ 0		$ 0	$ 9,000
Milestone fee recorded research and development expenses					35,000	€ 30,000		611,000	€ 500,000
Payments to acquire productive assets					0		0	0
Tianjing Can Sino Biotechnology Inc | Technology Transfer Agreement
Term of Collaboration Agreement				8 years
Collaborative arrangements and noncollaborative arrangement payment for transfer of additional serotypes and related technology		$ 300,000
Number of additional serotypes signed for transfer | Serotype		6
Collaborative arrangements and noncollaborative arrangement milestone payments incurred																$ 1,200,000
Collaborative arrangements and noncollaborative arrangement milestone payments incurred for agreement before amendment																$ 1,000,000
Collaborative arrangements and noncollaborative arrangement milestone payments incurred for amended agreement										$ 200,000
Tianjing Can Sino Biotechnology Inc | Technology Transfer Agreement | Maximum [Member]
Collaborative arrangements and noncollaborative arrangement milestone payments				$ 3,000,000
Royalty payment on net sales				10.00%
Tianjing Can Sino Biotechnology Inc | Technology Transfer Agreement | Minimum [Member]
Royalty payment on net sales				6.00%
Tianjing Can Sino Biotechnology Inc | Technology Transfer Agreement Third Amendment
Collaborative arrangements and noncollaborative arrangement milestone payments incurred					0		0	0
National Institute of Health | Patent License Agreement
Term of Collaboration Agreement			8 years
Collaborative arrangements and noncollaborative arrangement license issue royalty			$ 80,000
Collaborative arrangements and noncollaborative arrangement license royalty payments upon achievement of each benchmark								330,000
Royalty expense					$ 1,000		1,000	16,000
National Institute of Health | Patent License Agreement | Maximum [Member]
Royalty payment on net sales			4.00%
National Institute of Health | Patent License Agreement | Minimum [Member]
Royalty payment on net sales			1.50%
Collaborative arrangements and noncollaborative arrangement non refundable annual royalty			$ 8,000
Medimmune LLC | H5N1 Licenses
Collaborative arrangements and noncollaborative arrangement milestone payments incurred								$ 9,900,000
Collaborative arrangements and noncollaborative arrangement licenses fees and royalties paid													$ 3,400,000
Number of doses of vaccines from Chinese government | Dose												3,000,000
Institute for Translational Vaccinology
Term of Collaboration Agreement	50 years
Collaborative arrangements and noncollaborative arrangement milestone payments | €											€ 1,500,000
Collaborative arrangements and noncollaborative arrangement entrance fees and milestone payments										$ 2,406,000
Expense incurred or paid							$ 0
PT Bio Farma | Supply, Local Production and Technology Licensing
Number of collaboration agreement signed | Agreement															2
Minimum number of doses of vaccine produced by agreed party | Dose															140,000,000
KEYMEN | Supply, Local Production and Technology and Know-how Licensing
Number of collaboration agreement signed | Agreement														2

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Condensed Financial Information of the Parent Company - Schedule of Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 1,041,008	$ 152,718	$ 158,170
Prepaid expenses and other receivables	15,541	1,873
Total current assets	1,560,293	349,607
Total assets	1,901,326	452,299
Current liabilities
Accrued expenses and other payables	113,688	31,145
Dividend payable	11,143	5,128
Total current liabilities	679,610	87,199
Total liabilities	781,201	100,104
EQUITY
Preferred stock Authorized 50,000,000 shares at par value of $0.001 each Issued and outstanding: 14,630,813 (2019 - 14,630,813)	15	15
Common stock Authorized: 100,000,000 shares at par value of $0.001 each Issued and outstanding: 99,294,743 (2019 – 98,903,243)	99	99
Additional paid-in capital	538,924	207,962
Accumulated other comprehensive income (loss)	19,925	(4,321)
Retained earnings	144,241	56,731
Total shareholders' equity	746,472	294,019
Total liabilities and equity	1,901,326	452,299
Parent Company
Current assets
Cash and cash equivalents	56,666	70,201	$ 85,049	$ 2,140
Prepaid expenses and other receivables	2,461	1,166
Amount due from subsidiaries	93,665	86,006
Dividend receivables	3,195	3,195
Total current assets	155,987	160,568
Investment in subsidiaries	609,057	149,087
Total assets	765,044	309,655
Current liabilities
Accrued expenses and other payables	4,236	1,544
Amount due to subsidiaries	3,193	8,964
Dividend payable	11,143	5,128
Total current liabilities	18,572	15,636
Total liabilities	18,572	15,636
EQUITY
Preferred stock Authorized 50,000,000 shares at par value of $0.001 each Issued and outstanding: 14,630,813 (2019 - 14,630,813)	15	15
Common stock Authorized: 100,000,000 shares at par value of $0.001 each Issued and outstanding: 99,294,743 (2019 – 98,903,243)	99	99
Additional paid-in capital	531,815	207,962
Accumulated other comprehensive income (loss)	19,925	(4,321)
Retained earnings	194,618	90,264
Total shareholders' equity	746,472	294,019
Total liabilities and equity	$ 765,044	$ 309,655

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Condensed Financial Information of the Parent Company - Schedule of Balance Sheets (Parenthetical) (Details) - $ / shares	Dec. 31, 2020	Dec. 31, 2019	Mar. 07, 2018
Preferred Stock, Shares Authorized	50,000,000	50,000,000
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Issued	14,630,813	14,630,813
Preferred Stock, Shares Outstanding	14,630,813	14,630,813
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001	$ 0.001
Common Stock, Shares, Issued	99,294,743	98,903,243
Common Stock, Shares, Outstanding	99,294,743	98,903,243
Parent Company
Preferred Stock, Shares Authorized	50,000,000	50,000,000
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Issued	14,630,813	14,630,813
Preferred Stock, Shares Outstanding	14,630,813	14,630,813
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares, Issued	99,294,743	98,903,243
Common Stock, Shares, Outstanding	99,294,743	98,903,243

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Condensed Financial Information of the Parent Company - Schedule of Statements of Comprehensive Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Selling, general and administrative expenses	$ 176,534	$ 121,468	$ 137,003
Total operating expenses	227,800	145,022	159,611
Loss from operations	215,644	68,562	45,316
Other expenses	496	912	321
Interest income	1,930	1,996	2,016
Net income attributable to shareholders of Sinovac	110,369	44,929	21,782
Preferred stock dividends	(6,015)	(5,128)	0
Net income attributable to common shareholders	104,354	39,801	21,782
- Net income attributable to shareholders of Sinovac	110,369	44,929	21,782
Foreign currency translation adjustments	32,328	(2,827)	(10,996)
Comprehensive income attributable to shareholders of Sinovac	134,615	42,707	12,608
Parent Company
Selling, general and administrative expenses	7,013	7,750	15,615
Total operating expenses	7,013	7,750	15,615
Loss from operations	(7,013)	(7,750)	(15,615)
Other expenses	(23)	(16)	(13)
Interest income	532	871	798
Equity earnings of subsidiaries, net of tax	116,873	51,824	36,612
Net income attributable to shareholders of Sinovac	110,369	44,929	21,782
Preferred stock dividends	(6,015)	(5,128)	0
Net income attributable to common shareholders	104,354	39,801	21,782
- Net income attributable to shareholders of Sinovac	110,369	44,929	21,782
Foreign currency translation adjustments	24,246	(2,222)	(9,174)
Comprehensive income attributable to shareholders of Sinovac	$ 134,615	$ 42,707	$ 12,608

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Condensed Financial Information of the Parent Company - Schedule of Statements of Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows used in operating activities
Net income	$ 110,369	$ 44,929	$ 21,782
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
- Share-based compensation	10,203	3,003	4,305
Changes in:
- Prepaid expenses and other receivables	(13,151)	2,645	(2,613)
- Accrued expenses and other payables	131,777	6,793	(6,167)
Cash flows provided by financing activities
- Proceeds from issuance of common stock, net of share issuance costs	1,999	0	85,304
- Proceeds from shares subscribed	0	0	64
Cash and cash equivalents, beginning of year	152,718	158,170
Cash and cash equivalents, end of year	1,041,008	152,718	158,170
Parent Company
Cash flows used in operating activities
Net income	110,369	44,929	21,782
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
- Share-based compensation	3,003	3,003	445
- Equity in earnings of subsidiaries	(116,873)	(51,824)	(36,612)
Changes in:
- Amount due from subsidiaries	(7,659)	(3,425)	(7,624)
- Prepaid expenses and other receivables	(1,295)	172	(861)
- Dividend receivables	0	0	18,085
- Amount due to subsidiaries	(5,771)	(7,584)	2,602
- Accrued expenses and other payables	2,692	(119)	(276)
Net cash used in operating activities	(15,534)	(14,848)	(2,459)
Cash flows provided by financing activities
- Proceeds from issuance of common stock, net of share issuance costs	1,999	0	85,304
- Proceeds from shares subscribed	0	0	64
Net cash provided by financing activities	1,999	0	85,368
Increase (decrease) in cash and cash equivalents	(13,535)	(14,848)	82,909
Cash and cash equivalents, beginning of year	70,201	85,049	2,140
Cash and cash equivalents, end of year	$ 56,666	$ 70,201	$ 85,049