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Shares in Chinese vaccine makers slumped on Thursday after U.S. President Joe Biden’s support for a proposed waiver of intellectual property rights on COVID-19 vaccines sent investors scrambling to reconsider high valuations.

The Shanghai shares of CanSino Biologics Inc , a single-dose COVID-19 vaccine maker, tumbled as much as 16.91%. The company’s Hong Kong shares (6185.HK) fell even further, at one point diving nearly 22%.

Shares of Shanghai Fosun Pharmaceutical Group (600196.SS) fell by the 10% daily limit, as the CSI300 healthcare sub-index (.CSI300HC) dropped more than 5%.

On Wednesday, Biden indicated his support for a waiver amid growing concern that big outbreaks in India could allow the rise of vaccine-resistant strains of the deadly virus, undermining a global recovery. read more

Any decision by the World Trade Organization on waivers for COVID-19 vaccines requires a consensus of all 164 members. read more

Worsening outbreaks have boosted demand for vaccine stocks in China’s retail-driven equity market.

“The patent waiver will definitely have some impact on China’s domestic COVID-19 vaccine makers, as it would increase the global vaccine supply,” said Hu Yunlong, a Beijing-based fund manager.

“The fall in Chinese vaccine makers is also partly due to a technical correction following their recent sharp gains.”

China’s healthcare sub-index jumped nearly 11% last month, adding froth to the already-high valuations in the sector. Data from China Securities Index Co showed the price-to-earnings ratio for the healthcare sector at above 62, as of April 30, compared with around 21 for the Shanghai and Shenzhen stock exchanges overall.

“Chinese vaccine stocks had been spurred recently by news of worsening situations in other countries, such as India,” said Wu Tianhao, an analyst at Western Securities.

While the patent waiver could hurt exports of Chinese vaccines, the overall impact on the sector would be limited.

“Domestic sales are still their main source of revenue,” Wu said.

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