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Growth in the Chinese market for pharmaceuticals has been so robust and abundant in recent years that Western companies could
score gains simply by being there. Today, the momentum has shifted: China is becoming a more complex market, with the potential
for missteps if investors fail to accurately assess the dynamics of change and build a strategy that anticipates the new incentives
that guide the actions of all key stakeholders in health. Many of these incentives are driven by the strong arm of government,
while others reflect the impact of global trends on China as regards how medicines are developed, manufactured, marketed,
and reimbursed. Key changes affecting the market include a drive toward generic commoditization, expansion of the OTC franchise,
more pressure on hospital profit margins, consolidation in key adjacent businesses such as distribution and pharmacies, realignment
toward a more competitive domestic manufacturer base, and fresh options for private health services.
For the "C suite" audience of Pharm Exec, what matters most is helping your China-based team embrace change and avoid that "business as usual" mindset that tends to
accompany a past record of success. What's the key message? The "altered state" of Chinese healthcare is moving from abstraction
to reality—and 2011 is the deadline year for a strategic repositioning. Those who refuse to anticipate and prepare for change
do so at their own risk.
Indeed, it would be a misinterpretation to assert that the massive reforms launched by the government in 2008 are simply a
paper exercise. They have altered the structure of almost every facet of the medical product and service value chains—a fact
often downplayed because in China there is a large gap between policy and implementation. Policies set at the national level
are re-articulated at the provincial and local levels (a lengthy process), where they are enforced with varying degrees of
fidelity to their original embodiments. Nevertheless, the overall direction of reform is clear—as is the fact that it, in
conjunction with the central government's commitment to the 12th national economic plan which promotes increased domestic
consumption, will irrevocably change the face of China's healthcare and pharmaceutical sector moving forward.
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