Similarly, Roche has unveiled its fifth global R&D center on the outskirts of Shanghai. Novartis is collaborating with a leading Chinese R&D institute and is establishing an alliance with another Chinese biotech on other projects. In an effort to make its products more accessible to local residents, Pfizer has established a regional headquarters in Shanghai and is considering its own R&D center in China.

Investments like these become even more critical and the market opportunity more compelling as chronic disease rates rise in China with the increase of affluence. Greater prosperity often leads to lifestyle changes—for example, richer, less healthy diets—and a consequent increase in chronic diseases such as diabetes, cancer, and heart disease. By 2025, for instance, China will have 38 million diabetes patients, almost double what is projected for the United States, and about 13 percent of the global diabetic population. As China's populaton ages and people move from rural settings to more sedentary urban centers, chronic disease will grow.

Companies need to expand their efforts outside of large, tier-one cities such as Beijing, Shanghai, and Guangzhou. Today, companies can reach 80 percent of the hospital market in China by focusing on just 120 out of 665 cities. However, this dynamic is changing rapidly, so first steps must be taken toward China's future markets by understanding the shift from tier one to tiers two and three.

Improving customer base segmentation and daily call rates will also drive future growth. Segmenting by message content will also help, so that doctors who respond to efficacy or patient compliance arguments do not receive promotions based primarily on low cost. Significant growth can be driven from minimum frequency rates of one call per week on very-high-value targets and one call every two weeks on high-value targets.

Execution

All of this is easier said than done. As employers grapple with high turnover, they need to expand their talent pool into rural environs. They must invest in higher salaries, more rigorous training, and richer benefits to inspire loyalty among employees already accustomed to annual salary increases of up to 20 percent. Robust human resources programs that attract and retain top-shelf talent help companies accelerate market penetration. The companies that succeed in China will not necessarily be those with the best products. They will be companies that have marshaled the resources to execute a consistent, cohesive plan. Senior management will have to be stable. Their strategy must be informed by market-specific intelligence. And the company must be willing to forge alliances with the government.

China is the future pharmaceutical market. Companies that succeed in China will achieve higher growth rates than in mature markets around the world. Industry leaders are investing in China now. Posing the world's biggest strategic challenges, the market also promises the richest rewards.