China: Business as UNusual - Pharmaceutical Executive

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China: Business as UNusual
If there is one market this year that requires a click on the refresh button, it's China. If the 'growth curve' key was pressed, it should be your first delete. Pharm Exec's local partner, General Biologic, logs on with a snapshot of what's ahead for Big Pharma in managing for long-term success


Pharmaceutical Executive



(GETTY IMAGES / PHOTOSINDIA)
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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