China: Big Pharma's Long March to End? - Pharmaceutical Executive


China: Big Pharma's Long March to End?

Pharmaceutical Executive

Latecomers Face Growing Challenges

The Chinese challenge for Big Pharma is to scale up operations and start building profitability. However, a number of international biotechs and midsized players are only now starting to break into the market. These firms face a new set of challenges as the big MNCs have the incumbents' advantage and a broad array of dynamic local firms crowd the playing field. Mr. Zwisler warns new entrants, "The market is very, very competitive and the cost of entry in China is quite high. The time to market for registration and reimbursement, the scope and scale of sales forces needed, and learning to navigate in a complicated operating environment all contribute to a high barrier to entry." A company in just this position is Biogen Idec. The world's first biotech firm, Biogen Idec had previously targeted its international expansion efforts in Europe. Without an extensive branded generics portfolio to leverage, Biogen Idec has had to carefully time market entry, lest it invest too rapidly before the market could bear its products. General Manager David Yang seeks to ease his way into the market through partnerships. "When our products are approved we will form partnerships with local Chinese or foreign companies to help us commercialize our products," states Yang. "Operating in China is about recognizing risks and then minimizing them. This is a daily exercise where you are constantly evaluating where to share profits and where to go it alone." Another biotech to recently enter the market is Genzyme, which has attempted to overcome barriers to entry through intensive commitment to the country, including USD 90 million in R&D to produce the first cell therapies in China. Henri Termeer, the global Genzyme Chief Executive is also personally committed to building the business in China. Nonetheless, it still takes time to penetrate this market, and without support through the reimbursement system, Genzyme's orphan drugs have yet to realize any revenue in the Chinese market.

David Yang (Biogen Idec)
A strategy for overcoming these barriers is innovative product offerings. One of Biogen Idec's principal strengths is its product Avonex, which is currently the number one multiple sclerosis treatment in the world. Part of Avonex's success is owed to the firm's comprehensive follow up program, which includes advice and counseling. Mr. Yang seeks to replicate this program in China as part of a strategy to differentiate the firm's offering in customer service. He believes that these types of programs will elevate Biogen Idec above the competition to effectively penetrate this challenging market. As part of a longer-term strategy, Mr. Yang is looking to construct a regional clinical development plan for so-called 'Asian Diseases' in addition to investigating 'the full spectrum of pharmacoeconomic operations.' To this strategy, Mr Zwisler would add the following warning, "Be prepared that anything you do in China will take twice as long as you think, be twice as hard, and cost twice as much."


The dramatic changes underway in modern China are shaping the course of world events. China's image as a low cost manufacturer and source of 'me-too' products is on the verge of transformation, with thousands of firms vying to bring innovative products to market. As Big Pharma is leveraging this scientific talent to refill drug development pipelines, 'made in China' will certainly be joined with 'discovered in China.' The health care reform will introduce hundreds of millions of new patients to the benefits of modern medicine, accelerating the trend driven by urbanization and rapidly expanding purchasing power. Performance in the Chinese market today is likely a predictor for the global leaders of tomorrow. Thus, both as a market and as a source of innovation, the rise of China has already begun to transform the global pharmaceutical industry.

Note: Since the date of the interview, Michael Ryde has left Lundbeck China and is now working as Commercial Counselor, Teamleader Health, at the Danish Embassy in Beijing. Oscar Parra currently holds the position of General Manager for Lundbeck China. David Ricks is now the GM of Eli Lilly US and Christian Grapow is now GM of Solvay Pharma Italy.


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