31 PROVINCES, 31 FLAVORS
Didier Dargent, general manager of Servier's China affiliate, is candid about differing strategies across China's 31 provinces,
and even city to city. "For MNCs, the true market is not the rural market. The fact remains that only 25% of the rural market
goes to MNCs, while 75% goes to local companies, which is the opposite situation of many markets. Today, Servier China covers
100 cities and plans to expand to 130 cities in the near future, but I'm not sure we will run after every rural area."
Didier Dargent, General Manager of Servier China
"You can't escape the fact that Beijing, Shanghai, and Guangzhou make up 63% of the total market," Dargent continues. He emphasizes
that "China is all about prioritizing, and you must learn to make choices about where to go, and in some cases be able to
take the decision to stop. In some provinces, the pressure is just too high. A case in point is Anhui province [a major province
just west of Shanghai], where many MNCs have given up."
SALES GROWTH BY PRODUCT
But Servier is not likely to give up. At over 1200 people, it ranks number one in personnel and uplift of all affiliates.
This growth has been driven by three major products that constitute 90% of the China portfolio: Vasorel, Diamicron, and Acertil
– and with more on the way. "We've been waiting for the reimbursement of Valdoxan, Coralan, and Coveram, but this is unlikely
to happen before 2014. In the meantime, we will need to get on national and provincial reimbursement lists and win hospital
tenders. The delay between marketing authorization and actual availability for the patient can be anything between 1 and 5
View From The Top
One way to reduce such oft-lamented delays is to partner with local CROs. But while market leaders like WuXi or Hutchison
can afford to take risks and experiment with unique business models, how do China's other 400+ CROs compete in such a tight
space? Many fall back on the buzzword: integration. "It's interesting to talk about integration," says Dr. Chun-Lin Chen,
CEO of Shanghai-based Chinese CRO Medicilon. "Medicilon was one of the first truly integrated companies. When in 2005 I came
with a proposal, nobody believed me!"
Being on the leading edge has resulted in nearly 70% of the company's business remaining international, although Dr. Chen
says the Asia portfolio is growing, with goals to reach 50% of turnover from current levels at 30%. This strategic focus was
one of the drivers initiating a recent buyback out of a much-publicized JV with US-based CRO MPI.
From left: Ivan Zhai, CEO of GCP CMIC ClinPlus; Chun-Lin Chen, CEO of Medicilon
However, Dr. Chen is cautiously optimistic about integrated services: "I don't think many companies in China can offer it.
Of course, it always depends on how you define your terms. Some companies consider integration as combining chemistry and
biology; others, chemicals plus animal studies; others, IND studies. Ultimately, it doesn't matter what slogan you use. Medicilon
is concerned, to a certain degree, about whether we have too many branches, that we will still remain focused! Integration,
at the end of the day, is not always easy."