Biotechnology

China’s rising tide

0

Roberto Carminati and Caterina Lucchini

Despite the fact it recently announced that the Gross domestic product (Gdp) targets it aimed to reach are not going to be hit in the short-medium period, China still displays huge opportunities of growth and business for players in the pharmaceutical arena coming from the western world. This is also what experts and analyst participating a mid-spring online seminar held by Frost & Sullivan clearly stated; whilst on the other hand giving their audience a few hints and advices about the pro’s and con’s of operating in the critical Popular republic industry and market. Dedicated to the whole so called Bric area including Brazil, Russia and India too, the webinar was hosted by Reenita Das together with Siddharth Saha, Eduardo Golisano, Glenn Hou and Sandeep Sinha. And it displayed how all along the Great Wall economy in general and the pharmaceutical industry are still growing at a rapid pace and offer corporate and researches good chances to succeed, should they develop a correct and tailor-made business model. For instance, analysts predict that the in vitro diagnostic segment is about to grow at a Compound annual growth rate (Cagr) of 20 percentage points until 2015 when it will reach the overall value of 5,7 billion American dollars. The private sector is about to play a prominent role since it has been calculated that it is going to gain 20% of hospital beds in the next five years while presently it only represent 10% of the total amount. From nowadays’ 470 thousand private hospital beds China will in fact rocket up to one million by 2017. This will not only translate into a larger demand for drugs but also in a wider request for technology and healthcare-oriented IT solutions, driven by these hospitals’ needs. As well as other Bric nations such as India for example, China still shows as strong divide between urban and rural areas, with the latter dramatically lacking in terms of services and quality of therapies. It is easy to imagine that the national government has a strong influence on private initiative and it can stimulate businesses where and when needed leveraging on its rich fiscal reserves. And as well as other eminent Bric players such as Russia, Beijing is about to face the challenges introduced by an ageing population; an expanding middle class and, as a consequence, a robust culture of consumerism.

The emerging needs of the rural areas

A growing demand for consumables and diagnostic or therapeutic devices is about to spread all across the fastest-developing areas of the country, that Frost & Sullivan identified with the Sichuan, Anhui and Henan districts. To compete in the local market is not easy at all for foreign companies since they would be up against local manufacturers who can rely on the government’s support «with regard to funding and policy» and are looking forward to increasing their share in the high tech medical devices segment. Government reforms of reimbursement in hospitals has had a great impact on the pricing of healthcare products, Frost & Sullivan noted, and low cost domestic brand are clearly favored.

To give birth to the so-called best practices both in terms of manufacturing and distribution a solid relationship with local and central administrations is thus essential; together with the customization of products and services to address the country’s needs and specifics. «In order to deal with the local complexities and with regard to access», Frost & Sullivan’s analysts stated, multinationals will have to build «larger sales teams or partner up with lower tier distributors to tap the rural market». The time is still right to proceed to merging and/or acquiring strategies, examples being Medtronic and Stryker that respectively acquired Kanghui and Trason. Philips partnered instead with Neusoft to manufacture its Ct Scanners locally; but also acquired Goldway «to penetrate the low end market». Top of the list in terms of validity and efficiency of its business paradigm comes GE, which launched its In China, for China program. The plan is about developing products that are suitable to meet Chinese hospital needs. In fact, «its Linglong series X ray machines entered county and township hospitals» gaining the company some market share in the mid and low end of the Chinese medical devices arena.

1
2
SHARE

LEAVE A REPLY

Please enter your comment!
Please enter your name here