Executive Briefings

Pharmaceutical Industry Turns to China More and More

Lured by the potential for sales and increasingly familiar with the eccentricities of the market, overseas pharmaceutical companies are exploring new ways to cooperate with China.
For example, while most overseas companies use multiple distributors to market their drugs, Boehringer Inglelheim, the world's largest family owned pharmaceutical, has taken a different route by appointing a single China-wide distributor. In addition, whereas most multinational pharmaceutical companies prefer to establish their own research and development centers, Eli Lilly--the Indianapolis-based pharmaceutical company--is collaborating with local research institutes to help share the risks. A third company, SK, has opened a hospital in Beijing in hopes of reaching a wider market.
Despite their different approaches, most multinational pharmaceutical companies in China share one element in common: robust growth. The past year was a good year for pharmaceuticals; most of them posted their best-ever years in China. Eli Lilly reported 28 percent growth in sales revenue in China, and other companies were close behind. GlaxoSmithKline, whose global sales growth rose just 2 percent, increased its sales by 24 percent in China, while Roche, the world's leader in cancer drugs, posted 30 percent sales growth in China compared with global sales growth of 10 percent.
Similarly, AstraZeneca pushed its sales growth to 25 percent last year compared to its global growth rate of 7 percent, while Novartis, one of the world's top five pharmaceutical manufacturers, saw sales grow by more than 24 percent. Naturally, such numbers have not gone unnoticed by other players in the industry. "China will be the most important country for Wyeth in the years ahead," says Robert R. Ruffolo, the company's president of research and development.
Source: Wharton Business School, http://www.knowledgeatwharton.com.cn

Lured by the potential for sales and increasingly familiar with the eccentricities of the market, overseas pharmaceutical companies are exploring new ways to cooperate with China.
For example, while most overseas companies use multiple distributors to market their drugs, Boehringer Inglelheim, the world's largest family owned pharmaceutical, has taken a different route by appointing a single China-wide distributor. In addition, whereas most multinational pharmaceutical companies prefer to establish their own research and development centers, Eli Lilly--the Indianapolis-based pharmaceutical company--is collaborating with local research institutes to help share the risks. A third company, SK, has opened a hospital in Beijing in hopes of reaching a wider market.
Despite their different approaches, most multinational pharmaceutical companies in China share one element in common: robust growth. The past year was a good year for pharmaceuticals; most of them posted their best-ever years in China. Eli Lilly reported 28 percent growth in sales revenue in China, and other companies were close behind. GlaxoSmithKline, whose global sales growth rose just 2 percent, increased its sales by 24 percent in China, while Roche, the world's leader in cancer drugs, posted 30 percent sales growth in China compared with global sales growth of 10 percent.
Similarly, AstraZeneca pushed its sales growth to 25 percent last year compared to its global growth rate of 7 percent, while Novartis, one of the world's top five pharmaceutical manufacturers, saw sales grow by more than 24 percent. Naturally, such numbers have not gone unnoticed by other players in the industry. "China will be the most important country for Wyeth in the years ahead," says Robert R. Ruffolo, the company's president of research and development.
Source: Wharton Business School, http://www.knowledgeatwharton.com.cn