How do MNC mature product lines play in the Chinese market?

Judging from the newly announced performance, the global generics giants are still in the state of trying to restore market growth The mature products of the global pharmaceutical giants are in a dilemma In the Chinese pharmaceutical market, which has undergone significant changes in the past year, how will the market strategy of these mature products proceed? 01 Generic giants are all facing growth bottlenecks Recently, global generic giant TIWA released its semi annual performance report According to the announcement, TIWA's operating revenue in the half year of fy2019 was US $8.632 billion, down 11.61% year on year, and its net profit was US $794 million, down 197.54% at the same time In order to reverse the decline in performance, TIWA announced an important restructuring plan at the end of 2017, including 14000 global staff cuts and a total cost base of $3 billion by 2019 In a recent conference call with Tyva, chief executive K ö re Schultz revealed that the company has cut $2.7 billion in operating expenses since the implementation of the plan in 2018 According to the current situation, it seems that it is not difficult for TIWA to complete the $3 billion cost reduction at the end of the year, but from the current performance in 2019, the performance growth has not yet been restored K ö re Schultz said it would continue to improve profit margins by creating efficiency According to the expectation, TIWA is expected to increase its profit margin from the current 23% to 27% by improving its product structure and other ways to improve its efficiency Since K ö re Schultz took over as CEO of TIWA in 2017, the company has cut costs through layoffs, office closures and other ways to stimulate performance vitality In July 2019, TIWA also sold its OTC product portfolio in the U.S market and a 93000 square foot plant in New York to pl development, Inc., which includes about 80 employees He also said that the restructuring plan will be a long-term and gradual process After a certain recovery time, TIWA is expected to achieve an annual growth of 50% - 100% At the end of this year, a plan to further optimize performance will be announced Mylan, another generics giant, has attracted a lot of attention recently for its "marriage" with Pfizer Meilan will merge with Pfizer's non patent brand and mature pharmaceutical business unit puqiang to form a new global pharmaceutical company However, mylan's performance is not ideal According to the mid-2019 report, the company's operating revenue is US $5.347 billion, down 2.65% year-on-year, and its net profit plummeted by 255.3% to US $194 million Pfizer, first package the non patent brand and mature pharmaceutical business department as puqiang, and then merge it with mylan From a series of actions of Pfizer, we can see that its business focus gradually inclines to innovative drugs, which also implicitly reveals the new trend of global pharmaceutical industry In addition, Novartis, which has the same voice in the global generic pharmaceutical market, also faces the dilemma of sluggish performance growth Sales of Sanders fell by 2% in 2017, 3% in 2018, and net sales of Q1 fell by - 2% in 2019 to US $2.3 billion Novartis has been working on Sandoz's transformation, and Richard Francis, its chief executive, announced his resignation in the first half of this year 02 In the anxiety of mature products in China market, "we are seriously considering whether to replace sales volume with price reduction or withdraw directly." In an interview with McKinsey, a well-known consulting company, there are executives of multinational pharmaceutical companies Obviously, in order to solve the problem of mature product lines, pharmaceutical giants are constantly exploring the potential of emerging markets, especially China, the second largest pharmaceutical market However, innovation transformation has gradually become the main theme of the Chinese market, accompanied by new changes such as business and operation mode transformation, re evaluation of investment strategy, establishment and promotion of new capabilities of pharmaceutical enterprises In particular, since 2018, the impact of heavy industry policies such as consistency evaluation and national volume procurement on the industry structure has become more and more serious Mature product lines need to explore new paths in the Chinese market McKinsey predicted in the report "crack into a butterfly: the road to transformation of Chinese pharmaceutical enterprises", that the consistency evaluation of generic drugs and the reform of medical insurance will cause price pressure on mature products, but may bring more sufficient financial support for innovative products, and promote the continuous improvement of the maturity of Chinese market According to McKinsey, mature products account for more than 85% of the total sales of multinational pharmaceutical enterprises in China, while its business share in local pharmaceutical enterprises is higher McKinsey pointed out that many executives are worried that the consistency evaluation of generic drugs and the implementation of new bidding rules will put too much price pressure on mature products "On mature products, our attitude is pessimistic The severe challenges and heavy pressure we are facing force us to rethink investment and return " In the face of the changing Chinese pharmaceutical market, some executives of multinational pharmaceutical companies said It can be seen that mature products are facing increasing pressure in the Chinese market and even in the global pharmaceutical market In view of this, pharmaceutical companies began to reassess their investment and return In addition to improving efficiency and maintaining profits through changing business models, they are also looking for opportunities to continuously increase sales Some multinational pharmaceutical companies are seeking to cooperate with local Chinese enterprises in order to further expand market coverage and market access, especially in regions with large market potential, while improving efficiency and maintaining product maturity Enterprises are also looking for diversification of growth model and making more targeted business strategies for different product portfolios For example, Geli bio has the right of exclusive sales and marketing of paroxin in mainland China granted by Roche, Sansheng pharmaceutical has the right of exclusive distribution and promotion of insulin product ubilin granted by Lilly in China, Novartis has the exclusive promotion right of its three products for treating adult COPD in China granted to Hanhui pharmaceutical, and LVYE pharmaceutical has granted to AstraZeneca the right to promote LVYE The promotion right of zhizhikang capsule in mainland China McKinsey expects that in the near future, more multinational pharmaceutical companies will outsource original research drugs with expired patent protection to partners In addition, the company will reset its profit and productivity targets, adopt innovative tools to further improve the efficiency of the sales team, and accelerate the transfer of its investment focus in different product portfolios.