Italy calls China's medical market a challenge for multinational companies

Source: China's dividend is not easy to get from pharmaceutical economic news on June 18, 2013 Recently, the white paper on China's medical market published by value partners, an Italian consulting company, compares China's medical market to the challenge faced by multinational companies, and the best way to deal with it is to grasp the policy trend and make timely response, so as to achieve growth "With a GDP of 8 trillion US dollars and a population of more than 1.3 billion, these two simple figures have explained why China has become the destination for most multinational companies." According to Thomas Wu, partner of VIP consulting In recent years, the desire of large multinational pharmaceutical companies has become stronger The total value of China's medical market is about 400 billion US dollars, and it grows by double-digit percentage every year It can be predicted that the pharmaceutical market will continue to grow rapidly in the future: the current medical reform has been trying to promote universal health insurance, people are richer, the population is aging, rural to urban migration and other changes have increased the demand for medical services in the future However, at present, multinational pharmaceutical companies in China have obviously felt the threat For example, the market share of generic drugs continues to grow, and the price of drugs decreases one after another, which greatly threatens the core interests of multinational companies "The development path of multinational pharmaceutical companies in China must not be smooth The reasons for this phenomenon are not only the growth of local manufacturers, but also the increasingly strict regulatory environment." Thomas Wu pointed out The theme of "reducing the burden of patients" has been repeatedly emphasized by the government In order to achieve their strategic goals, multinational pharmaceutical companies must rethink their medium and long-term development goals in China The first challenge for multinational pharmaceutical companies is the development of generic drugs in China At present, generic drugs dominate the Chinese pharmaceutical market, and the market share will continue to increase in the future The price advantage of less than one tenth of the price of foreign patent drugs makes local pharmaceutical companies compete to produce generic drugs, which also makes such drugs popular Low price is an important factor in the success of generic drugs, especially in the Chinese market, where 94% are primary and secondary hospitals In addition, the government's reform in recent years supports the development of generic drugs According to the policy, hospitals cannot buy more than two brands of drugs of the same type For price reasons, at least half of the drugs in hospitals are generic, even in top three hospitals For the sake of sustainable development, multinational pharmaceutical companies must seek new competitive strategies in China Recently, Pfizer and Merck are jointly producing generic drugs with local manufacturers As the research and development of new drugs becomes more and more difficult, innovation has become a key factor for major pharmaceutical companies to maintain price advantage What worries multinational enterprises more is the pressure of drug price reduction This pressure is very significant in China and will increase in the future In the face of this situation, all companies, especially multinational companies, need to evaluate their own cost structure In the future, the pressure of drug price reduction is bound to continue to increase Recently, the relevant departments held a discussion on the maximum retail price, requiring that the retail price of drugs should not exceed 25% of the factory price Regulators asked all producers to provide their average ex factory prices for their medicines in order to assess whether, when and how the implementation of this measure began "The impact of these policies will be huge, especially for multinational companies," said Thomas Wu Enterprises must focus on how to formulate new strategies for drug circulation management " More attention has been paid to "compliance" In recent years, compliance has become the most concerned and tense topic for Chinese and foreign pharmaceutical managers Although compliance has always been talked about by pharmaceutical companies in various forms, what really touches the sensitive nerves starts with the sky high penalty issued by the judicial department for the past violations of many well-known multinational pharmaceutical companies In the past few years, the government has taken a number of actions to combat medical corruption For example, the government has imposed restrictions on the amount of "gifts" that doctors and hospital executives can accept In the national "two sessions", the problem of medical corruption has become the focus of discussion The government also said that solving this problem will be a short-term focus, especially in the bidding behavior of medical products The bidding behavior of medical products in China is mainly carried out at the provincial level The representatives of the NPC and the CPPCC said that to some extent, this existing mechanism has created many problems such as bribery and waste, which should be changed in the short term In order to meet possible further compliance initiatives, pharmaceutical companies should adjust their organizational structure and re-examine their business models In a word, despite the increasingly fierce competition and stricter supervision, China still represents infinite business opportunities for multinational pharmaceutical enterprises, both at present and in the foreseeable future However, with the deepening of the process of medical reform, only those enterprises that can accurately judge the trend of policy and take timely response measures can remain invincible China is still the most desired destination for multinational pharmaceutical companies, but only those enterprises that can accurately grasp the policy trend and take timely response measures can be invincible.