Why Pharma Companies Shouldn’t be Complacent About China
Wednesday May 21st, 2014
The Chinese market is potentially very lucrative for pharmaceutical companies; some analysts predict that in a couple of years, China will be established as the second largest pharmaceutical market in the world, after the US. Digital Pharma has even moved into the region, running it’s second year in China this July 17-18.
However, it’s important not to get complacent about the market in China and the profits that it can offer to pharma companies.
For one thing, when the Chinese economy experiences periods of slowing down, generally so does the amount of growth in the pharmaceutical market. Compared to a few years ago, growth is significantly slower these days.
There’s also a heavy amount of competition, not only between US and European companies but also involving a growing Chinese pharma industry. It will be interesting to see what products these Chinese pharma companies continue to introduce to the market and what advantages they’ll have in their own home market compared to foreign companies.
Furthermore, companies can get hit by scandals that also slow down their growth, damage their reputation, and ultimately make them fall behind in this very competitive market. A major example involved GlaxoSmithKline (GSK), which in 2013 was accused of bribery and corruption on the scale of hundreds of millions of dollars; over a dozen members of its staff faced serious accusations of giving Chinese doctors various gifts and cash bonuses in exchange for prescribing medications manufactured by GSK.
As a result, the company’s sales in China took a significant hit. They couldn’t market their products as effectively, given both the damage to their reputation and the fact that they needed to devote significant effort to the investigations. Competing companies, including Chinese companies, gained some of their sales.
In general, companies involved in these kinds of scandals not only lose sales; they may also face steep fines and legal action. Whenever there’s a corruption scandal in one company, generally others will get investigated as well.
China continues to offer the possibility of market growth and more sales. However, a company may find itself edged out of the market for a number of reasons, including unethical practices. On top of that, the market itself may slow down or otherwise experience changes that put companies in a more tenuous position than they may have anticipated.
Prepare Yourself for the Chinese Pharma Market
Join top marketers in life sciences as they discuss the challenges, solutions and innovations within the pharma/biotech/med device industries within China at Digital Pharma China (view the brochure or register for the event), taking place July 17-18 in Shanghai.
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