Comment

Multinational pharmaceutical companies have enjoyed intellectual property protection, reduced tariffs and better market access after China's entry into the Word Trade Organization (WTO). Multinational companies accounted for 27 percent of the total sales and 33 percent of the total profits of the pharmaceutical industry in China last year.

After cashing in with patented drugs and high-priced strategies, many multinational companies are now getting ready to extend the lead gained in the mainstream hospitals to the grassroots level. Since 2007, many companies have started brand-building exercises at the grassroots level and are also promoting chronic disease drugs with doctor training and patient education.

Bayer HealthCare, the medical arm of Bayer AG, together with the Ministry of Health launched the "Go West" campaign in 2007, aimed at improving healthcare services in western China. The "10, 000 Healthcare Professionals Training" is the main platform of the Project, and looks to improve medical care by providing professional services to local doctors.

In 2008, US-based drug major Eli Lilly Company joined hands with Project Hope, a charity program engaged in building primary schools in China's rural areas, for a five-year program on "Expanding and Improving Diabetes Education and Care in China". With this the US company expects to strengthen relations with local governments and medical institutions.

With the impending expiration of the RLD (reference listed drug which is original studied) patent, many multinational companies are also tapping the OTC (over-the-counter) and generic-drugs market actively.

In 2006 Bayer HealthCare bought White and Black, a Chinese cold medicine brand; and this year, Sanofi-Aventis SA brought Hebei-based BMP Sunstone Corp under its fold. Besides mergers and acquisitions, cooperation such as Pfizer Inc with Zhejiang Hisun Pharmaceutical and Merck Serono with Simcere Pharmaceutical Group have also helped multinational drugmakers to obtain quick and easy access to the grassroots market in China.

However, due to the low-price threshold of China's essential drug list and the uncertainty regarding procurement policies, many multinational companies are yet to do anything to reduce product prices. Rather, what most multinational companies have been doing is to strengthen the links with local partners, including Chinese drugmakers, pharmaceutical retailers and distributors, for new market opportunities.

Pfizer Inc acquired a stake in Shanghai Pharmaceutical Corp, while GlaxoSmithKline joined hands with the China National Medicines Cooperation Ltd. Moreover, to ensure their leading position in terms of technology, multinational pharmaceutical companies are strengthening their local research and development and accelerating the introduction of new drugs. They are also looking to be listed in the health insurance directory or even the essential drug list for refractory disease relying drugs. In the additional Shanghai essential drugs directory, products of Pfizer, Novartis AG, Sanofi-Aventis and a number of foreign-funded companies are listed.

In the future, domestic and foreign pharmaceutical companies will seek more cooperation with each other, especially in emerging fields, like bio-pharmaceuticals, generic drugs and some high-end diagnostics (diagnostic reagents).

Both the players will jointly promote a diversified standardized, high-ended pharmaceutical market in China.

At the same time, the establishment of joint ventures will lend strength to foreign companies to formulate a more flexible localization strategy and help domestic companies get to the international market.

The author is a researcher at Samsung Economic Research Institute. The opinions do not necessarily reflect those of China Daily.