Medical Products Marketing in China
The global financial crisis is causing China to adjust its growth strategy leading the country to take a more inward view of growth. While the nation was export-led for the last several years enjoying the benefits of selling cheap goods to the industrialized markets, Chinese leadership will now stimulate growth within the country to drive demand and growth. Spending will be allocated to roads, public housing and medical clinics throughout the country. Officials have also suggested that job training will be made available to Chinese workers to upgrade their skills allowing the nation to transition from manufacturer of low-cost goods to more value added products. In the healthcare realm, working Chinese will see benefits from improved healthcare infrastructure spending. Medical clinics in townships and villages are sorely under-equipped and understaffed. Improvements in this area will soften the criticism that the Chinese government has ignored the millions of Chinese in the smaller townships and villages. Growth in the medical arena will necessitate importation of medical equipment which will bode well for the United States, Japan, and western European countries.
China's initiatives within the pharmaceutical and medical equipment sectors are driven by changing demand within the country evidenced by a growing middle class that is demanding more drugs to treat lifestyle ailments. Managing healthcare for 3.2 billion Chinese also requires establishing lower price points for some types of medical equipment as lower tier hospitals are attempting to equip their facilities with quality products but must adhere to strict public budgetary constraints. Western companies are making adjustments for this market in an effort to capitalize on the opportunity.
- Demand for drugs to treat "lifestyle" ailments is growing in China. As the society modernizes, there will also be a surge in lifestyle-related conditions or what McKinsey & Company's researchers call "diseases of affluence", namely diabetes, breast cancer and cardiovascular disease. Demand for such drugs has led to a domestic pharmaceutical market that is growing more than 20 percent annually. U.S. drug company, Pfizer, has indicated that the firm will abandon continued research in cardiovascular therapeutics focusing its R&D on only one of the areas that affect China - diabetes. Other therapeutic focus will include cancer, pain management, inflammation, Alzheimer's disease and schizophrenia.
- Philips Electronics NV's medical equipment division recently entered into a joint venture with China-based Neusoft to design low-cost imaging equipment that would be sold marketed in China and other newly developed economies where the threshold for expensive medical equipment is rather low. Re-engineering sophisticated medical equipment for markets outside the United States and Europe is an increasingly common strategy practiced by western medical equipment firms.
- In 2007, Eli Lilly announced its decision to develop more drugs in China capitalizing on the lower costs of bringing a drug to market. Lilly will segue its China operation from its U.S. research labs where 1 in 5 of its researchers are Chinese. Lilly plans to invest $100 million on research and development in China during the next four years. The firm's Asian venture arm, Lilly Asian Ventures, has already invested $10 million in Chinese venture firm, BioVeda. One can expect that in due course, Lilly will commence clinical trials on its new heart drug, Prasugrel, which company executives believe is nearing U.S. FDA approval. The anti-clotting drug was the subject of Phase III human clinical trials under a 13,608-patient comparing its to rival heart drug, Plavix.
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