China is a strategic market and full of opportunities for players in the pharmaceutical industry. The Chinese government is keen to improve its healthcare offer in the country and become a major pharmaceutical power in the years to come. In this article, we will introduce you to the opportunities for health brands to expand their business in China.
A pharmaceutical market filled with opportunity
Priority to government investment in the sector
As said previously, the Chinese government aims to develop the pharmaceutical industry in the Middle Kingdom. For this, since 2009, the government does not skim on investments. The aim of these investments was to increase the share of individuals who could benefit from health insurance coverage, increasing the share from 60% to 90% at the present time.
In the short term, the government intends to develop investments in the sector by moving to a budget of 1.3 trillion euros by 2010. The country’s objectives are to set up a universal health system, in which the Chinese will have access to quality and affordable medical services.
Growth driven by demographic and societal factors
China is positioned as one of the largest pharmaceutical markets in the world, justified by the size of its market and its population. On closer inspection, the market is far from mature. However, the market has an opportunity that will in the future be exploited to make the sector more sophisticated in the coming years.
The market has several growth engines:
- A mass-market: with a total of more than one billion people, China’s demographic development will enable the players involved to target a broad consumer target.
- The aging of the Chinese population: the demographic forecasts are alarming. By 2050, the share of individuals over the age of 65 would approach 24% or more than 300 million people. The aging population will develop diseases due to a weaker immune system, increased demands for medical care, home care and e-health solutions.
- A growing sense of the population with regard to their health. The development of the average social class engenders the development of new expectations and thus aspires to better medical care. The emergence of this middle class leads to a different way of life than the Chinese have known before. The lifestyle becomes more sedentary and diet plays an important role in the chronic diseases of the country as it becomes more greasy, salty, and sweet.
A split market with increased confidence for foreign brands
While the market is growing for the country, it remains complex, inefficient, and fragmented. Distribution in the industry is difficult to apprehend since an average of 2/3 intermediaries between pharmaceutical companies and the pharmacist can be counted, justifying the high prices charged on this type of product.
Moreover, this distribution is often blamed for its lack of transparency. To illustrate this inefficiency, the top ten companies control only 20% of the market, when the average in this sector is around 50%.
The pharmaceutical sector does not escape the popularity of foreign brands, which are still seen as a guarantee of quality and innovation. We can see a correlation between the Chinese sensitivity regarding their health and the purchase of foreign brands. The evolution and current situation of foreign brands in the Chinese market undoubtedly show the unique characteristics of an emerging market.
Regulations on advertising campaigns in the sector
The Chinese pharmaceutical industry is the sector of the sectors carrying out the most promotional campaigns. Nevertheless, the country is increasingly repressing publicity in this sector because of the false advertising that has been carried out. Indeed, pharmaceutical advertising prohibits the representation of medical experts and the testimonies of people suffering from diseases.
Prior to any distribution in the country, advertisements must be approved by the SFDA Drug Market Compliance Department and the local authorities where this advertising will be broadcast.
Opportunities to be explored by foreign industries
The market has many growth opportunities for trademarks that it is relevant to the state in this article:
Opportunities through Innovation:
The Chinese market is more focused on expectations and demand than on the innovations that major pharmaceutical groups can bring to the market, especially in terms of medicines for the most common diseases.
However, existing innovations in the marketplace are only copied by the Chinese players involved. The actors do not have the necessary R & D to develop their own products and only seek to improve the products already marketed.
To compensate for this, many local groups are seeking partnerships with foreign pharmaceutical companies to develop unique and innovative pharmaceutical products. This solution allows for a win-win situation because the constraint faced by foreign companies when entering the Chinese market is the duration of the drug approval processes on the market, which may take more than 5 years.
Opportunities through differentiation:
The generic market in China is a mature and highly competitive market, and many players have already positioned themselves in this segment to develop their sales. However, USPs are in high demand on this range of drugs. Indeed, a trend towards generics bringing a new functionality (mode of administration, taste …) is noted and appreciated by individuals.
Opportunities for Biopharmaceutical Products:
Biopharmacie is still in its premises with its Middle Empire and local actors are still dependent on the influence of foreign industries in this segment. In a market where the unequal environment of populations is visible offering therapies that a large population can afford is the most suitable solution.
A trend to buy online on the market
E-commerce in China is a channel increasingly used by Chinese consumers and is going to be a vector of growth is an opportunity for market players.
As previously said pharmaceutical distribution in China is complex, going through a digital platform to offer these products and services will allow giving more transparency and visibility to the market.
Chinese people are hyperconnected and highly savvy consumers of their environment. They perform many types of research before they make their purchase and this is especially the case in the pharmaceutical market. Since the country’s various health scandals, the consumer is becoming more and more aware of what he wants to consume in terms of pharmaceuticals. A company’s reputation is becoming more and more important to establish a relationship of trust with individuals.
A sensitivity for French pharmaceuticals
The French pharmacy market is beginning to shine in the Middle Kingdom, particularly in the dermatological segment. French pharmacies are a guarantee of quality for the Chinese since they feel reassured and advised by real professionals when entering. The white coat of our dear pharmacist contributes to it for many.
The dermatological segment is an opportunity for French brands wishing to develop their activities in China. France is considered the country with respect to dermatological care. The companies in the field are keen to offer their consumers efficient products that do not harm the skin and are made from thermal water sources. The latter is one of the flagship products of Chinese tourists when they visit our country.
French pharmacies have a secure brand image for Chinese consumers who see these pharmaceutical professionals, people who can advise them, reassure them, and offer them a personalized offer. Dermo cosmetics is one of the growth segments for pharmacies wishing to market their products in China.
The Health market has many opportunities that it will be interesting to develop over the long term. Foreign companies have a certain competitive advantage over local players. Their strength of innovation is a promising element in the growth of the market. Moreover, the liberalization of the country’s regulations makes it possible to motivate these companies.
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