Pharmaceutical industry in China : Problems encountered by distributors

Over the last ten years, the pharmaceutical industry has evolved greatly in China. There have been more than 13,000 distributors since 2009. Although the market is flourishing, distribution remains complex, inefficient, and fragmented. The main disadvantage of distribution in China is that there are two or even three intermediaries between the producer and the pharmacist, which explains the exorbitant drug prices in China. For some drugs, there are up to 5-6 intermediates in the distribution chain.

Pharmaceutical leaders in China

Have you ever heard from the top three pharmaceutical leaders in China?

They are called Sinopharm, Shanghai Pharma, and Jointown Pharmaceutical Group.

  • Sinopharm: its main strength is its close relationship with Chinese hospitals and pharmacies, which makes it one of the top three pharmaceutical market leaders. Sinopharm intends to acquire new market shares by approaching national, provincial, and municipal hospitals. In 2010, the group sold its products for 70 billion, which represents 10% of the market.
  • Shanghai Pharma: the group covers more than 3,350 Chinese hospitals in the east of the country. Shanghai Pharma realizes 75% of its turnover by selling directly to hospitals. The remaining 25% is sold through a distributor.
  • Jointown Pharmaceutical Group: unlike Sinopharm and Shanghaipharma, it is a private company. Its goal is to build 20 large, provincial distribution centers in major urban centers.

New trends in pharmaceuticals

One of the major trends in pharmaceuticals is the purchase of drugs online. However, injectables should always be purchased from a hospital or pharmacy.

E-commerce will dominate the pharmaceutical market for various reasons:

  • Because of the complex chain of distributions, drug prices are exorbitant. Selling on online platforms offers fairer and more transparent pricing.
  • E-commerce gives visibility to small pharmaceutical companies.
  • Consumers can choose their own medicines
  • Online sales platforms allow large companies, such as those mentioned above, to improve their liquidity flow.
  • E-commerce offers new opportunities for small pharmaceutical companies. Consumers can buy drugs from pharmacies without restriction by time or space.
  • Through mobile applications, doctors have patient health records and receive early warnings of diseases.

The E-Patient or “Patient Empowerment”

In China, consumers are very digital-oriented. According to these figures, pharmaceutical brands must promote mainly by digital means.

  • 1/5 of the research done on Baidu
  • 10% of discussions on social networks
  • 80% of Chinese have already searched for health information on the Internet
  • 1/3 of Chinese use it to evaluate and choose their doctor
  • 60% of Chinese admit that their research has affected their decision on how to treat the disease
  • 50% of opinions turn to a doctor for a second medical opinion after their research
  • 30% of Chinese make a decision whether or not to consult after Internet searches

Consumers in the Middle Empire are very concerned about their health, especially after scandals involving water, food, and other consumer products. That’s why online reputations are very important because the Chinese do not hesitate to start researching drugs before buying them.

How to manage online reputation?

Whether in healthcare, cosmetics, catering, or any sector, online reputation is paramount in China. It works like word-of-mouth in the 21st century. As soon as good or bad news is published by an influencer, journalist, or media about the company in question, it is impossible to backtrack.

To avoid spillovers, it is better not to boast about the benefits of the brand or product, but rather to publish informative articles. Also, regarding side effects, it is best for the company to notify them.

To have a better reputation online and to gain brand awareness, companies can call on KOLs (Key Opinions Leaders). These Chinese influencers have a great influence on their subscribers. However, it is important that the image of the KOL fits perfectly with the image of the brand, otherwise, the collaboration will not produce any results, as consumers will see the deception.

Who is Gentlemen Marketing Agency?

Our agency is specialized in digital marketing in the Chinese pharma market and is based in Shanghai. Over the years we have acquired good know-how to offer you the most advice to start your business in China. We are committed to working with you to develop the most relevant strategy for your launch. Do not hesitate to contact us!

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