Strategy & Rivalry

crunchkingofprussiaΒιοτεχνολογία

6 Δεκ 2012 (πριν από 4 χρόνια και 11 μήνες)

190 εμφανίσεις

International

University of Monaco



MBA
2011

Insight into
China

20% of Global
Population

1.5% of global
pharmaceutical
market
-

$25.7
billion

Largest
pharmaceutical
producers in
the world

Annual average
growth rate

16.72%

International

University of Monaco



MBA
2011

Economic
performance of
China

Macroeconomic

Indicators

Size

of

population



1
.
3

billion

(
2010
)

GDP



$
4627
.
7

billion

Inflation



3
.
3
%

Consumer

price

Index



123
.
6

(
3
.
3
%

growth)

Exchange

Rate



6
.
8409

(
$
/CNY)


International

University of Monaco



MBA
2011

Activity Time
Trend

11
th

November

2001



Entry

into

World

Trade

Organization

Improved

transparency

&

Intensifying

of

commercial

legal

procedures

Obligations

include

Sharpening

of

rules

on

intellectual

property

Tariff

concessions

Market

access

of

non
-
Chinese

service

dealers

participating

in

the

distribution

of

pharmaceuticals

Better

patent

system,

medical

insurance

has

become

more

widespread

Pharmaceutical
-
related

regulations

have

been

improved

To

become

the

third

largest

pharmaceuticals

market

in

the

world

by

2011

according

to

a

report

released

by

a

market

research

firm

know

as

IMS

China's

pharmaceutical

revenue

is

growing

fast


Market

may

double

by

2013
.

Sales

of

prescription

drugs

in

China

will

grow

by

US
$
40

billion

through

2013





International

University of Monaco



MBA
2011

Shanghai &
Pudong

Shanghai

18

million

Inhabitant



Tenth

largest

cities

in

the

world

Located

at

the

delta

of

the

Yangtze

River,

longest

and

busiest

in

China

Largest

and

most

important

centre

of

Industry

in

China

China’s

leading

port

and

commercial

city

Pudong

Flagship

of

China’s

economic

reform

Permanent

Population



4
.
12

Billion


Gross

output

value

-

RMB

400
.
139

billion


International

University of Monaco



MBA
2011

Development
of Pudong Area

Government Support

Development of local physical
infrastructure

Provision of funding for Shanghai
research institutions and support
of venture capital investment to
facilitate technology
commercialization

Foster favorable trade and tax
environments

Provision of financial and
insurance freedom and help to
expand its capacity as a financial
center

Improvement of the legal
environment and protection of
intellectual property

International

University of Monaco



MBA
2011

Diamond

Analysis

Pharmaceutical
Cluster

Firm
Strategy &
Rivalry

Demand
Conditions

Related &
Supporting
Industries

Input
Conditions

International

University of Monaco



MBA
2011

Input
Conditions


A

drug

supervision

and

management

body

was

formed

in

1998
.

The

goals

for

this

body

are

to

intensify

supervision

and

control

over

medicines,

and

gradually

set

up

a

drug

management

system

featuring

legal

management,

unified

law

enforcement,

standard

codes

of

conduct,

honest

practice

and

high

efficiency




Foreign

Companies

doing

R&D

in

China

Subsequently

China’s

entry

into

the

WTO,

many

strong

pharmaceutical

companies

are

transferring

their

research

and

development

centers

to

China
.

For

example,

Roche

of

Switzerland

opened

its

R&D

center

in

Shanghai

recently







Supervision & FDI in China

International

University of Monaco



MBA
2011

Input
Conditions

Governmental Policies

The main goal of the government is
to improve manufacturing and
distribution efficiencies,
strengthen drug safety
supervision, and separate hospitals
from the drug retailing business

To reach these goals the following
provisions were required:

Requiring all pharmaceutical
manufacturers to meet GMP
standards

Diminishing drug sales through
hospitals

Bidding publicly for drug purchase

Implementing a national healthcare
insurance system and

Strengthening intellectual property
protection and SFDA supervision


Governmental Policies

International

University of Monaco



MBA
2011

Input
Conditions

The

pricing

mechanism

is

based

upon

three

reflections

when

setting

the

maximum

retail

price

-

production

cost,

a

wholesaler

spread

set

by

the

government

and

the

prices

of

comparable

products

in

the

market
.

Any

products

priced

above

this

level

will

be

removed
.

The

central

government

has

been

playing

a

significant

role

in

pharmaceutical

price

readjustment
.

Future

price

reductions

will

originate

from

hospital

pharmaceutical

retail

shops
.




Government drug pricing
policy

International

University of Monaco



MBA
2011

Input
Conditions

Since 2002, China's pharmaceutical
logistics industry has been expanding
constantly. A great amount of capital
is being injected into this industry. In
2007, China had 3 main
pharmaceutical logistics centers put
into operation and many more are yet
to come.


Pharmaceutical
Logistics

International

University of Monaco



MBA
2011

Input
Conditions


China’s over
-
the
-
counter market is
growing fast and has become the
fourth largest OTC market in the
world. Foreign enterprises have been
closely observing the growing OTC
market

The central government has been
playing a significant role in
pharmaceutical price readjustment.
Future price reductions will originate
from hospital pharmaceutical retail
shops
.

Over the Counter
Market and Pricing

International

University of Monaco



MBA
2011

Strategy

&

Rivalry

-
Buyer

Power

International University of Monaco

MBA 2011

International

University of Monaco



MBA
2011

Strategy & Rivalry
-
Supplier Power

International University of Monaco

MBA 2011

International

University of Monaco



MBA
2011

Strategy & Rivalry
-
New Entrants

International University of Monaco

MBA 2011

International

University of Monaco



MBA
2011

Strategy & Rivalry
-
Substitutes

International University of Monaco

MBA 2011

International

University of Monaco



MBA
2011




Strategy
& Rivalry
-
Degree of
Rivalry

International University of Monaco

MBA 2011

International

University of Monaco



MBA
2011

Demand
Conditions

Longer Life
-
span

The average lifespan for Shanghai
people reached 81.08 in 2010
-

the
first time it has passed 81

China: 75 years

Infant mortality Shanghai: 3 per
1,000 China: 6 per 1,000

The pre and post
-
natal mortality
rate for women was 6.68 in
100,000

Age Structure: Larger older
population

Com
-
pared with the 5th national
census in 2000, the
proportion
of
those aged 0
-
14 in the city
population dropped 3.4 %

Aged 65 and above rose by 0.5
%

Buyers

Local Consumers

International

University of Monaco



MBA
2011

Demand
Conditions

Employment

Employs 9.4607 million people

4.2 % unemployment rate

Local labor markets
-

sub regional
chemical fields

Middle Class Expansion/China

Present estimates of middle class in
China range from 100 million to 247
million

An income of about $9,000 is
necessary to be considered middle
class

China could have over 600 million
middle class citizens by 2015

Per Capita Income

China is on track to create a 700%
growth in per capita income in just
20 years

Shanghai: $18, 400






“Sophisticated
demanding buyers pressure
companies to meet high standards, to innovate
and to move forward more developed
segments.”
Michael Porter

International

University of Monaco



MBA
2011

Demand
Conditions

Total: 5,898,415

Type A and Type B infectious diseases
(3,499,582)

Plague
, Cholera, HIV, Viral
,
Tuberculosis

Type C infectious diseases
(2,398,833)

Leprosy, Camp Fever

Health Conditions

International

University of Monaco



MBA
2011

Demand
Conditions

Hospitals

67,000 in China; 759 in Shanghai

Managed Care Organizations (MCOs)

Medical facilities provided 132.17 million
out
-
patient and emergency services and
647,000 surgical procedures for
hospitalized patients, both increasing by
about 13 %

Medical services at the 228 involved 1,190
teams of general practitioners and a
health database covering 1.7 million
families

Health supervision agencies
shut
3,369
illegal clinics, withdrawing the licenses of
four facilities and collecting 16.91 million
yuan

Government Agencies

International Companies

Large range and product differentiation
reduces buyer power

Overall, buyer power is
moderate

Key Buyers

International

University of Monaco



MBA
2011

Demand
Conditions

Pharmaceutical market is growing
more than 20% a year

Demand is projected to increase 13.6
% annually to 375 billion yuan in
2011

Growth decline from 2011
-
2015 to
$48.8 billion by 2015

Aggressive government spending ,
economic boom, rapidly aging
population

The trend toward unhealthy lifestyles
and an increasing demand for drugs
to treat chronic disease







Local Demand

International

University of Monaco



MBA
2011

Market
Segmentation

International

University of Monaco



MBA
2011


International University of Monaco

MBA 2011

International

University of Monaco



MBA
2011

International University of Monaco

MBA 2011

International

University of Monaco



MBA
2011

Market
Share

International University of Monaco

MBA 2011

International

University of Monaco



MBA
2011

Leading
Companies

AstraZeneca

PLC

GlaxoSmithKline

Plc

Northeast

Pharmaceutical

Group

Company

Limited

Pfizer

Inc
.

Yangtze

River

Pharmaceutical

Group


International

University of Monaco



MBA
2011

Demand
Conditions

Global

pharmaceutical

sales

will

rise

5
%

-
7
%

in

2011

to

$
880

billion


The

2011

projection

compares

with

2010
’s

4
%

to

5

%

growth

in

drug

sales

to

$
840

billion

It

is

expected

for

drug

spending

in

China

to

increase

at

least

25
%

in

2011


China

is

expected

to

expand

by

as

much

as

17
%

to

$
180

billion

worldwide

while

growth

in

the

United

States

market

slows

Global Demand

The

ultimate

size

and

forecast

exponential

growth

in

future

demand

for

pharmaceuticals,

coupled

with

the

inherent

low
-
cost

structure

of

Chinese

manufacturing

offer

huge

opportunities

for

pharmaceutical

enterprises
.


International

University of Monaco



MBA
2011

Demand
Conditions

Patent Protection

Over the next five years,
multinational corporations will
lose patent protection of products
worth US$140 billion in annual
sales

Example
:

Novartis, $1.25 billion in R&D

Bayer, $5 billion sales increase by
2015






Global Demand

“arguably

ranking

as

the

best

pharmaceutical

outsourcing

destination

among

all

Asian

territories

when

looking

at

the

multiple

factors

of

cost,

risks

and

market

opportunities


PriceWaterhouseCooper

International

University of Monaco



MBA
2011

Related and Supporting Industries

Biotechnology
Industry

Chemical Industry

Engineering Industry

Packaging Industry

Hospital and

Medical Services

Drugs Discover
and
Development

Manufacture

Market

The

Shanghai

Pharmaceutical

cluster

benefits

from

i
nternationally

competitive

related

and

supporting

industries,

able

to

deliver

cost
-
effective

inputs

(materials,

machinery,

services)

in

an

efficient

and

preferential

way

thank

to

the

geographical

proximity

p
rovide

advantages

in

innovation

and

upgrading

through

close

cooperation

and

sharing

of

information

with

pharmaceutical

firms




Pharmaceutical

Value

Chain



Other Services

International

University of Monaco



MBA
2011

Biotechnology Industry

The

field

shows

immense

importance

in

augmenting

existing

technologies

in

the

pharmaceutical

industry

(i
.
e
.

research

of

simple

molecules

through

trial
-
and
-
error

to

treat

symptoms

of

diseases)


In

Shanghai
-
Pudong

the

establishment

of

the

Zhangjiang

Hi
-
Tech

park

fostered

the

development

of

biotech

industry

1996

-

Agreement

of

National

Shanghai

Biotechnology

and

Pharmaceutical

Industry

Base

Many

biotech

firms

raised

as

s
pin
-
offs

from

local

universities

with

proven

record

in

the

field

Shanghai

Fudan
-
Zhangjiang

Bio
-
Pharmaceutical,

founded

by

six

teachers

from

Fudan

University

Local

Government

is

accommodating

in

the

proactive

search

for

new

park

residents,

with

regard

to

research
-
intensive

activities

Drugs
Discover and
Development

Manufacture

Market

International

University of Monaco



MBA
2011


Chemical Industry

Raw Materials

Weighing of Recipes

Batching & Mixing

Tableting/Capsuling/
Filtering/Stirring

Filling

Sealing and Labeling

Packaging

Provides

bulk

drugs

and

raw

materials

for

the

production

of

all

pharma’s

product

categories

Tablet
/Capsules,

Oral

liquid,

External

Preparation


As

average,

raw

materials

account

for

33
%

of

the

drug’s

MRP

-

Maximum

Retail

Price

(i
.
e
.

bulk

drugs,

dyes,

preservatives,

glycerin,

lactose,

solvents)


The

growth

of

the

chemical

industry

in

Shanghai
-
Pudong

specialized

in

areas

such

as

pharmaceuticals,

biotechnology

and

specialty

chemicals

Gross

production

value

of

the

Yangtze

Delta

chemical

industry

increased

from

333
.
18
bn

Yuan

(
41
.
6
bn

USD)

to

1
,
304
.
90
bn

Yuan

(
163
.
1
bn

USD)

between

1998

and

2005

Drugs
Discover and
Development

Manufacture

Market

International

University of Monaco



MBA
2011

Raw Materials

Weighing of Recipes

Batching & Mixing

Tableting/Capsuling/
Filtering/Stirring

Filling

Sealing and Labeling

Packaging



Engineering Industry

Pharmaceutical

industry

is

highly

capital

intensive

requiring

consistent

investments

in

custom

design

machinery,

in

accordance

with

stringent

regulations

As

average,

Pharmaceutical’s

processing

expenditure

accounts

for

25
%

of

the

drug’s

MRP

-

Maximum

Retail

Price

Machinery

for

mixing

and

granulating,

tablet

coating,

capsule

manufacturing,

autoclaves,

drying

chambers,

etc
.


In

Shanghai
-
Pudong
,

the

Jinqiao

Export

Processing

Zone

achieved

great

development

in

the

machinery

industry,

attracting

multinational

corporations

to

produce

and

sell

quality

machinery

worldwide


As

of

July

2005
,

the

development

zone

absorbed

investment

totaling

USD
14
.
159

billion,

of

which

USD
12
.
721

billion

made

by

foreign

enterprises


Drugs
Discover and
Development

Manufacture

Market

International

University of Monaco



MBA
2011

Raw Materials

Weighing of Recipes

Batching & Mixing

Tableting/Capsuling/
Filtering/Stirring

Filling

Sealing and Labeling

Packaging

Packaging Industry

The

pharmaceutical

packaging

industry

encompasses

all

activities

including

package

testing

and

validation,

package

designing

and

development,

package

prototyping

of

pharmaceutical

products

High

cooperation

with

pharmaceutical

firms

P
roducts

can

be

subdivided

into

different

packaging

segments
:

blisters
,

blow
-
molded

plastics,

ampules,

caps

and

closures,

tubes

and

glass,

bottles,

strip

packs


P
harmaceutical

packaging

materials

industry’s

contribution

rate

in

China

is

lower

than

other

developed

countries

(
10
%

compared

to

average

30
%
)

Over

the

next

five

years

predicted

a

rapid

development

of

the

local

pharmaceutical

packaging

industry

Actual

packaging

industry’s

annual

output

can

only

meet

80
%

of

the

domestic

pharmaceutical

demand

Drugs
Discover and
Development

Manufacture

Market

International

University of Monaco



MBA
2011


Hospitals and OTC Pharma Industry

China

has

a

large

and

fast
-
growing

over

the

counter

(OTC)

pharmaceuticals

industry

Retail

sales

value

of

OTC

drugs

expanded

by

102
%

between

2003

and

2009

Total

OTC

pharmaceuticals

retail

market

increased

to

72
.
02
bn

Yuan

in

2009
,

and

the

market

is

expected

to

surpass

100
bn

Yuan

by

2013

Growth

in

the

OTC

pharmaceutical

market

propelled

by

increasing

public

awareness

about

health

care,

rapid

rise

in

urban

living

standard

&

growing

disposable

income

levels


China’s

124
bn

USD

healthcare

reform

(April

2009
)

boosts

demand

for

pharmaceutical

products

ranging

from

generic

drugs

to

medical

equipment
.

As

part

of

the

reform

essential

drugs

are

to

be

sold

at

government

hospitals

at

wholesale

prices

40
-
60
%

decline

in

traffic

in

some

of

the

drugstores

located

where

implemented

the

healthcare

reform

Drugs
Discover and
Development

Manufacture

Market

International

University of Monaco



MBA
2011

Major Challenges


Current operation mode of most distributors is not in line with the requirements of modern
distribution, especially with regard to scale and automation.

Many distributors lack logistics management knowledge and talented managerial
professionals

Macro regulation and control from the government is limited.

Profits today are at very low
levels. The
existence of a large number of undersized
distributors has caused malignant competition and chaotic growth, which has resulted in
higher costs, lower profits, and conflicts over limited market shares

Many distributors have limited market development and service capabilities.


International

University of Monaco



MBA
2011

Future Trends & Recommendations

Scale
-
up

to

achieve

economies

of

scale

required

for

economic

performance

Merging

with

domestic

and

foreign
-
owned

companies

Narrowing

their

focus

to

specific

geographic

market

or

healthcare

areas

Enhancing

modern

logistics

management

China's

domestic

pharmaceutical

industry

growth

is

exploding
.

With

17
%

growth,

the

future

looks

bright
.

However,

systemic

planning

will

be

required
.


International

University of Monaco



MBA
2011

International

University of Monaco



MBA
2011