For every manager with a surefire strategy for China, William Keller has one piece of advice: "Let it go!" Keller should know. He founded Roche's China affiliate in 1994 and built it into a market leader. In the meantime, he became an eminence whose wisdom is sought industry-wide, from his role as spokesman for the Zhangjiang Hi-Tech Park, the world's highest concentration of Life Science companies, to lobbying for Shanghai's successful bid to host the 2010 World Expo. "Don't try to control everything," Keller goes on, "and see what comes out. Some will fail, and some will get very good insights to go further. It's a journey of exploration. Explorers have a different mindset than followers!"
 
Indeed, China's pharmaceutical journey has reached record heights. Just four years ago in 2009, China surpassed the UK, Spain, Italy, and Canada to become the world's 5th largest market. Now it has exceeded both France and Germany to achieve 3rd place, and by 2015 will leapfrog Japan to sit behind only the US as global #2. Behind the 20%+ compounded annual growth, structural changes from the central government have put healthcare and innovation at the foremost of policy priorities.
 
 
Effective April 2011, the 12th Five Year Plan focuses for the first time away from pure growth, toward more sustainable and equitably distributed initiatives, including billions of dollars in "Strategic Emerging Industries" (SEIs). These include biotechnology, which will see RMB 12 billion (USD 1.9 billion) earmarked for new drug R&D from 2011-2015, out of a total RMB 4 trillion (USD 0.64 trillion) alongside other high value added like next-generation energy and IT.
 
"In China, we do believe the government will have an even bigger role to play, because of the way the country is set up, and because of the stage the industry is evolving through," says Sheryl Jacobson, senior partner in Monitor Group's China Healthcare practice, speaking to the role of innovation in the sector. "We're still at a stage where the MNCs (Multinational Corporation) are USD 1 billion businesses at most, and primarily commercial entities. Local companies are anywhere, in terms of manufacturing revenue, from almost nothing to USD 0.5 billion. The typical company that does innovation from the lab to in-patient trials – the traditional US or European model – simply will not work in China."
 
Jacobson points to innovative industrial parks as platforms for China's fast catch-up on innovation, and suggest that there's potential to achieve world firsts, such as the elusive Electronic Medical Records, thanks to a scientific central approach. "What's important for people outside of China to understand about China is the experimentation that the government does province by province, city by city. The sheer number of experimentations means there's a huge number of opportunities for healthcare companies, and it also means that everything shifts."
Examples include the implementation of an EDL (Essential Drug List), which Jacobson lists as one of many initiatives which can spread to the entire country, or be shut down in six months. "You really have no idea," she continues. "And that has huge implications on how you go to market. The government does, in fact, drive a huge amount of innovation deliberately in all sorts of ways, to figure out what works best. Fortunately, they're willing to have really good learnings, for instance what's happening on the EDL has led to significant quality issues."
"But now," Jacobson concludes, "[the government is] rethinking quality, with a price premium for some of the generics that are deemed to be the highest quality, and that's something that you just don't see in any other market."
 
GOOD TIDINGS WE BRING
 
Minister of Health Chen Zhu immortalizes his enthusiasm for forward-looking policies in this excerpt from an occasional poem he penned: "Wind and thunder move across the country, health reform brings good tidings." The Minister refers to 2009's ongoing "Healthcare Reform Plan" which has completed its first phase, bringing upwards of 95% of the population under some form of medical insurance, increasing accessibility and affordability, and building a network of basic healthcare facilities. Although there is still room for improvement – of total healthcare spend, drugs account for 50% (compared to only 13% for the US) and per capita spend remains among the lowest in the world, at USD 35 annually – China is not only a market anyone can afford to ignore commercially, but one that is increasingly locally competitive. This trend has resulted in an oft-lamented lopsided market split for MNCs with only 25% share, compared to locals at 75%. With the difference only growing in favour of locals, the Minister's tidings are unlikely to be shared equally by all.
Fortunately, for foreign players, there is a bright side in China's estimated 4,700 domestic manufacturers. According to Dr. Brian Mi, general manager of IMS Health China, "not all of them abide by the GMP quality standard. There's a big gap. This makes local manufacturers perceived as lower quality and associated with less effectiveness and higher side effects. Because of that, MNCs enjoy a price premium, and doctors are very willing to prescribe the branded original products – because if the doctor mistreats a patient, it's the doctor's liability."
This, Dr. Mi says, has resulted in a quasi-evergreen phenomenon, evidenced in products like Glucobay, BMS's old oral anti-diabetic, which continues at 30%+ growth. But as he also notes, "If you ask me what will happen in five years – with China undergoing a second round of GMP and the government tightening up quality – I always warn MNCs that the party may be great, but it's ending. When locals start to produce high-quality products, the government will have a very good reason to reference and lower your price – because why shouldn't they? You don't have a patent!"
 
MNC VS. LOCALS: ILLUSION AND CONFUSION
 
Joseph Cho, managing director of RDPAC (R&D-based Pharmaceutical Association Committee), adds a historical perspective to Dr. Mi's. "The Chinese pharma industry started with generics, and coverage available from a good health system was only recently available. It has really only been since 2005 that more advanced products have had the opportunity to penetrate to tier-3 hospitals in major cities."
 
This view, shared by many MNCs, explains how the locals have managed to capture and maintain share. But representatives from the locals' side, such as Yu Mingde, chairman of CPEA (China Pharmaceutical Enterprises Association), doubts the statistics altogether. "The results of comparison depend on different standards and methods employed. We can see the accurate statistics from IMS, and talking about distribution or profitability rates, MNCs have done much better than locals. But local companies have a higher market ratio than MNCs and do better in basic drug supply," he concedes, "because most MNCs produce patented drugs while locals do generics. The basic policy is to choose the lowest-priced drugs because of financial reasons and the large population."
 
With such conflicting messages, it's imperative to separate the noise from the signals. Jay Dong, general manager, Asia Pacific Region & China, of antibody and research leader Cell Signaling Technology, acknowledges this as a widespread difficulty. "People see opportunities, but at the same time, are perplexed by the many challenges or opportunities that are not materialized or over-exaggerated. They want to capture whatever real opportunity there is, while taking China as part of a global strategy, and figuring out how to leverage it."
 
Dong breaks it down: "There are two challenges to focus on. The first is identifying what's the real opportunity. The second is developing a strategy, so that whatever signal or noise there is, you are able to identify it. An integral part of that is having the right team to capture the opportunity, implement the strategy, and manage risks."
 
1.3 BILLION REASONS TO SMILE
 
Ultimately, the platitude of people as number one asset is rampant in China. As some insiders put it, the talent war is a cliché as big as a house, but one that remains the most pressing issue for companies of all size. Headhunting abounds, resulting in a subgenre of employee known as the "job-hopper" – a person who will change jobs up to once per year for salary increases as little as 300RMB (USD 48) per month – although most increases result in total packages increase by 20-30%, and contribute to rapid wage inflation that has touched every segment of the Chinese economy.
 
Though any elementary economics textbook would suggest an easy fix for a shortage – pay more – many managers, such as Jonathan Zhu, general manager of Celgene China, have found a way around this expensive alternative. "Our statistics for turnover rate in the last 12 months are very, very low," Zhu says bluntly. However, his HR strategy is somewhat counterintuitive: "My philosophy is that I'm not necessarily recruiting "the best" – simply because it's so hard to define. One must take into account all the human qualities, inclusive of competence and knowledge, personality and experience. It's very difficult to define. I'm going to recruit the appropriate talent and labor, which fit in very well for the long-term – people who speak a common language and share common values, and they will adopt the corporate values and compliance in turn. The result is a group that works together as an effective and productive team." This has seen a doubling of headcount, from 30 to 60, in the company's Shanghai office, in preparation for the China launch of Revlimid, a multiple myeloma drug, for mid-2013.
 
 
THINK AND GROW RICH: CHINA'S NAPOLEON HILL
 
Zhi Yang, managing partner, & founder of BioVeda China Fund, never intended to be a healthcare investor. But his remarkable story – from a restaurant worker in the Cultural Revolution, to being selected to earn his PhD at Harvard, and returning to China to start the first international investment fund focused on healthcare – is rivalled only by his history-making exit, which at the time was the largest acquisition in the Chinese pharmaceutical industry since 1949.
 
In 2011, he turned his $7.8 million stake in CITIC Pharma into an approximate $550 million exit in just five years. Yang, in a brief history of healthcare sector investment in China, says that when he started BVCF in 2005, "the talk was always about "low-hanging fruit." Later, many people began to notice that all the low-hanging fruit may be ripe and ready to serve, but ripe fruits are also the soonest to rot. When you hold low-hanging fruit in your hands, if market conditions are not right, you can find yourself holding handfuls of rotting fruit. On top of that, a lot of veteran Chinese investors now agree that the low-hanging fruit is gone. You have to look at the higher fruits which are less ripe, and find the ones that can quickly become the best fruits with the right nurturing. That means investment, like most things, is a game of differentiation and skill."
 
Yang describes the field of investing with a uniquely Chinese metaphor. "Sometimes I compare investing to a TV show about appraising ancient Chinese antiques. On the show, an antique is presented to two panels: a panel of regular people, and a panel of antique experts. First, the common panel must decide if the antique is real or fake, and if it's real, then which dynasty did it come from? These are hard questions! They look at obvious things like color and markings, feel whether they trust the antique's owner, or even crowd-source an opinion from the audience. In reality, they make their best guess. Most of the time they don't get it right – obviously!"
As an example, Yang offers another successful investment, where he began by buying out the stake of a local Private Equity fund, which had priced their investment at under $100 million. "In China, that's not a small number!" he says. "They were happy that they made good money on the deal. We were happy that we got an asset which was quickly becoming a $1 billion company."
 
31 PROVINCES, 31 FLAVORS
 
Didier Dargent, general manager of Servier's China affiliate, is candid about differing strategies across China's 31 provinces, and even city to city. "For MNCs, the true market is not the rural market. The fact remains that only 25% of the rural market goes to MNCs, while 75% goes to local companies, which is the opposite situation of many markets. Today, Servier China covers 100 cities and plans to expand to 130 cities in the near future, but I'm not sure we will run after every rural area."
 
"You can't escape the fact that Beijing, Shanghai, and Guangzhou make up 63% of the total market," Dargent continues. He emphasizes that "China is all about prioritizing, and you must learn to make choices about where to go, and in some cases be able to take the decision to stop. In some provinces, the pressure is just too high. A case in point is Anhui province [a major province just west of Shanghai], where many MNCs have given up."
 
But Servier is not likely to give up. At over 1200 people, it ranks number one in personnel and uplift of all affiliates. This growth has been driven by three major products that constitute 90% of the China portfolio: Vasorel, Diamicron, and Acertil – and with more on the way. "We've been waiting for the reimbursement of Valdoxan, Coralan, and Coveram, but this is unlikely to happen before 2014. In the meantime, we will need to get on national and provincial reimbursement lists and win hospital tenders. The delay between marketing authorization and actual availability for the patient can be anything between 1 and 5 years."
 
One way to reduce such oft-lamented delays is to partner with local CROs. But while market leaders like WuXi or Hutchison can afford to take risks and experiment with unique business models, how do China's other 400+ CROs compete in such a tight space? Many fall back on the buzzword: integration. "It's interesting to talk about integration," says Dr. Chun-Lin Chen, CEO of Shanghai-based Chinese CRO Medicilon. "Medicilon was one of the first truly integrated companies. When in 2005 I came with a proposal, nobody believed me!"
 
Being on the leading edge has resulted in nearly 70% of the company's business remaining international, although Dr. Chen says the Asia portfolio is growing, with goals to reach 50% of turnover from current levels at 30%. This strategic focus was one of the drivers initiating a recent buyback out of a much-publicized JV with US-based CRO MPI.
 
However, Dr. Chen is cautiously optimistic about integrated services: "I don't think many companies in China can offer it. Of course, it always depends on how you define your terms. Some companies consider integration as combining chemistry and biology; others, chemicals plus animal studies; others, IND studies. Ultimately, it doesn't matter what slogan you use. Medicilon is concerned, to a certain degree, about whether we have too many branches, that we will still remain focused! Integration, at the end of the day, is not always easy."
 
Interestingly, not only is integration sometimes difficult, but often unnecessary, depending on individual needs. "For many companies, global scale is redundant when they are looking only to conduct studies in China. In that case, what use is a PM in Australia, data management in India, regulatory consultant in Taiwan, and monitoring in China?" says Albert Liou, Vice Chairman, Asia-Pacific Region for the CRO PAREXEL. "This kind of infrastructure is simply unsuitable for a smaller biotech which may choose PAREXEL to work towards marketing a single drug in China." As a result, Liou has tailored his approach with a dedicated China team, with all the training, project management, and operational execution in China. "The operation is completely China-focused. All the resources are in China, but the quality is the same global gold standard, and we audit everything the same," says Liou.
 
Ivan Y. Zhai, CEO and major founder of GCP CMIC ClinPlus, is clear about his goals, and how he plans to achieve them: "I want to make the company grow faster, and the best way is to leverage existing resources." As a business formed by integrating three well-developed companies – the CRO DMS, an SMO, and a third medical device CRO company – GCP CMIC ClinPlus intends to leverage the strong foundations of its predecessors, formed by famous experts still leading their academic fields, or by former Chinese officials. "For instance," Zhai says, "the medical device CRO company was previously affiliated to the Chinese Association of Medical Device Industry/CAMDI. In China, we sometimes say relationships are very important, and in addition to relationships, we are proud to have unique resources and expertise. We have a very strong senior management team, with many having worked in the pharmaceutical and/or CRO fields for 20 years or more, and many with overseas working experience."
 
MORE MONEY, MORE MONKEY
 
This lack of ease is one of the reasons why specialization, rather than integration, is the name of many entrepreneurs' games. Enters Professor Piu Chan, founder and president of Wincon. Professor Chan grew the company out of his expertise and desire to conduct translational research, which he felt was a limiting environment in the US. In that environment he was a leading researcher before returning as early as 2000 to China as a spearhead "sea-turtle," the affectionate term given to overseas returnees.
 
"China," Dr. Chan says, "offers several advantages for conducting translational research: chief among these are the Chinese culture, large population and management infrastructure. For example, it is often easier to integrate and utilize clinical resources because most of the hospitals, universities and staffs are already supported by the government." With this in mind, he returned to China with two colleagues, a neurosurgeon specializing in surgery on Parkinson's disease, and a stem cell researcher, at a time when far fewer people were coming back. "Our main goal was to pursue translational research, with a dream of really developing something new for our patients." This resulted in China's first AAALAC (Association for Assessment and Accreditation of Laboratory Animal Care International) accreditation for facilities of non-human primates in 2006, and leading collaborations investigating stem cells, neuron growth factor and new drug alongside with scientists from the Parkinson Institute, Stanford, Wisconsin, and UCSF in the US, funded by the Kinetics Foundation of Andy Grove, the former Chairman of Intel.
 
Zhongguancun Biomedical Garden, on the other hand, has focused on attracting local innovative companies concerned with new drug discovery. The entity, which began as a subsidiary to the Haidian sub-park of Zhongguancun Science and Technology Park, now counts all services and supports concentrated on the commercialization of new products, including drugs, diagnostics and medical devices. CEO Liu Rongyao says this focus has paid off: "Based on 8 years of joint efforts, among our members, there are two companies which have gone public, one in China and the other in Singapore. Two medical device companies have earned three registration certificates from the SFDA (The State Food and Drug Administration) and six members have successfully completed new drug clinical approvals from the SFDA."
 
IF YOU CAN'T BEAT 'EM…
Dr. Wu Xiaobing, country manager for Pfizer China, the country's #1 MNC, assesses the big picture of growth to come. "MNCs will certainly continue to bring innovative products to China, but China is a huge country and to change takes time. But ultimately it doesn't matter whether growth comes from MNCs or locals. I differentiate only between innovative products and generics, regardless of the source, and if it benefits people, everything it will be accelerated."
 
This is why many MNCs – including Pfizer, who signed a USD 500 million deal with Hisun to develop high-quality branded generics – have embraced a local flavour to spice up local generics penetration.
 
Eric Baclet, president of Eli Lilly China, is presiding over a similar partnership. Baclet began his career with Lilly 25 years ago as a sales rep in France, and moved through management positions in France, Hungary, North Africa, and Belgium before heading back to the US where he eventually headed the launch of Cymbalta to a turnover of USD 5 billion globally before coming to China. In China, Lilly recently expanded a partnership with Novast by USD 20 million, which Baclet says is "about making our portfolio available to Chinese patients. It's about innovation, and high-quality innovation – high-quality innovation do you need to repeat high-quality innovation? is important in China. Novast is an important play to complement with branded, high-quality generics, the disease areas where Lilly has expertise. We aren't going to be opportunistic with generics outside our field of expertise. Therefore, each brand we will develop with Novast will be either in Neuroscience, Oncology, or Diabetes."
 
Some, like Sanofi, are still testing the waters. Despite a strong global generics presence with Zentiva in Europe, Kendrick in Mexico, Medley in Brazil, and Nichi-Iko in Japan, Sanofi has yet to make a big play in China. Jean-Luc Lowinski, senior vice president, Asia Region & vice president, Greater China Global Operation, speaks to the predominance of generics in China: "First of all, Sanofi in China has faced this reality since day one – when we launched Plavix, there was already a generic in the market!" However, despite the presence of generics, Sanofi's brands have flourished, with Plavix the most successful drug in the Rx market in China, and Amaryl which continues to gain market share over generics. "Globally, we're not unfamiliar with the situation where there are generics," Lowinski continues. "Having said that, even though Sanofi is now number three in the market, we're not covering as many of the Chinese population as we would like to." Lowinski wants to play a bigger role in China in generics. "There's lots of moves in the industry, we're looking at them and studying what makes sense for us, and it's definitely part of the market where we think we should also be there, the way we are in other countries."
 
SWING YOUR PARTNER
 
Andras Gizur, chief representative of Gedeon Richter in China, whose expertise in the country dates back almost 20 years, has a realistic assessment of the sometimes rosy views of the market from outside. "Everybody thinks China is big," Gizur says, "and it's therefore very easy to make a successful business – but that's not true, because it's very complicated, everybody's here, and the competition includes all the big MNCs plus the local companies, which are good and getting better." One way around it is partnering, a longtime necessity for Gedeon Richter, a company which counts 90% of its sales originating from outside its native Hungary. Enter GRmidas, the new OTC company, which will enable Gedeon Richter to be one of the only players at its level to offer full service for both Rx and OTC lines.
 
"In the last 10 or 15 years, Gedeon Richter focused on Rx, which was the strong point because of our long term experience and the fact that most of our products are Rx. However, our strongest therapeutic area consists of gynaecological products which account for some 35-37% of global sales – and in China, these products are mainly OTC. This focus on OTC was one of the main reasons we established the new JV GRmidas Pharmaceuticals, and we have also opened a new business line to further develop primarily the gynaecological and women's healthcare business line as well," which currently includes Postinor, the emergency contraceptive known in the US as Plan B. "Earlier we were not present with this portfolio in China, but it's an area we want to develop in the coming years," Gizur says. "Every step is difficult, but we're on the right track."
 
Investment company Vivo Ventures specializes in therapeutic products in clinical development in the US and China, and is a different kind of partner altogether. Managing Partner James Zhao gives the example of Kanghui, a former Vivo investment recently acquired by Medtronic for USD 816 million, of how his firm can help local companies innovate and accrete significant value.
 
"By the end of 2008, Kanghui had two products in the pipeline in trauma and spinal. Right now, they have three, and the third, a joint product, was brought in by Vivo after our investment. This joint technology comes from a company Vivo is very familiar with, based in Sacramento [California]. One of the reasons why Kanghui invited Vivo to come onboard is that, while they were not short of cash, they lacked technology. Chinese people are very smart – and they are rightfully well-known for their ability to copycat products very soon – but technology like the one Vivo introduced to Kanghui represents a fine art of technology and manufacturing to duplicate the natural mobility of the joint."
Zhao is clear about the value Vivo provided as a partner: "Were it not for Vivo, it would have taken Kanghui five to seven years to build up such a capability in-house and bring the final product to a commercial stage. But Vivo introduced both companies to establish an OEM opportunity for Kanghui, which is now the official OEM supplier worldwide. With this third product line in joints, Kanghui can call itself a true orthopaedic company, and a total solution orthopaedic provider. Without Vivo, this would not have happened, and this demonstrates in a very clearcut way how what we do is different."
 
INSIDE THE CHINESE MIND
 
For a last look at the sector, two of its shining stars explain the mindsets behind their approach, and give a brief slice of advice for future collaborators and competitors.
 
Fosun Pharma is the pharmaceutical subsidiary of the multi-billion dollar industrial conglomerate, whose interests run as diverse as steel and real estate. As an integrated company with operations from API to finished products, distribution, medical devices, and retail, the group is famous in China for its entrepreneurial spirit, and the slogan of "Cultivation, Teamwork, Performance and Contribution to the Society".
 
Qiyu Chen, the company's chairman, admits this success is not always translatable. "It is hard to explain this to foreigners," Chen says, "because it is one of [China's] core cultural values. In ancient times, scholars who have strong ambition abided by these values. For Fosun, I think we should put our eyes on stability, self-discipline and environmental protection. We should make a difference and contribute to the whole society. The result of our contribution should be measured by some statistics, but we should always bear in mind that we should be grateful to the society however big our contribution is and however the business scale is."
 
Some humble values, echoed by another industry leader, Dr. Henry Sun, the president of Tasly Pharmaceuticals, China's TCM leader – and if upcoming phase III FDA trials of its flagship angina drug are successful, possibly the world's. "For foreign companies to penetrate the China market, it's the same as Chinese companies going global: you have to have local experience," Dr. Sun says. He extols the common view of partnerships and long-term relations, and how one might choose Tasly as a jumping off point. "Tasly, with almost 10,000 employees in China, is well-equipped to help out," he says, with benefits accruing not only to potential Western partners, but to bring better medicine and more options to Chinese patients. "And that's good for everybody," Dr. Sun notes. In this vein. He concludes by predicting that TCM, some day, will become a vehicle for cultural understanding and exchange. "When people more and more know your product, they will be interested to know your culture and background. As I have described here today, TCM history can be related in an engaging story. Such cultural exchange will bring people tighter together, and bring more peace to the world," Dr. Sun concludes.
Erratum: in our Singapore report published in January, it should have read that Keat Chuan Yeoh is the Managing Director of the Singapore Economic Development Board世联翻译公司完成医学-国别报告英文翻译

Unitrans世联翻译公司在您身边,离您近的翻译公司,心贴心的专业服务,专业的全球语言翻译与信息解决方案供应商,专业翻译机构品牌。无论在本地,国内还是海外,我们的专业、星级体贴服务，为您的事业加速！世联翻译公司在北京、上海、深圳等国际交往城市设有翻译基地，业务覆盖全国城市。每天有近百万字节的信息和贸易通过世联走向全球！积累了大量政商用户数据，翻译人才库数据，多语种语料库大数据。世联品牌和服务品质已得到政务防务和国际组织、跨国公司和大中型企业等近万用户的认可。 专业翻译公司,北京翻译公司,上海翻译公司,英文翻译,日文翻译,韩语翻译,翻译公司排行榜,翻译公司收费价格表,翻译公司收费标准,翻译公司北京,翻译公司上海。