Bayer Schering Pharma is a division of Bayer HealthCare AG in China. In the last three years, Bayer and Schering were among the fastest growing firms on the mainland. Their merger earlier this year has created a company that is well positioned to rise as a leader in China’s pharmaceutical market. Liam Condon, the general manager of Bayer Schering Pharmaceuticals China and managing director of Bayer HealthCare, talked to CHINA ECONOMIC REVIEW about the idiosyncrasies of the country’s pharma market and how the company is innovating in drug development.
Q: How important is the enforcement of patent law in China for Bayer HealthCare and foreign pharmaceutical companies?
A: I think it’s absolutely essential [for the industry] to grow in a healthy and sustainable manner. It is a priority of the government to create a more innovative society, to move away from a focus on manufacturing and to go more towards the direction of innovation. The protection of intellectual property rights such as patents is very important because, unless there is a reward for innovation, there is no incentive for research and development. For example, the cost of research and development is rewarded by patents that secure exclusivity in the market for a limited time. So I don’t think it is specific to us or to foreign companies. I think the government has been doing quite a lot in recent years and there has been quite a lot of progress made.
Q: What is the concept behind Bayer HealthCare’s Diabetes Houses program?
A: The idea behind the Diabetes Houses program is to set up an integrated concept where people can test their blood-sugar levels, get advice about nutrition, lifestyle and, if necessary, advice about medication for diabetes. It is really a “one-stop shop” for diabetes education, prevention and treatment. The concept of going to one place where you can get full information seems to be highly appreciated at the moment.
Q: How do you think your hemophilia drug, Kogenate will fare in the China market?
A: We will be launching Kogenate in November. [The product] can really revolutionalize the therapy of hemophilia. There were quite a few media articles in the past several months about patients dying because of the lack of blood plasma in China. We had donated product to help alleviate that; we believe and know there is a high need for this type of product in China. The great thing about this product is that it really saves lives, and it is not just about improving lifestyles. So we have quite high hopes for this product. We also hope we can get reimbursement from health insurance for this product because that would ensure that all hemophiliacs can get access to treatment and not just ones with enough money.
Q: How are western and Chinese pharmaceutical markets different?
A: In Western markets you tend to have a lot of patented and innovative products with a few generics. In China most of the products are generics. There are actually very few real patented products on the market.
Q: How is the distribution of pharmaceuticals in China different from your Western markets?
A: It is quite different in the sense that in the West, distribution tends to be very consolidated. You have a few major players and deal with only a handful of distributors. Due to the geographic size and complexity of the market in China, both the size of the population and the geographic distances involved, you have many several thousand distributors.
Q: How does this work out on a practical level?
A: The functions are a little bit different. In the West, the function of distribution tends to be purely logistical. They just deliver your product. In China, you can also get more added value from distributors in the sense that they can not only deliver your product but can also give you valuable market information or help you promote your product. It can be quite a complex mix but we benefit a lot from having strong distributors as partners in China.
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