| By Alex Shaw, Asia Manufacturing Pharma |
| Tuesday, 25 November 2008 |
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As the global financial crisis continues to worsen, China’s pharmaceutical exporters need to take corresponding measures to address challenges. In this article, we will study how maintaining competitive advantage in the manufacture of |
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traditional products, developing a market diversification strategy, enhancing the position of strength through increased investment in overseas markets, improve core competence through cooperation with multinational enterprises and establishing effective risk controls should be of help.
Maintain competitive advantage in the manufacture of traditional products
After decades of growth, China’s pharmaceutical manufacturers have established comparative advantages in sectors such as APIs and medical dressing. China has become the largest producer of pharmaceutical products including penicillin industrial salt, and the output of APIs in the country has accounted for 25 percent of the world’s total. In addition, due to the ongoing financial crisis, America and European countries have decided to reduce government spending on health care, which will drive the demand for high-quality and low-price generic drugs. As a major provider of materials for manufacturing generic drugs, China |
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will be able to benefit from a new round of medical reforms in America and in European countries.
Develop a market diversification strategy
As China’s main trade partners in the pharmaceutical sector, Asia, Europe and North America account for 92 percent of China’s foreign trade volume of pharmaceutical products. As these main target markets slow down, China should increase exports to the Middle East, Africa and Latin America. In 2007, South America’s pharmaceutical market experienced a growth of 11.6 percent in capacity, with a market value of nearly USD40 billion. Pharmaceutical exporters should develop flexible marketing strategies in different markets and adjust the structure of exported products accordingly.
Enhance strong position through increased investment in overseas markets
By the end of 2007, China’s pharmaceutical manufacturers had made direct investments in more than 10,000 enterprises in overseas markets. However, the volume of the investment remains at a very low level. The financial crisis is causing many pharmaceutical manufacturers in America and European countries, especially small and medium-sized enterprises, to suffer from a serious lack of capital, |
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providing opportunities for Chinese manufacturers to make equity investment or acquisitions.
Improve core competence through cooperation with multinational enterprises
Multinational enterprises such as Pfizer Pharmaceuticals, AstraZeneca, GSK, Eli Lilly and Sanofi-Aventis have accelerated expansion in China since 2008. Many of these enterprises have moved their R&D Centers to China, which provides an opportunity for Chinese manufacturers to leverage the advanced technologies of multinational enterprises.
Establish effective risk controls
Chinese pharmaceutical manufacturers have accelerated expansion into international markets, while making little progress in establishing internal risk control systems. The pharmaceutical industry should learn lessons from the financial crisis, and seek effective ways to control risks.
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