Venturing Into China’s Pharma Market: Infiniti Research Reveals the Key Market Entry Barriers and How to Combat Them
LONDON--(BUSINESS WIRE)--Jan 8, 2020--
Infiniti Research is a leading provider of market intelligence services to businesses around the globe. For over 15 years, Infiniti has been helping companies across industries to identify key market challenges and strategize to meet the changing market demands.
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Barriers to market entry in China’s pharma sector (Graphic: Business Wire)
Although expansion into emerging markets is vital for pharma companies to ensure continued growth, both cultural and economic market entry barriers can pose critical challenges. China is one of the most lucrative markets for pharma companies across the globe. China’s growing middle class and an aging population mean new opportunities for companies to widen their portfolio in this area. However, entrants into the Chinese market encounter several roadblocks while expanding their operations into the country. For Western companies seeking a foothold in the pharma industry in China, our experts have identified some of the key market entry barriers in the Chinese pharma market and ways to overcome them.
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Barriers to market entry in China’s pharma sector
Identifying untapped market potential
The scale of the country could prove to be one of the key market entry barriers for pharma companies planning to enter the Chinese market. So far, the main focus for pharma companies has been on Tier 1 and Tier 2 cities, those with a population of over 2 million. Physicians in large hospitals in these cities have been targeted by foreign companies as a part of their market entry strategy to venture into these markets. Pharma companies must also identify ways to leverage the potential of China’s rapidly growing Tier 3 and Tier 4 cities. Mergers or joint ventures with established Chinese firms who have built up knowledge and a profile in these areas is one of the best ways to pursue this.
China’s overlapping demographics with each of them requiring a tailored approach could prove to be a severe challenge for pharma companies. Furthermore, inadequate knowledge of geographical and cultural differences in Chinese markets could also prove to be significant market entry barriers for companies in the pharma sector. Even two cities such as Shenzhen and Guangzhou which are in close proximity, speak different languages and represent very different social clusters. Marketing in these two cities or even the case of Tier 1 and Tier 4 cities in the country would necessarily require two separate approaches.
Planned price restrictions
The Chinese government has recently indicated that they intend to review their current drug pricing scheme, which could increase the market entry barriers for foreign companies. They are planning to dramatically increase the number of drugs covered under the essential drugs list. China’s pharma industry is heavily weighted towards producing generics which are better placed to compete under such criteria, posing major market entry barriers for foreign companies wishing to profit from more expensive branded drugs. In this case, foreign pharma companies can increase their profit margins by targeting consumers directly.
Supply chain challenges
Once the drugs have made their way through the registration process, it will need to be distributed, and the fragmentation of the supply chain makes this a much more complicated process in China. Often, there are several layers of distributors to get through before reaching the customer in Chinese markets, which raises the distribution costs and also diminishes supply chain visibility, making it difficult to monitor the product once it has left the factory, contributing to further market entry barriers.
To stay relevant in the competitive market landscape, chief marketing officers, or CMOs, need to glean more insights from customer data with the help of market intelligence. Get in touch with an expert to know more about how our market intelligence solutions can be tailor-made to combat your business challenges.
About Infiniti Research
Established in 2003, Infiniti Research is a leading market intelligence company providing smart solutions to address your business challenges. Infiniti Research studies markets in more than 100 countries to help analyze competitive activity, see beyond market disruptions, and develop intelligent business strategies. To know more, visit: https ://www.infinitiresearch.com/about-us
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CONTACT: Infiniti Research
US: +1 844 778 0600
UK: +44 203 893 3400
KEYWORD: CHINA ASIA PACIFIC
INDUSTRY KEYWORD: HEALTH PHARMACEUTICAL
SOURCE: Infiniti Research
Copyright Business Wire 2020.
PUB: 01/08/2020 10:11 AM/DISC: 01/08/2020 10:11 AM