China: A Tailored Strategy to a Changing Market
From the significant unmet medical need in terms of disease burden, to the increasing size, age, wealth and urbanization of the population, a number of factors have converged to make China one of the most attractive and challenging markets in recent years.
With the Chinese market set to develop into the world’s second largest, and against the backdrop of the bribery scandals of 2013, it is time for multinational pharmaceutical companies to step back, reassess, and develop the optimal approach to exploit the continued opportunities for growth. In this article, The Adelphi Group will provide four key recommendations to align your business, brand, and actions to stimulate growth within a changing environment.
Recommendation 1: Develop a thorough, multi-perspective understanding of the opportunities in your market
China is unique. The way patients, physicians, and other healthcare stakeholders think and act is fundamentally different from the West. If China is to act as a key driver of global growth for pharmaceutical brands, recognizing these differences is a crucial step in building a platform for products. Consider the following facts:
- Primary care in China is still emerging, and the healthcare system continues to be largely hospital-based
- The majority of quality healthcare services are concentrated in large hospitals, where the best doctors see on average 100 patients a day for three minutes each, resulting in poor quality of care
- Patients have a fundamental distrust of physicians, and attacks on doctors are disturbingly common
- The majority of innovative drugs are not reimbursed by the government—affordability and the willingness of individuals to pay are major issues
- The middle-class population, assumed to represent the market for innovative medicines, is spread through more than 400 cities. Its historic concentration in the rich coastal regions of Beijing, Shanghai, and Guangzhou is no longer a reality
Awareness of the full spectrum of drivers for physician and patient behaviors, and decision-making are crucial for success in this healthcare market. What drives treatment-seeking behavior by certain patients at specific hospitals? How do physicians perceive and respond to pharmaceutical communications? And how do these communications influence physician and patient decision making alike? These questions must be answered in the context of the wide variation that can exist across therapeutic areas.
Developing a deep understanding enables key opportunities to be identified and exploited. This should involve multi-perspective research, gaining insight from all stakeholders to address the role and behaviors of regulators, physicians, and patients at all stages of their disease journey. The perspectives of each stakeholder are unique within the context of the Chinese healthcare system, which is currently at a critical point in its evolution. Gaining this understanding will enable multinational companies (MNCs) to develop mutually beneficial strategies with key stakeholders, where profitable sales can be achieved for pharmaceutical companies, and benefits from investment, innovation, and education lead to improved health outcomes for China’s 1.3 billion citizens.
Recommendation 2: Innovate with market access strategy in China, considering patient, physician, and payer needs
As MNCs continue to see the growth potential in China, more and more products have been launched into the Chinese market. With increasing competition and the widening geographical base of the country’s middle class, simply increasing sales force numbers is insufficient to sustain growth. MNCs must take a more strategic approach to access the market and establish greater barriers to entry for new competitors.
In China, a large proportion of innovative drugs are paid for directly by patients. With affordability and willingness to pay therefore being key issues, patient access programs (PAPs)—programs in which innovative drugs are offered with varying degrees of discount or as free products—have become a widespread requirement for MNCs, especially for drugs that are expensive or have long-lasting treatment regimens. Even with these programs in place, levels of access to new medicines for the majority of patients are low, and adherence to medication is poorer than in developed markets. For example, the 2012 Disease Specific Program for diabetes found that adherence rates for insulin in China are roughly 1/3 lower than in developed Europe.
Beyond PAPs, a holistic approach is required that continues to expand beyond traditional boundaries. In a country with over 700 million active smartphone users1, for whom this technology is invading every aspect of their lives, the way people access, engage with, and share information evolves and shifts on an almost daily basis. Successful market access must remain abreast of these developments.
Moreover, companies that can determine how to best apply and communicate the principals and insights derived from Health Economic and Outcomes Research (HEOR) approaches, which are currently rarely used and little valued by Chinese payers, will create differentiating advantages for brands and products. From our HEOR research in Asia, clear parallels can be drawn with countries such as Japan and Malaysia. In these markets, regulators have historically failed to value HEOR research, but for some companies who have successfully developed and exploited this evidence, access to new patients has been ulocked almost overnight and brands have considerably grown and differentiated themselves.
Evolution from an approach of simple marketing and sales tactics, to one where all challenges to and opportunities for market access are considered, is essential. A full “China lifecycle” plan should be developed to capitalize on different patient and physician needs through the varying stages of the product lifecycle.
Recommendation 3: Re-engage stakeholders with enabled medical affairs
Until recently, medical affairs in China broadly functioned as a gatekeeper for marketing, an initiator of clinical trials, and an office for pharmacovigilance. However, the industry has been steadily evolving to use these groups as “business enabling teams” with an increasingly central role. This transition has largely been driven by three key factors: 1. the need to differentiate in the face of increasing competition; 2. restrictions imposed by government regulation; and 3. the changing demands of the physicians.
Additionally, government regulation is tightening and with the bribery investigations of multiple MNCs still ongoing, companies must re-think the best way to effectively communicate the value of their products. Those that adopt highly strategic approaches, and thoroughly plan publications, educational activities, and key opinion leader (KOL) advocacy in line with brand vision and market needs, will lead the way in a more regulated and scientific environment.
Furthermore, the relationship between physicians and patients in China is on the cusp of disaster. Every year there are, on average, 27.3 assaults on physicians per hospital, a figure which has risen by 23 percent per year since 20022.This is driven on one side by increasingly educated patients, progressively suffering from chronic diseases (eg diabetes), and on the other side, by physicians who are under-paid, over-worked, and largely unqualified to handle the demands placed on them. Clear, consistent, and unbiased communications and tools that deliver value to physicians and enable them to make better treatment decisions at the point of care can be extremely valuable for physicians, patients, and MNCs alike.
Recommendation 4: Act early to enhance growth
It is critical to develop a fundamental understanding of the opportunities which China presents as early as possible, and discover the education needs of key stakeholders and market segments in order to drive growth. China is an extremely diverse market and not all opportunities are equal. Global teams, which have traditionally seen China as a few key coastal cities, are possibly failing to fully understand where and how their products are best positioned. A holistic picture of current and future market trends, behaviors, and sectors is required early to decide where key priorities must lie.
China is still, and will continue to be, a huge and complex market, which is still in the process of optimizing its healthcare system. By utilising these recommendations in combination with medical leadership, strategic marketing, access, and education, companies will be able to develop a significant advantage over competitors to access the vast pools of the right patients through engaged physicians.
Ultimately, strategies must move away from extrapolating traditional approaches used both in China and developed markets. They must move towards a tailored strategy, treating China as a unique, individual, and changing market. For those who are prioritizing China as a key growth market, there has never been a better time to step back, refocus, and create innovative solutions to unlock its vast potential.
Co-authored by Nick Hough, Alice Turnbull, Sarah Anderson & Schichun Zheng of The Adelphi Group, www.adelphigroup.com
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