The increasing Chinese demand for pharmaceutical drugs is a boon and a curse. While the requirement could not come at a better time for western manufacturers, who have seen a slump in sales, thanks to patent expirations in the US and price controls in Europe, the procedure of supply in what is a huge market, has revealed illegal payments being made through travel agents to doctors, hospitals and government officials to help spur sales.
Blue-chip companies like Merck and GlaxoSmithKline, to name but a few, find themselves under the spotlight as the authenticity of their operations is being examined by Chinese authorities.
The lesson is simple: western companies will have to try and find a fine balance against their Chinese counterparts as they attempt to do business there. Beijing has signalled its intention of promoting the domestic drug industry into direct competition with the world’s top manufacturers. This is to combat a growing need among the middle class for western manufactured drugs and endorse the government’s new health programme under which insurance coverage will be provided to millions.
Companies must accept the government’s populist policies at the risk of sullying their brand’s international image.