A Global Expansion Plan for Chinese Biopharma

From Quintiles:


A Global Expansion Plan for Chinese Biopharma

By: Christoph Schnorr, MD  |  May 26, 2015

China has become a magnet for global biopharma companies looking to serve the needs of the country’s huge, aging, and increasingly prosperous population. But what about Chinese biopharma companies who want to expand beyond their own borders? While small Chinese companies are benefitting from growth of the local marketplace, many of the larger Chinese firms have grander aspirations, to compete on an international scale.

But going global isn’t easy, regardless of where you start. They need a global business strategy that will enable them to recoup the huge costs of innovative drug development, while competing for market share in major reimbursed markets, including the United States, Western Europe and Japan, where competition is already fierce and the market is dominated by well-known brands with well-established networks.

Chinese biopharma companies do bring some unique advantages to the global playing field -- most notably a talent pool full of top-grade researchers, and the ability to build new infrastructure without the burden of legacy systems. However they also face significant obstacles, including a lack the necessary international industry experience and know-how to take their business models beyond their borders. And that is a problem that will be difficult to solve.

Breaking into any new market is fraught with risks and challenges, especially in a field as highly regulated as the pharma industry. In order to be successful, Chinese biopharma companies will need to adapt to culture and language barriers, master local regulatory environments that are increasingly focused on real world outcomes as a condition of approval, and craft unique market access strategies that meet the specific needs of physicians, payers, and patients in that market.

Because every country’s healthcare environment has different definitions of value, the breadth of knowledge needed to run a successful market access strategy beyond the reach of companies that operate in only one or two regions can become quickly overwhelming. Adding to the challenge is that many of these market access issues need to be taken into consideration early in the research phase of drug development to ensure researchers collect the necessary data to support global regulatory demands. The companies that delay risk finding themselves in payer negotiations without the data they need to make a convincing argument.

Faced with this confluence of obstacles, Chinese drug developers with global aspirations can choose one of two paths: either build a global capacity in-house through training and talent management, or through acquisitions of other companies; or engage in partnering and/or outsourcing relationships to ramp up expansion without giving up control over their portfolio of products.

Partnering vs acquisition: How to choose

Building a global company requires enormous time and resources -- whether you build it organically or through acquisition. If expansion is part of a company’s long-term business strategy, developing in-house global expertise over time can make sense, though it’s important to weigh the benefits of such growth plans against the cost of carrying that much overhead. Most companies today prefer global-growth strategies that allow them to stay nimble, in order to optimize resources and reduce risk.

The alternative is to partner with an outsourcing expert who can provide global knowledge, access and expertise without requiring massive upfront time and financial investment. This partnership model enables companies to rapidly scale-up in global markets where they do not have a strong presence, while ensuring every phase of their research and commercial access strategy incorporate local regulatory and market considerations so they can avoid expensive and time-consuming mistakes.

When deciding which path to pursue for global expansion, Chinese biopharma companies should ask themselves these questions:

• What functions that support global expansion are core to your strategy, and which are non-core?
• How will you select world-class partners to provide non-core functions in a way that adds long-term value for your portfolio?
• What will it take for a particular product win approval in the markets you are targeting, and what data do you need to support that process?
• Do stakeholders in these markets have a strong need for such products?
• What will it take to succeed in the markets you want to enter?

Whether you build or outsource, taking a decision-theory based approach to portfolio strategies will help these companies develop actionable plans for expanding globally, which will increase their chances of success. 

Topics in this blog post: Biopharma, China, Strategic Partnerships, Population Outcomes, Kun Tuo, Emerging Markets