In a nutshell, Asia presents significant business opportunities for multinational companies, but there is work to be done. Reynold (Pete) Mooney, consulting leader for the life sciences and healthcare industry at Deloitte Touche Tohmatsu Limited (New York), explains, "Asia is not just one market but a diverse range of markets. As each market has its distinctive characteristics and dynamics, companies need to fine-tune what they do in a specific market in order to compete effectively."
Take, for example, sanofi-aventis (Paris) which is locally branding in each market in Asia via acquisitions. The company signed a collaborative agreement with Hangzhou Minsheng Pharmaceutical Group (Zhejiang) early this year, which marked its entry into the consumer healthcare segment in China. The French company has also inked a licensing deal with Glenmark Pharmaceuticals (Mumbai) for the development and commercialization of new molecules for chronic pain treatment. Again, this is significant for sanofi-aventis considering that the osteoarthritic pain market is estimated at $4 billion with 40 million patients. Similarly, Bayer (Leverkusen, Germany) has introduced high-growth therapy drugs (e.g., Glucobay for diabetes and Adalat for hypertension) in the Chinese market. Today, the Chinese market accounts for 3% of its group revenue.In fact, many companies are starting to explore ways to enter Asia. "Given that the Asian market is developing rapidly, it will be advantageous for companies to enter early. This will give them the opportunity to gain experience and to grow alongside with it," says Mooney. India is one such market that pharmaceutical firms may want to focus on given the country's low-cost manufacturing and research and development. As the Indian market establishes itself over time, foreign players will have to build selling and marketing capabilities. However, Mooney points out that there will be mixed success of foreign companies in the Asian marketplace depending on their market-entry strategies.
Interestingly, governmental policies play a paramount role in ensuring the success of foreign firms in Asia. When China advocated its open-door policy and socioeconomic reforms, it attracted a significant amount of foreign fixed investments for its pharmaceutical industry. Between 1980 and 1988, there were approximately 1600 foreign establishments in the country. The government's commitment of US $125 billion to Chinese healthcare infrastructure and universal health coverage by 2011 has kept the interest of foreign companies and encouraged them to stay in China as an overseas market avenue.
The mergers and acquisitions (M&As) trend is also starting to emerge in the Japanese market. Under the Abe government, new regulations have opened doors for foreign firms to purchase Japanese firms. The move has paved the way to develop areas such as drug development and generic-drug manufacturing for Japan's aging population. In addition, the government's strong push to develop the generic-drug industry has attracted many multinational pharmaceutical companies into the country. For example, Lupin (Mumbai) is able to make inroads into the Japanese generic-drug market given its 80% stake of Kyowa Pharmaceutical.