Pharmaceuticals Selling Strategies in the Chinese Market      

The production line is the life of a manufacturing enterprise. Domestic pharmaceutical companies, especially those with a wide variety of products, a complex product portfolio, and long, wide and deep product chains, suffer from troubles like irrational market networks and product match, and low efficiency in product sub-lines, directly causing companies to follow unwise marketing strategies for various market levels. Amid the increasingly fierce competitive circumstances, it is difficult for companies to fully show the potential of their products through efficient marketing and promoting strategies in the short-term; it is hard in the medium-term to realize end-control and sales team training; and in the long-term, branding is also not easy.
   Based on an analysis of pharmaceutical market as well as a survey of several domestic pharmaceutical companies, it can be seen that the strategies of product portfolio and product chains must be based on the structural optimization of target markets. The premise of product strategy is to probe the markets in detail and choose the right products for the right markets. By the habits of drug usage, the level of wealth and other factors, the current domestic pharmaceutical market can be divided into three levels from low to middle to high.

A Level:
Large scale hospitals emphasizing both profitability and academic research

The hospitals in major cities can be defined as the high-end level market that spends the largest amount in consuming medicines and prepares a more complete range of medicine varieties than the other two market levels, and it is also the main channel for urban patients to treat diseases. According to statistics, in this market level, the patients' compliance with doctors' advice exceeds 65%. Therefore, doctors' prescriptions constitute the core of any marketing strategy in this high-end market and also the key basis for pharmaceutical companies to market their products in the hospitals.  
    Products suitable for the high-end market possess many features, such as initially entering the market, higher prices, fewer competing manufacturers. The two most important features they must possess are huge profitability and high technology, which are closely matched with the core marketing mode - "Relationship Marketing + Academic Promoting" - of the high-end hospital market. Products sold in the high-end market can bring about greater profits to pharmaceutical companies and help them establish a high-end brand.

B Level:
County-level hospitals in the middle

Because the major patients seeking consultants and treatment in county-level hospitals mainly come from small cities, the development of drug usage lags behind large cities. Therefore these hospitals and doctors pay less attention to the technological level of medicines. Compared to the high-end market, the county-level hospitals serve patients who have little purchasing power and weak tolerance for high drug prices. And developing new consumers in the county-level hospitals also requires a certain investment. Thus, it is not suitable to market the lowest price drugs to the county-level hospitals.
   The medicines that are suffering a declined profitability and are losing domination in know-how technology due to long exposure to the market, reduced tender price and competition from alternative drugs will be gradually eliminated by the high-end market but may find a suitable new market in the county-level hospitals. However, there is a great gap between rich regions and poor regions, and the consuming level of county-level hospitals varies greatly between regions. Therefore, medicine companies that want to sell their products to the county-level hospitals must consider the economic level in the county.
   The latest healthcare reform draft further clarifies the county-level hospitals' effect on township hospitals and village clinics. In the future, the county-level hospitals are not only the county's medical and healthcare centers, but also play an important role in training town and village doctors, hence guiding medicine consumption in the whole county. To develop a market in the county-level hospitals is a vital part for drug makers to develop the low-end market.

The second level market:
knowledge of famous brands

The OTC market is defined to include the chain drug stores, single pharmacies and common supermarkets in cities. It is the OTC certification and the listed healthcare insurance category of a drug that primarily decides the level at which it can be popularized in the retail market. The OTC medicines for many manufacturers have strong influence in other market levels, but lack brand awareness among common consumers. Some large domestic enterprises, although they can produce a few medicines with OTC certification, have paid much attention to the awareness of common citizens by enriching the combination of OTC drugs that they offer, in order to expand their public influence and enhance corporate brand awareness.
   Therefore, the choice of medicines for OTC is extremely important. The company would better produce the OTC medicines with good market base, accessible prices, high security and repeatable usage features.

The third level market:
Rural clinic organizations - circulation or intense marketing

The low-end market mainly accepts two kinds of medicines, one is the circulative generic drug, which needs little or no promotion to sell well, and the other one needs the drug maker to develop the channels and the retail terminal in particular. The latter are called the "promotion" drugs. As for the generic drugs that have been in circulation for a long time, enjoying high market awareness, cheap prices and low added-value, makers should sell such drugs mainly through the existing outer channels, distributors or commercial platforms. The promotion drugs need to be promoted on the basis of channel promotion, then by directly facing the retail terminals (stores and distribution centers) or the direct controllers of the terminals.  
   As for enterprises, those medicines that can both expand scale and make profits can occupy production capacity and dilute costs as well as help sell profitable medicines by means of their effect on scale. They can also boost a brand's influence.  High volume products that have low profit margins are important to augment sales and create cash flow, but cannot make profits. The medicines that need market development are the opposite. Drug makers are advised to select the products that have bigger gross profits, higher value-add and better potential growth to develop markets.

Community health service centers controlled by old generic drugs

Currently, Chinese community healthcare service centers consume less drugs for fewer kinds of treatments, so they are commonly neglected by drug makers. However, the new healthcare reform program has clearly pointed out that the health service centers will offer more types of treatments. Therefore, it is inevitable for community healthcare service centers to consume and distribute more drugs than before, which should be a new growth point for drug makers.
   Undoubtedly, the competition in this market level will be fierce. The community healthcare service centers will assume the treatment of common diseases, chronic diseases and frequently occurring diseases, therefore will mainly consume generic drugs available in market for many years, with no technical threshold keeping potential competitors at bay. Therefore, before joining in competition, drug makers must do a volume and profitability analysis in order to sele