1. S T R AT E GY G R O U P
S T R AT E GY G R O U P S T R AT E GY G R O U P S T R AT E GY G R O U P
The Future of Pharmaceutical
Marketing in China
OUR RESEARCH
KEY FINDINGS
MOVING FORWARD
Over 50 high level, in-country
one-on-one interviews
Candid analysis on what has
already happened and how
MNC Pharma has to adjust.
As growth in China slows, how can
industry talk to, connect with, and
create influence by KOLs?

2. Table of Contents
Foreword Page 3
Overview of Key Findings & Recommendations Page 4
Section 1 – Context & Background Pages 5-9
Compliance Concerns Pages 5-6
CFDA Drug Lag Pages 6-7
Role of Sales Staff Pages 8-9
Section 2 – Transitioning From a Sales to Marketing Driven Culture Pages 10-11
Section 3 – Key Findings Pages 12-17
View of China from Headquarters Pages 13-14
CFDA Reforms Critical to the Future of Innovative Marketing Page 14
China Not Central to New Product Launches Pages 14-15
Downstream Effects of Narrow Commercialization Windows Page 15
Marketing Agency Work Is Tactical, Rarely Strategic Pages 15-16
MNCs Are Desperate for Creative Marketing Solutions Pages 16-17
Budget Is Not the Constraint – Other Resources Are Page 17
Section 4 – Opportunities Pages 18-21
Strategy Development Page 19
MedEd Activities Page 19
Digital Page 20
Market Access Page 21
Section 5 – Moving Forward – Recommendations Pages 22-24
PAGE 2 The Future of Pharmaceutical Marketing in China / TABLE OF CONTENTS

3. A variety of factors have aligned in China’s pharma-
ceutical sector to clearly signal to multinational companies
(MNCs) that the local marketing culture will need to rapidly
mature. Precipitated most publicly by the GSK compliance
crisis, the pharmaceutical sector in China has been plagued
withineffectiveoff-linepromotionalactivitiesforyears. Med-
ical education teams have struggled to develop adequate
content in a timely manner, especially given the increasing
role of digital and the need for rich, scientific discussions
developed and made available at the velocity digital plat-
forms require. At no fault of their own, market access teams
continue to struggle with presenting a coherent message
aroundthevariousreformsandpilotactivitiesoftheChinese
government, no doubt a reflection of how many Chinese of-
ficials feel themselves.
Recently, Rubicon engaged in a series of high-level in-
terviews with industry business unit heads, marketing exec-
utives, regulatory specialists and government affairs teams
to gain a better understanding of how exactly the market-
ing function within pharmaceutical MNCs is going to need
to evolve. These interviews were all completed in China,
with the objective of getting key stakeholders to articulate
what they see as the current challenges around navigating
the changing pharmaceutical industry here.
Across the board, executives expressed confidence
that China was going to continue to be an important - even
critical - market for the success of their respective global
businesses; however, to a person these same executives are
concerned over market access challenges, broad discon-
nects between the government’s stated policies and what
is implemented locally, the velocity with which China’s FDA
(referenced in this white paper as CFDA) can address the
structural problems that have created drug lag, macroeco-
nomic factors specific to China that will impact consumer
spending, and lastly how China’s political challenges may
further confuse healthcare reforms. At the same time, the
aftermath of the GSK compliance scandal continues to re-
verberateacrossthesectorprimarilybyeliminatingthemost
traditional marketing vehicles – sponsored events – that
MNCs have relied on for twenty years.
The purpose of this white paper is to explore the context
within which changes specific to China’s healthcare econo-
my are taking place, the key findings of Rubicon’s interviews
that relate to how MNC’s marketing function will have to
change, and introduce solutions to what the industry needs.
China’s MNC pharmaceutical landscape is in the midst of a
pivotal transition from a sales to a strategic marketing-driven
culture, where the traditional vehicles that generated rev-
enue growth – hiring more sales people – is not only unreli-
able, but also rife with compliance challenges. MNCs that
under-estimate this transition, who do not have local part-
ners capable of bringing strategic insight and creative solu-
tions to bear, will find the China market more opaque, suffer
declining market share, encounter increased difficulty bring-
ing new innovative products to market, and face increasingly
unresponsive government partners. For the China market
to continue to play the outsized role pharmaceutical MNCs
anticipate and need, marketing models will have to change.
Foreword
Benjamin Shobert
Founder & Managing Director
The Future of Pharmaceutical Marketing in China / FOREWORD / PAGE 3

4. Section 1
Context & Background
T
o understand the need for a rapid change in how MNC pharmaceutical
companies sell and market in China, it is critical to have a sound foundation
on how the country’s healthcare system currently works, in particular how
healthcare is paid for in China. Because too much of China’s public hospital system
in particular is reliant on the sale of pharmaceuticals to fund their operations, MNC
pharmaceutical companies in China find themselves in the cross-hairs of govern-
ment officials sensitive to their own short-sighted funding policies, as well as the ire
of Chinese families who remain cynical around the real versus perceived need for
pharmaceuticals recommended to them by a physician.
PAGE 4 / The Future of Pharmaceutical Marketing in China / SECTION 1 CONTEXT & BACKGROUND

5. While China’s overall pharmaceutical market will vie with Japan and the United
States’ to be the world’s largest, price pressures in China will result in the lo-
cal market being dominated by generics, many of which are likely to benefit
from various subsidy schemes from the Chinese central government that will
not be accessible to foreign MNCs. This means at least two things. First, build-
ing brand loyalty for branded generics in particular is of critical importance and
second, bringing innovative products to China in a timely basis will be more
essential to growth than it has been thus-far.
There are five specific topics that are relevant to how the sales and market-
ing environment for MNC pharma companies in China is going to continue to
change: declining growth rates, ongoing healthcare reform specifically focused
on prices of pharmaceuticals, compliance concerns, the changing role of face-
to-face promotional activities, and drug lag issues at the CFDA. Of these, three
are most critical to MNC marketing teams: compliance, promotional activities,
and drug lag.
Compliance Concerns
Often times Anti-Monopoly Law (AML) allegations go hand in hand with China’s
anti-corruption drive. This has led to a certain amount of cynicism about the ap-
plication of China’s anti-bribery standards. The best example of this so far has
been the allegations leveled against GSK in the summer of 2013.
As has been previously discussed, doctors in China are chronically over-worked
and under-paid. Hospital administrators struggle to meet shortfalls between
government reimbursement and the increasing costs associated with the levels
of service and medical products they are expected to provide. Both hospital
administrators and doctors have found alternative means to make up for the
revenue not provided by the government. For administrators, their response has
been to incentivize doctors to prescribe unnecessary pharmaceuticals, surgical
procedures, and diagnostic evaluations. Doctors have supplemented their pal-
try incomes through the sort of bribes the GSK scandal has exposed, as well as
the previously mentioned “red envelope” payments that families make directly
to doctors to ensure proper and timely care.
In the 1980s, as part of China’s economic reforms, it began to dismantle
its worker units, called danwei. A critical part of the danwei was the so-
called barefoot doctors, which provided basic medical services, midwifing,
and emergency medicine. When the danwei were taken apart China’s pri-
mary care system disappeared. The immediate consequence of this was
that healthcare services concentrated in public hospitals. Not only was the
location of service delivery disrupted, healthcare financing systems were
not updated. The result has been that the burden of paying for healthcare
has fallen disproportionately on the shoulders of Chinese families.
China’s healthcare system is paid for primarily through out of pocket
spending (OOPS) on the part of the consumer. These OOPS take two
forms: the ubiquitous “red envelope” payments of cash to doctors in
exchange for preferential care, and cash payments for prescriptions and
procedures – many of which are medically unnecessary, but pushed by the
hospital to fund itself. Even after two rounds of additional healthcare-spe-
cific stimulus spending by the Chinese government in 2009 and 2011, the
country’s public hospitals remain badly under-funded. This historic reality
has created a toxic mix of financial incentives where hospital administra-
tors who are scrambling for revenue, coupled to under-paid doctors hungry
for better compensation, prescribe unnecessary medicines and procedures
simply to fund the hospital’s ongoing operation and achieve incentive com-
pensation by the doctors related to sale of prescriptions and procedures.
The Future of Pharmaceutical Marketing in China / SECTION 1 CONTEXT & BACKGROUND / PAGE 5
EXPERT INTERVIEW: “The pharma market in China has developed
at a very fast pace over the last twenty years. MNCs in particular en-
joyed a very high-speed expansion of the market between 2000 and
2010, where CAGR were between 25-40%. But a number of factors,
including the GSK scandal, the central government tightening price
controls on drugs, ongoing weakness in the commercial healthcare
insurance sector, and an overall slowdown in the economy, have all
combined to take growth rates down to 10-15% between 2013-2015,
and to only 5% this year. There are huge challenges around the
government’s ability to continue investing in healthcare if the GDP
doesn’t hold to historical growth rates. We all know a new business
model for pharma is coming, but it is not yet clear what the new
model is going to look like.”
– Strategy Manager, Cardiovascular Products, Beijing
EXPERT INTERVIEW: “The Beijing health bureau tried a DRG ap-
proach in five of the local public hospitals. It did not go well. If
the hospitals fully complied with the over 100 clinical pathways this
pilot established, if they ensured the doctors got on board with this
approach, the pilot showed that costs for diagnosis and treatment
would go up. The NHFPC reviewed the results and called this idea
the “luxury version.” The bottom line is that reforms around pricing
are not working, and the government knows this.”
– President, Pharmaceutical Lobbying Group, Beijing

6. PAGE 6 / The Future of Pharmaceutical Marketing in China / SECTION 1 CONTEXT & BACKGROUND
Compliance Concerns – continued
MNCs did not create this environment; rather, they have had to determine how
to navigate the complex field where international compliance standards overlap
with how healthcare is consumed and paid for in China. During interviews with
pharmaceutical marketing executives, the concern over whether or not China’s
healthcare reforms would actually result in doctors being paid more was a con-
stant theme. Of those executives interviewed, 83% stated they believe physi-
cians in China are still engaged in rent-seeking behavior, even as MNC phar-
maceutical companies have cracked down on any non-compliant behaviors
from their field sales team. If this is accurate, then much of the non-compliant
practices have been buried within the distribution channel, and are continuing
to take place at the hands of domestic drug manufacturers, whose practices in
these areas have always been more egregious than those of MNCs.
In response to the GSK crisis, MNCs have in-
creasedcompliancesurveillance. Atthesame
time, slowing growth rates have resulted in
many MNCs sending their sales teams into
new geographies which in practice means
more smaller markets. Penetrating Tier 3 and
4 cities has become more important as MNCs hunt
for revenue; however, these tactics pose two overlapping
compliance risks: smaller markets remain those where non-compliant behavior
continues to be practiced, and in most cases the sales teams that MNCs send
into these areas are the newest to the company, and as such most prone to their
own non-compliant activities in pursuit of sales’ targets.
Most MNCs have significantly scaled back marketing events where they spon-
sored doctors’ attendance and participation. These tended to be the most
common locus of non-compliant activities when MNCs can exact direct control;
however, while these were problematic, they were the most effective marketing
platform MNCs had access to in China. In the absence of event sponsorship,
MNCs have now begun to view two other capabilities as their primary alterna-
tives: Medical Education and Digital.
CFDA Drug Lag
Few MNC pharmaceutical executives interviewed questioned that going for-
ward, success in China will be more reliant on innovative products than ever be-
fore. What many of these same executives expressed concern over is whether
China’s market is going to become any easier for them to bring innovative thera-
pies into the country in a timely and efficient manner. While the most common
EXPERT INTERVIEW: “For MNC pharma companies, compliance
in China is getting more difficult. Coming to China is easy; staying
in China, while being profitable and compliant is getting harder.
No one really has a unifying strategy around how to interact with
government authorities around compliance or tendering. No one
can answer the question of which agency we are supposed to
work with, which means there is lots of discretionary decision
making by authorities that can cut both ways – to your benefit, or
to your detriment.”
– Compliance Officer, Shanghai.
EXPERT INTERVIEW: “We have a new oncology drug that, best
case, is going to take three years to get through what should be
a one year process within the CFDA. There are too few reviewers
and thus far a lack of leadership from within the CFDA to take
this issue on headlong. Because of how the CFDA has worked
thus far, and the lack of a transparent approval process, we end
up being very reactive versus proactive to their requests. When
we do run into an issue with the reviewer, many times we find
they are not familiar with the data, which doesn’t help our cause
at all. For my business, growth out of China has been talked up
and assumed by corporate. What I continue to tell headquarters
is that we are not making enough early-stage investment to be as
successful here as we could be.”
– Business Unit Head, Oncology, Shanghai.
Aredoctor
s still engaged in economic rent seekin
gbehavior?
YES
NO

7. The Future of Pharmaceutical Marketing in China / SECTION 1 CONTEXT & BACKGROUND / PAGE 7
CFDA Drug Lag – continued
frustration along these lines has to do with
drug approvals, there are critical structural fac-
tors other than the CFDA’s approval process
that MNCs will have to deal with, chief among
these how to access and influence physicians.
Around the general question of bringing innova-
tion to China, the number one concern of MNCs
centers around how drug lag, the difference
in time it takes to get an approval through the
CFDA versus other markets, further compli-
cates their ability to educate the market and
interact with KOLs in the Chinese government
and the most critical public hospitals. While the
CFDA is taking steps to improve this, in large
part a reflection of commitments made dur-
ing the December 2014 Joint Commission on
Commerce and Trace (JCT) meeting in Chicago
where American Vice President Biden specifi-
cally brought this issue forward, there continue
to be concerns over how quickly the CFDA can
build infrastructure and train staff to get drug
approvals through the system faster.
Because of these concerns around bringing in-
novative molecules to China in a timely basis,
MNCs recognize they have a narrow window
of time within which they can build and execute
their commercial launch programs. This finite pe-
riod of time is beginning to force MNCs to carefully
think through how they can most effectively use
what time they have left once the CFDA’s approval
is in hand. These pressures mean that MNCs are
extremely hungry for innovative ways of talking to,
educating, and capturing data about Chinese clini-
cians. With a narrower window within which MNCs
have to access their Chinese KOLs, they need more
impactful tools being brought to bear. Changes to
the CFDA will only draw further attention to how
little bandwidth Chinese physicians have to par-
ticipate in the sort of knowledge sharing exercises
thathavebeenfoundtobuildcompetenciesaround
new therapies in other geographies.
Are reforms at the CFDA critical
to your ability to argue for more
innovative marketing programs?
EXPERT INTERVIEW: “We try to get as tight of
a connection with KOLs in China as possible,
but even in very focused disease areas, it is very
difficult. KOLs in China are still much more of
a practitioner than what we would see in the
west. Frankly, KOLs in China are much more
of a GP than most MNCs appreciate. KOLs in
China are still typically seeing 100 patients a day,
trying to participate in clinical trials to further
their career, and education students. We still be-
lieve that while digital is important, in China it is
the face-to-face that drives the sort of responses
from physicians that we most care about. A
single marketing channel with KOLs just won’t
work – we have to connect on and off-line time
with doctors.”
- Head of Marketing, Innovative Products, Beijing
Before the GSK crisis,
with limited time in the
market to sell therapies, MNC
pharma companies viewed
face-to-face promotion as more
important than strategic
marketing.
YES
NO

8. PAGE 8 / The Future of Pharmaceutical Marketing in China / SECTION 1 CONTEXT & BACKGROUND
If the CFDA’s drug approval process is going to get better, and improve more quickly
than many anticipate, then MNCs are going to encounter the harsh reality of how best
to talk to and educate a Chinese doctor around a new therapy. The day-to-day work-
ing environment Chinese doctors face leaves them with very little time to educate or
better themselves. This creates another layer of complexity around how MNCs can
actuallygetandholdtheattentionofChinesedoctors. Themoreeducationisrequired
around dosing, follow-up and potential drug interactions around a new drug, the less
probable it is that a MNC pharma company can effectively transfer this knowledge to
the clinician.
Role of Sales Staff
Historically, success in China as a pharmaceutical MNC was directly related to the
number of sales members that were hired and sent out into the market. This causal
relationship was in some ways more complex, and in other ways simpler, than may
be understood by some at a MNCs headquarters. For too long, the sales function in
China’s pharmaceutical sector has required a face-to-face connection not to build a
proprietary relationship, nor to educate the doctor or hospital administrator on the
value of the products in question. Rather, the face-to-face connection was required
because there was a gray market in place between the hospital and the pharmaceuti-
cal industry. The sales function in too many MNCs existed as an unfortunate proxy for
this on the ground reality in China.
With this traditional sales model disrupted, many MNCs have begun to transition their
field teams away from traditional sales models to non-promotional teams capable of
medicaleducation,oftentimesreferredtoasmedicalliaisons. Atthesametime,there
has been an explosion of interest in digital marketing on behalf of pharmaceutical
MNCs. The backdrop to these endeavors is that the traditional mode of talking to,
interacting with, and attempting to influence key stakeholders within China’s hospitals
has been broken. What is less clear is what the new models are that will allow MNCs
to successfully interact with this cohort.
Where sales teams have been maintained, compliance training and oversight has in-
creased. In addition, how they are incentivized has changed. Several MNCs have
begun to emphasize other metrics beyond just revenue in order to gauge the effective-
ness of their sales’ teams. Examples of this include measuring success based on the
number of physicians a sales rep signs up for a new digital initiative, or the number
who participate in an on-line training session. While these are tactics designed to en-
sure more compliant behavior, the unpleasant reality is that many physicians in China
continue to expect payment in exchange for their participation.
EXPERT INTERVIEW: “We have had to fundamentally change
our marketing platforms because of the GSK scandal. We
can no longer directly incentivize sales staff by their individual
sales. Now we emphasize the quality of their calls. We cannot
provide any travel sponsorships at all, no speaker fees, and we
have increased the auditing of our distributors. All of this is
really good though, because it is putting the patient back in
the center of our sales and marketing efforts. We know that
to serve the patient best, we need to make sure the doctor
has timely information. So, we are making a big investment
to improve the quality of information available to our MedEd
teams. We are working to create platforms that will foster a
rich, science-based peer-to-peer dialogue with doctors.”
– Business Unit Head, Shanghai.

9. The Future of Pharmaceutical Marketing in China / SECTION 1 CONTEXT & BACKGROUND / PAGE 9
Access to KOLs in China’s
hospitals is going to
require new clinician and
patient centric MedEd.
This means patient
journey analysis and the
combined on/off-line
work will be critical.

10. Section 2
Transitioning From a Sales to Marketing
Driven Culture
I
n the aftermath of the GSK scandal, multinational (MNC) pharmaceutical
companies have been quick to review their compliance practices, ask questions
to their government affairs teams about what this situation says about China’s
regulators or its internal politics, at the same time MNCs review overall strategic
market access for their China operations.
PAGE 10 / The Future of Pharmaceutical Marketing in China / SECTION 2 TRANSITIONING FROM A SALES TO MARKETING DRIVEN CULTURE

11. One of the most critical ways in which the GSK crisis is going to change MNC
pharma’s work in China has been largely overlooked: going forward, China
is no longer going to be a sales driven culture. Companies used to generally
understand the relationship between hiring more sales staff and the positive
impact on revenue. No more. Now, additional types of measurement and sys-
tems of control are under development that will allow managers to understand
which activities are generating the greatest benefit to the company.
While these changes are problematic, the reality is that the growth in size and
geographical reach of China’s pharmaceutical sales force has been a problem
for MNCs. Adding hundreds of additional sales team members was becoming
increasingly costly and difficult to manage, especially with the high turnover
rates many MNCs struggled with.
Going forward, MNCs must anticipate they will find it harder to build and sus-
tain relationships within the hospital. Time with doctors will get more pre-
cious, and relationships between MNCs and doctors are going to come under
increasingly intense scrutiny. Political optics within the hospital, and between
doctors and their patients as well, is going to further muddy the waters about
how and where companies can talk to clinicians.
The issue of trust continues to be a pervasive one that strategic marketing
initiatives need to have as their foundation in China. Patients do not trust doc-
tors. Doctors do not trust hospital administrators. Hospital administrators do
not trust manufacturers. It is a vicious cycle that leaves everyone in the pro-
cess frustrated, confused, and searching for ways to validate what each party
has put forward. Handled properly, this is an opportunity. More specifically,
it may be the essential insight to what should drive consumer and clinician
marketing efforts by MNC pharma in China: building trust.
How can this be done? Heavy investments in patient information resources
on-line, medical science communication options for time-poor doctors, and
training programs. MNC pharma should be aggressively investing in ways to
expand what information they provide to clinicians and consumers via China’s
internet and social media platforms, as well as making strategic investments
in the handful of mHealth apps designed and deployed in China.
Another way to capture this transition is to characterize today’s environment
as moving away from a sales-driven culture to a medical-driven culture. This
transition reflects similar changes that have taken place in more developed
global markets, as access to physicians has become more challenging from
both a compliance and bandwidth point of view. While sales teams are never
going to entirely go away in China, two parts of MNC organizations will need
to come together with the sales’ function to work on new strategic endeavors:
medical for engaging KOLs in scientific discussions and educating the broader
market, alongside marketing that will need to create branded commercial pro-
grams that engage physicians across all channels.
The Future of Pharmaceutical Marketing in China / SECTION 2 TRANSITIONING FROM A SALES TO MARKETING DRIVEN CULTURE / PAGE 11
Is China changing from a sales to a
marketing-driven culture?
YES
NO

12. Section 3
Key Findings
W
hile China has made a number of public and promising commitments
to reform the drug approval process inside the CFDA, basic questions
persist around where the organization is going to find the necessary
scientific and bureaucratic capacity to make good on these commitments. Today, as
growth rates for MNC pharma in China significant slows downs, the surrounding
questions around how quickly and efficiently the CFDA can reform itself are taking
on new urgency.
PAGE 12 / The Future of Pharmaceutical Marketing in China / SECTION 3 KEY FINDINGS

13. View of China from Headquarters (HQ)
 China growth has been talked up to shareholders, and assumed by all.
 Now that growth is slowing down, HQ is asking more questions.
 Drive to understand the China market from HQ is very high today given
economic, political and market-specific changes.
 China affiliate offices need additional help sharing the China story in
order to get more and different types of resources deployed in country.
 Two issues in particular – China’s tendering process and the CFDA
reforms – are viewed with particular suspicion by HQ.
Because growth in China has begun to slow, and for some MNCs quite dramati-
cally, every MNC executive interviewed expressed concern over how to best ex-
plain the changing local market to headquarters. For MNCs, growth in China has
been one of the most reliable drivers of revenue and profitability growth over the
last fifteen to twenty years. This growth has become a central part of the narrative
headquarters has crafted with shareholders, in particular as a vehicle to offset
some of the pressing concerns over maturing product pipelines and uncertainty
over the next generation of so-called “blockbuster” drugs available for commer-
cial launch in developed markets. Growth in China has become assumed, and
with growth now plateauing, executives in corporate offices are beginning to ask
questions around what is happening in China, and what MNCs should make of the
various factors that explain the slowing growth rates.
Headquarters has three core uncertainties. First, macro-economic uncertainty.
During 2015, the volatility in China’s stock market has become something of a
symbol around the uncertainty and concern over what to make of the general di-
rection China’s economy is taking. Questions around whether or not China will be
able to make the transition from a manufacturing and infrastructure investment-
driven economy to a service economy, with the subsequent benefits to the general
healthcare system writ-large, have become more difficult for China affiliates of
MNC pharma companies to answer satisfactorily.
The Future of Pharmaceutical Marketing in China / SECTION 3 KEY FINDINGS / PAGE 13
EXPERT INTERVIEW: “For the first time ever in our history as
a company in China, growth has slowed to single digits. Head-
quarters now wants to know whether we really need this big
of a sales force. They want answers around how our business
model is going to innovate, and we need to have answers for
them going into this next phase of the market’s development.”
– Business Unit Head, Oncology Products, Shanghai.
EXPERT INTERVIEW: The government here in China is facing
a lot of challenges: aging, the needs of the rural poor, urban-
ization, and chronic diseases such as diabetes and hyperten-
sion. This is the language the government understands, and
MNCs have to become better using these touch points. You
can argue with government around patents and innovation,
but going forward, MNCs are going to have to accept that
market access is going to be about a willingness to lower
price but saying to the government ‘we will lower price but we
want access, access and more access.’”
– Head of China Government Affairs, Shanghai.

14. PAGE 14 / The Future of Pharmaceutical Marketing in China / SECTION 3 KEY FINDINGS
The second core uncertainty revolves around China’s politics, and what MNCs
should make of the varied signals from the government around how China
views foreign investment in other, more mature sectors of the economy such
as telecommunication and IT. While the concerns of these sectors have thus
far not touched on those of the pharma community, the political realities that
drive over-reaction to foreign direct investment in telecom and IT do create
uncertainties and concerns by healthcare and pharma MNCs who recognize
similar political pressures could negatively impact market access, tendering
policies, and the general FDI climate.
Third, MNC pharma executives in headquarters have concerns over what to
make of China’s reform process. President Xi Jinping has led a round of re-
forms that are subject to varied interpretations as to his intentions and the over-
all direction of the country’s economy and political system. That such varied in-
terpretations exist at all point towards the degree of profound uncertainty even
the most qualified of experts cannot fully explain. As such, MNCs – especially
those in sensitive areas of the Chinese economy such as healthcare – remain
wary as to what they should make of the country’s overall reform process.
The net of these uncertainties, coupled to slowing growth for pharmaceutical
products, and a market where the traditional way of selling and marketing has
to change, has created a level of concern at headquarters that is unprecedent-
ed in the modern era. China affiliate offices need help articulating a broader
vision of what is happening specifically within the healthcare system, but also
more broadly around what is happening in China, and the reason MNC pharma
should continue to invest, and in particular invest around innovation in both
products and the marketing strategies deployed to capture the attention of
KOLs in government and the healthcare system more broadly.
CFDA Reforms Critical To the Future of
Innovative Marketing
 CFDA receives 10,000 applications a year.
 The CFDA has the organizational capacity to process between
4-5,000 a year.
 Current backlog stands at approximately 21,000 reviews.
 This has resulted in a drug lag between when innovative products launch
globally in developed markets, versus when they can launch in China.
Few issues are more critical to the timely commercialization of innovative mol-
ecules than the development of a transparent, science based drug approval pro-
cess within the CFDA. Executives interviewed named this as their number one
or two priorities. China has made very public commitments to reform the drug
approval process, but questions remain around how quickly the organization can
build the talent and infrastructure to follow through on these commitments. The
increase of drug registration fees is an important structural reform that will cre-
atehigherfundinglevelswithintheCFDA. Asisalwaysthecaseinbureaucracies
in general, and those in China especially, how this money is spent and to what
extent it remedies those problems, remains to be seen. With these concerns in
mind,thevelocityandtypeofreformstheCFDAhasmadeinthelastninemonths
are fundamentally different, and foundationally critical, to understanding the ex-
tent to which the CFDA understands its need to quickly modernize.
China Not Central to New Product Launches
 Because of the drug lag issue, China is not a central part of most innova-
tive drug launches.
 Thus far, the exceptions to this are for those drugs that have a unique
market opportunity in China.
 Some MNCs are adjusting their strategy in line with anticipated reforms
at the CFDA, as well as innovative molecules in the CFDA review process that
have unique application to the China market.
Because growth in China has been predictable and strong up until 2013, the
issue around the CFDA’s drug lag has been a thorn in MNC’s side, but not a fun-
damental impediment to the MNC’s commercial success. This has all changed
EXPERT INTERVIEW: “We can’t answer ‘I just don’t know’ to head-
quarters when they ask us about pricing, reimbursement and health-
care reforms, even when we really are not sure how to explain what
is happening in China. We find ourselves constantly having to explain
to headquarters what is happening here.”
– Business Unit Head, Vaccines, Shanghai.

15. as the market has slowed down, and the launch of new products has become
more of a priority. With this re-prioritization has been an awareness that MNCs
have not been forced to make China a central part of their launch strategy for
new drugs. A number of MNCs interviewed admitted that over the course of
the last five years, problems at the CFDA have essentially meant that China
is viewed as a secondary priority, only to be pursued once launches in more
established markets have been completed.
One of the best examples of this problem being addressed and avoided is
the Bristol-Myers Squibb (BMS) launch of Baraclude in China. BMS decided
there was no point developing Baraclude unless they could get it approved
in China more or less concurrently with the US. This was an explicit decision
that BMS made early. Given that one third of the world’s Hep B carriers are in
China, totaling at a minimum 120 million potential patients across the country,
and that the primary pharmaceutical treatment option at the time was GSK’s
Epivir (lamivudine), which was known to create drug resistance, BMS had an
obviously compelling market opportunity in China.
BMS worked closely with the CFDA and designed a proactive program to con-
duct the research by tapping into a network of Chinese clinicians, experienced
in treating Hep B, whose work would not only be used in the China approval
process, but would also be integrated into the global program. This approach
paid off When BMS received approval in China only 6 months after the FDA’s
approval. The China program was the flagship part of the global program.
BMS did not assume that the patient journey of someone in China with Hep
B would be similar to that of another country. Because of this, BMS initiated
an extensive survey of the Chinese Hep B patient population, with the goal to
understand the patient history and journey of a typical Hep B sufferer in China.
BMS recognized they needed to understand in great detail how physicians
and patients thought about and managed the disease.
Many pharma MNCs under-estimate the complexity of this work, and because
of this under-resource the market research role in China. There are important
subtleties around how Chinese doctors and patients think and act about the
clinical and care components of a disease. The process of understanding
these nuances has never been much of a priority for MNCs, in large part be-
cause the China market was where face-to-face selling, and not innovation in
product or service offering defined success.
Downstream Effects of Narrow
Commercialization Windows
 Marketing teams were too reliant on events to create brand awareness.
 This feed face-to-face selling versus strategic marketing initiatives
 Compliance initiatives have drastically cut back these platforms.
Much of what has driven MNC pharma marketing in China for the last decade
have been events. Designed to look like continuing medical education, they
were little more than social events. These have become problematic since
much of the non-compliant activities brought forward during the GSK crisis took
place within the event planning community. The most common interpretation of
the role events have played with MNC marketing has been that it is an easy and
convenient means by which to interact with physicians; however, this misses the
deeper point. Because the period of time within which a MNC has access to an
innovative product in China is narrow, the type of brand building activities MNCs
pursue have been more akin to sales activities rather than marketing. Few mar-
keting activities MNCs have pursued have been those such as events that align
not only with the economic motives of physicians, but also hold the potential to
segment KOLs. Digital platforms have not been as effective at either, nor have
other traditional, but non-event driven marketing activities. Because of these
challenges, face-to-face selling has been the predominant activity that MNCs
invest in, to the great detriment of their innovative product launches.
Marketing Agency Work is Tactical, Rarely
Strategic
 Local firms are viewed as purely transactional. Most interviewed ex-
pressed deep frustration over local options.
 Local firms can be sent to do a specific job (capture the patient journey),
but have no ability to interpret what is happening, provide insights, or make
strategic recommendations around what a MNC should do.
 Market research capabilities are very rudimentary and have the same
problem (no strategic insight).
EXPERT INTERVIEW: “The big question we have as a company is
whether China’s CFDA reforms will take it down the path Japan went
down. If so, this should be good for MNC pharma. I believe China
can develop the technical capacity to build the same sort of approval
process that Japan did, but I am not certain whether the CFDA has the
political will to take the reform process the entire way. It is unclear to
me how empowered the Chinese CFDA officials will really be to make
this all happen in ways that benefit foreign MNCs in particular.”
– Head of Government Affairs, Beijing.
The Future of Pharmaceutical Marketing in China / SECTION 3 KEY FINDINGS / PAGE 15

16. PAGE 16 / The Future of Pharmaceutical Marketing in China / SECTION 3 KEY FINDINGS
Marketing Agency Work is Tactical, Rarely
Strategic – continued
A market that has not had much in the way of innovative products to market
has not required innovative marketing techniques, and for many mid-level mar-
keting team members who have not experienced value added partnerships
with creative work, too few know what to ask for from partners. This means
that most local marketing agencies provide basic tactical capabilities, but
largely lack strategic insights.
Almost 90% of those executives interviewed described their existing agen-
cies as lacking any meaningful strategic or creative capabilities, with par-
ticular frustrations vocalized around insights offered by these firms around
the patient journey, what is and is not working in digital, and how to create
meaningful content platforms for KOLs. Anecdotally, the best-case solution
that MNCs described was commissioning market research or patient journey
projects, receiving tactical information around the questions that were asked,
but no follow-through on how the MNC should interpret this information, and
certainly no creative solutions that would address problems, weaknesses, or
opportunities the research illuminated. This process creates a negative feed-
back loop: MNCs commission market research or other similar agency-led
work, the work product is devoid of strategic insight or recommendations, and
frustrated marketing executives stop asking for higher quality work believing it
is not available from the local market.
EXPERT INTERVIEW: “The bottom line is that Baraclude proves to
MNC pharmaceutical marketing teams that if you do the launch
right – if you make China a central part of your strategy from the
very beginning – even when that product comes off patent in China
you will be fine.”
– Senior Marketing Manager, Endocrine Products, Shanghai.
EXPERT INTERVIEW: “In our experience, the level of sophistica-
tion with KOLs in China is quite low. We had a new therapy for
a neurological disorder that we wanted to launch in China. In the
US it would be easy to find 100 specialized treatment centers. In
China we struggled to find 2-3 doctors – not to mention specialized
treatment centers – that had enough subject matter expertise to
really help us launch the product in China. That may be an extreme
example, but it holds for other less-specialized efforts we’ve made
to find KOLs in China.”
– Head of Commercialization, Neurological Products, Shanghai.
EXPERT INTERVIEW: “I have not been able to find any market re-
search company in China that really understands the patient journey.
I don’t have a problem with getting quantitative information out of
these firms – what is missing is their ability to use the market research
process to get into the head of the physician or the patient. I don’t get
anything from the research company or agency about what I should
take from, or do with, the patient journey itself. Even worse, I get a
lot of echoing behavior from the team. They just don’t know how to
ask and answer good, insightful questions about the patient journey.”
– Head of Marketing, Vaccines, Shanghai.
MNCs Are Desperate for Creative
Marketing Solutions
 New and mature products have the same need: more creative help.
MNCs with products on both the mature and innovative side of the
equation are saying this.
 This does not refer to ‘creative’ in the traditional art/copy sense, but
the ability to design solutions that meet targets in a rapidly evolving
market.
How would you describe how the patient’s
individual search for information changed
in the last 3 years?

17. The Future of Pharmaceutical Marketing in China / SECTION 3 KEY FINDINGS / PAGE 17
Of those senior marketing executives interviewed, the vast majority expressed
extreme dissatisfaction with the level of creative and strategic work available to
them through domestic or international marketing agencies with local capabili-
ties. Regardless of whether the MNC in question had a more mature or innova-
tive product portfolio, the need for creative and strategic work was high. In the
case of mature product lines, price pressure is creating the need to find new
ways to demonstrate value, build brand recognition, and continue articulating
the product and company benefits to KOLs. One MNC in particular, who could
be understood as having one of the most mature product portfolios in China,
stated that their leadership has been pressuring them to find more innovative
ways to position the company’s products and overall story, not less. One of the
two largest MNCs in China has been conducting internal workshops with their
Chinese marketing teams in order to help them understand what they should
be asking for from local agency partner, in particular around how to get more
creative and insightful work.
Budget Is Not the Constraint – Other
Resources Are
 No one at the executive level, including procurement, expressed
budgetary concerns. Those who did express concern over budget
were all junior-level marketers.
 Everyone at the executive level articulated a willingness to spend
more on innovative ideas provided they had confidence in the local
ability to execute.
 Really big ideas are going to need to be positioned as a risk sharing
opportunity with the more sophisticated MNCs.
 Because the local market is not mature, price points and budget
discussions need to be viewed as such (aspirational versus intentional).
At the executive level, as defined by director level and above, nearly 90% of
those MNCs interviewed stated budgets were not the constraint for them pur-
suing more innovative agency led work. This included interviews with procure-
ment, of which 73% stated that budget was not their primary concern. Con-
cerns around budget were primarily vocalized by the more junior staff within
a MNC marketing team, with 35% of those below a director level stating that
what prevented them from commissioning more innovative work was budget.
This disconnect should be understood as a poor understanding by the junior
marketing team around what creative and innovative marketing programs
looked like, rather than pure budget constraints.
EXPERT INTERVIEW: “Please, bring me better talent … People that
are passionate about my brand … Brand managers here need help
from agencies to develop a stronger scope of work that the agency
could be doing on our behalf.”
– Procurement Director, Shanghai
EXPERT INTERVIEW: “The quality of services we get from agencies
is not good. Every product that we bring to the market has some
unique characteristic, but the solutions agencies bring to us are
all the same, none of them are really customized to our products.”
– Vice Director of Marketing, Beijing
EXPERT INTERVIEW: “To be successful in China, we have to get
our internal marketing teams to overcome the perception that ad
agencies are nothing more than production shops. I actually con-
ducted workshops with our internal marketing directors around how
to effectively engage with external agencies – how to get them to do
better work on your behalf. We struggled with follow-through for a
variety of reasons, but the very tactical versus strategic capabilities
of the local agencies is one of the key reasons why this failed to be
more impactful.”
– Head of Marketing, Shanghai.
Almost 90% of those executives interviewed
described their existing agencies as lacking any
meaningful strategic or creative capabilities.
Is budget the key reason you do not commission
more creative and strategic work?
YES
NO

18. Section 4
Opportunities
F
our areas continue to come up as areas where pharmaceutical MNCs are
hungry for more innovation: strategy development, MedEd activities,
digital and market access. In each of these areas, the request from MNCs
to marketing and strategy firms is this: “get better at your ability to execute and
don’t just tell me what you found – tell me what it means and what you think I
should do with these insights.”
PAGE 18 / The Future of Pharmaceutical Marketing in China / SECTION 4 OPPORTUNITIES

19. The Future of Pharmaceutical Marketing in China / SECTION 4 OPPORTUNITIES / PAGE 19
Strategy Development
Faced with a need to develop more innovative marketing strategies, but without ac-
cess to local marketing agencies capable of high-level strategic work, a number of
the largest MNCs have been forced to commission work through international con-
sulting firms. In most cases, these firms are tasked with projects that would typical-
ly be sent to large marketing agencies of the sort commonly found in New York and
London. Because local capabilities at both domestic and international agencies in
China come up well short of the expectations and needs of MNC pharma marketing
teams, the international consulting firms benefit, even though the background of
the teams assigned to these projects in China rarely includes the sort of subject
matter expertise MNC pharma companies need. This need is particularly acute in
areas such as digital, where local agencies struggle to offer meaningful strategic
insight into what is and is not working in China’s digital ecosystem.
Additionally, while many of these international consulting firms have strong
business analysis capabilities, they are not familiar with the intricacies of
China’s healthcare economy, the number of pilot projects and reforms specifi-
cally impacting MNC pharma, or how patient journeys are changing in light of
pressures on the domestic economy. What this means in practice is that even
when a MNC pharma company commissions a piece of strategy work from a
large international consulting firm, the pharma company bears responsibility
for designing the project in a way that does not require those completing the
work to provide insight into the broader strategic implications of the analysis.
In many cases, the final work product is of limited strategic value because
those completing the analysis do not have the benefit of a strong background
in healthcare or China’s pharmaceutical marketing challenges.
MNC pharmaceutical companies in China are hungry, and prepared to pay for,
meaningful market research, regulatory analysis, patient journey work, and
stakeholder mapping activities that can result in key strategic insights for their
business. MNC pharma is frustrated with their ability to access these capabili-
ties locally, as evidenced by 88% of those executives interviewed who stated
they have not yet seen these sort of capabilities deployed in the local Beijing or
Shanghai markets where they are most needed.
EXPERT INTERVIEW: “Right now, I am working more at taking digi-
tal platforms and apps offline than putting new ones up. We can’t
maintain the ones we have, and the ones we have are fragmented
and not really producing results for us. I want to do fewer digital
projects, but want those we do to have more resources, more focus
and more creative solutions than what we’ve been throwing out into
the market thus far.”
– Head of Digital Marketing, Shanghai.
EXPERT INTERVIEW: “As healthcare reforms in China continue,
the macro-level policies are becoming much more unpredictable.
We have found it is critical to hire external professionals who can
do this sort of strategy analysis work for us. We have tried to do
this through an internal think tank, but the need for getting the right
information and getting it first hand has been hard to do.”
– Associate Marketing Director, Vaccines, Beijing.
MedEd Activities
In the aftermath of the GSK scandal, most MNC pharma companies have be-
gun to trim back the number of sales people deployed across China. For a
number of companies, not only have they lowered their overall field force head-
count, but they have also begun to reposition their field staff in the direction
of medical education or medical liaison teams. This transition is designed to
change the nature of the interaction between the pharmaceutical company’s
team deployed in the field and clinicians by providing a more highly educated
and more technical engagement. Of the more than 15 MNCs interviewed, every
company stated they have already begun to rapidly increase their medical af-
fairs and communication staffs.
MNC pharma, in moving some critical communications functions to medical
affairs teams, ensures that medical education produced is compliant, balanced
and non-promotional, or non-branded in nature. In order for this to be effective,
clear responsibilities and accountabilities for communicating and educating
the market need to be aligned across marketing and medical functions, and
clear accountability in the field needs to be established. External partner com-
munication firms need to act compliantly and make this distinction clear, rec-
ognizing the goals of the two different stakeholder groups while also bringing
innovative solutions that drive engagement and education across channels.
EXPERT INTERVIEW: “We need to see more competition for cre-
ative and strategy work from marketing agencies in China. I haven’t
found any company that I am particularly satisfied with, or that has
brought me really outstanding ideas. I worked with one of the large
agencies recently on a product marketing plan, paid them premium
money, and I didn’t see any difference between what they presented
me with and what I could have got from a local Chinese run agency:
the design of the product branding materials, the slogan, advertis-
ing … all of them were no surprise.”
– Senior Marketing Manager, Hypertension Products, Beijing

20. PAGE 20 / The Future of Pharmaceutical Marketing in China / SECTION 4 OPPORTUNITIES
Digital
In the fall of 2015, DXY.com, the largest digital platform for doctors in China, an-
nounced that it was fundamentally repositioning its business away from digital
services for clinicians and that it would now be opening its own healthcare
clinics. The reason for this according to an interview with the DXY.com founder
was that digital marketing to doctors was not profitable. DXY’s struggles il-
lustrate the deep challenges around digital marketing in China: it is possible
to create large databases of doctors around the country, but segmenting these
doctors by specialty, and ensuring their contact information is validated, is not
yet profitable for the purveyors of this information. Why is this?
The information provided on DXY and other similar platforms is broad but not
deep. The DXY platform functions in what resembles an old-school BBS, with-
out adequate curating of the content or people participating in the conversa-
tion. Because the site lacks this, users initially sign up, only to lose interest
because the signal to noise ratio is too high for clinicians with limited time. One
company, Medive, has begun to address this problem and is offering clinicians
a more tailored suite of content that can be focused on a specific disease or
clinical question that a doctor wants to learn more about.
Second, content is king in digital, and the content needs to be constantly up-
dated. In addition to content needing to be current, it needs to be easy to lo-
cate within the platform in question. Clinicians’ use of digital platforms is still
nascent and fragmented even across digital platforms such as product and
company websites, apps, WeChat or eP2P. Cumulatively, clinicians have mul-
tiple digital outlets, and MNC pharmaceutical companies need to be able to
identify both a digital platform that reaches the clinicians in question, as well as
a content engine that educates doctors. One additional factor needs to be re-
flected in MNC pharma’s digital strategies: the extent to which patient distrust
drives the hunt for information about diseases and treatment options by family
members recently diagnosed with an illness. In China, distrust of physicians
is pervasive. This is primarily related to the economic rent-seeking behavior of
Chinese physicians and the over-prescription of drugs. As marketing becomes
more patient centric, with the patient journey front and center, this dissatis-
faction with the healthcare system is a clear opportunity for pharma to drive
disease awareness and provide patients with the right tools required to achieve
adequate treatment from the right doctors.
Third, digital strategies need to be linked to off-line strategies. Strategic mar-
keting is about creating a seamless brand experience across channels that
drives brand awareness and captures opportunities for revenue growth. If mar-
keting is only tactical, as many digital endeavors from MNC pharmaceutical
companies has been, each channel will be treated separately and the sum of
all the marketing parts will not have compounding effects.
Digital has become a fad for marketing teams within MNC pharma, to the det-
riment of coordinated on and off-line marketing plans. For many marketing
teams, the act of launching a digital marketing platform is viewed as a box
that needs to be checked. This is particularly problematic in a culture such
EXPERT INTERVIEW: “After the GSK scandal, compliance pressure
changed the marketing function in my company. We cannot pay
travel costs or provide payment to doctors for lectures. Work that
previously would have been handled by the marketing team is now
handled by the medical affairs team, and the medical communication
function in our company has become a lot more important.”
– Senior Product Manager, Diabetes Products, Beijing.
EXPERT INTERVIEW: “I’d prefer to see one MedEd program done
well, that engages all our key physician stakeholders and keeps them
engaged and adds value to their practice and professional lives than
100 medical education tactics done individually. It’s better for our
products, our reputation, our company, our customers and our work-
life balance.”
– Vice President of Medical, Vaccine Products, Shanghai.
EXPERT INTERVIEW: “Digital is not a marketing strategy, it is a tactic
to achieve a strategy. Many MNCs feel they ‘have to do something
in digital.’ The market is too trusting of the established platforms like
DXY. We over-estimate our ability to create our own digital universe
that will achieve our marketing goals.”
– Digital Marketing Director, Shanghai.

21. The Future of Pharmaceutical Marketing in China / SECTION 4 OPPORTUNITIES / PAGE 21
as China, where a strategic need quickly devolves to a tactical project. One
senior marketing executive noted that they have actually begun to decom-
mission existing digital marketing platforms, and have trimmed spending on
any new digital launches not because of budgetary concerns, but because
the marketing team did not understand how to measure efficacy of the digital
campaigns in question. One of the keys to a successful digital strategy is en-
suring a suite of off-line MedEd and similar activities compliments it, not that
digital is pushed out on its own without complimentary activities.
Market Access
Over the last five years, basic market access issues have become more, not
less, complicated for MNC pharmaceutical companies in China. This is partic-
ularly problematic around tendering and reimbursement discussions with the
Chinese government. Because of the unique, and unfortunately perverse role,
pharmaceuticals play within hospital’s finances, the interplay between pricing
pressure and reforms to how and where pharmaceuticals are sold have mud-
died the water with respect to where MNC pharma needs to go to address
basic market access questions. MNC pharma needs particular help pulling
together the various healthcare reforms, pilot projects, and public policy docu-
ments into a coherent narrative that can guide market access strategy. In
particular, bringing this information together in a way that coordinates not only
these factors, but also more importantly, what is actually transpiring on the
ground, remains a pressing need for MNC pharma.
Market access teams need to be able to present a unified narrative to the C-
suite around how their role is going to need to evolve in the coming years, and
the resources they will need to be able to effectively engage key government
stakeholders in a proactive manner. The foundation of such a narrative has to
be explaining the motives of the Chinese government. This discussion must em-
phasize what the Chinese government’s primary concerns are around pricing
and reimbursement. Little can be understood about how market access is go-
ing to change until these motives are explained. From this foundation, the key
pilot projects around the sale of pharmaceuticals within hospitals, price limits,
and even the development of tele-health and on-line sales can be explained and
understood. In addition, market access teams have the unique ability to project
forward and anticipate how the Chinese government’s other objectives, such as
those around economic development of a domestic life science sector, could
further complicate market access discussions.
EXPERT INTERVIEW: “Distrust between patients and doctors is so
deep that it has added many more obstacles to the whole health-
care service process. Patients now rely more on information on-line
than ever before … we need technology that makes it convenient for
patients to find information on-line and to improve communication
between the patient and caregiver.”
– Brand Specialist, Endocrinology Products, Shanghai
EXPERT INTERVIEW: “Without doubt, digital technology is chang-
ing the whole market, but it is hard to say whether anyone has an
effective understanding of how to use digital. Digital platforms help
provide wide coverage, and deliver information quickly, must I still
see China’s culture as relationship-driven. Any digital solution is go-
ing to need a face-to-face connection to work in China, this is still
very important.”
– Vice-Director of Marketing, Cardio Metabolic Products, Beijing.
EXPERT INTERVIEW: “New policies on compliance have had a signif-
icant impact on the behavior of our sales team, but the much bigger
issue is around how the public insurance system drives reimburse-
ment, and in turn how physicians and patients choose which drug
to use. We see doctors not making a strong recommendation to
patients around which drug to use. Now, they present two options to
the patient: one is a high priced product from a MNC, and the other
is a lower priced product usually from a local Chinese company.”
– Sales Director, Oncology Products, Beijing

22. Section 5
Moving Forward
F
ew question that China will remain a big market for pharmaceuticals,
but MNCs could stand to lose out on the market’s potential unless new
ways of talking to, educating, and interacting with Chinese government
officials, physicians and the public are developed. Given the headwinds that face
the Chinese healthcare economy, MNCs should not anticipate that more produc-
tive and positive interactions with each of these groups are inevitable. In fact,
the political optics specific to China’s healthcare system could easily deteriorate,
adding further complications to the opportunities in China.
PAGE 22 / The Future of Pharmaceutical Marketing in China / SECTION 5 MOVING FORWARD

23. The Future of Pharmaceutical Marketing in China / SECTION 5 MOVING FORWARD / PAGE 23
What are pharmaceutical MNCs to do in face of these pressures?
1. Re-frame expectations at headquarters around growth rates in China. As
growth in China further slows, and as uncertainties specific to the country’s health-
care system continue, headquarters will need more information from its China af-
filiates. The act of building consensus and educating key internal stakeholders
should not be under-estimated by executives in China. Proxies will be needed that
can help headquarters tie together broad themes around why the Chinese govern-
ment is behaving as it is, how that will impact the healthcare economy, and specific
implications to pharmaceutical MNCs. As internal stakeholders are educated, busi-
ness unit heads from China will need to unpack how these macro-factors are likely
to impact short-term growth. This discussion needs to carefully avoid being purely
fixated on risk, and needs to outline how critical structural reforms like those taking
place within the CFDA, actually point towards the China market becoming even
more important provided short-term expectations do not get in the way of critically
needed investment.
2. Argue internally at headquarters for China to become a priority earlier in the
launch of new products. A handful of MNCs have begun to bring China into their
launch plans earlier than they would have prior to the CFDA’s reforms intensifying.
MNCs have no choice but to believe that the CFDA will change in ways that allow
innovative therapies to come to market in a timelier manner. As this unfolds, MNCs
that wait to address the unique needs of the China market around clinical trial data,
KOL activities, and broader market access issues, will find they are at a disadvan-
tage when compared to their peers who have brought the China market into launch
planning processes earlier.
3. Reinforce the strategy and messaging of your government affairs’ teams
around the most critical reforms needed within the CFDA to address drug lag. The
CFDA’s reforms are not inevitable, and could still go off the rails. Because of this
possibility, MNCs need to be extremely proactive around the message they take
to government and industry groups. MNCs should have well established talking
points around what they are willing to bring to China that provide clear “if-then”
relationships with local officials. China wants the right innovative products brought
to its citizens, but many of its regulatory officials do not understand with adequate
precision the work that needs to be done to ensure the CFDA reforms take shape in
ways that remedy the core problems around drug lag.
4.. Relate your drug lag concerns with the desire of the Chinese government
to see its own domestic companies develop innovative products of their own.
China’s 13th 5-Year Plan will emphasize an ongoing focus on the development of
a domestic biotech industry. The country’s leaders clearly want to see a vibrant
pharmaceutical sector, with domestic companies both providing cost-effective and
innovative products for consumption within China, but also for export. In order to
achieve these goals, China will need to fundamentally address the various ways
in which its review processes do not meet international standards. These same
problems can be understood as barriers to MNCs bringing innovative products to
market in a timely manner across China. The extent to which these two issues can
be connected in the minds of Chinese officials greatly increases the likelihood that
they will act to remedy those problems that complicate MNC’s efforts to bring new
products to market in China.
5. Develop internal training programs around how to work more effectively
with external content generation and strategic marketing firms. Only one MNC in-
terviewed stated they had done this. Domestic MNC marketing teams need help
understanding how to engage with external partners. Allowed to continue on their
current trajectory, outside agency partners in China will get better very slowly, with-
outthesortofstrategicinsightsandcreativeproblemsolvingthatMNCsneed. This
process is not only the responsibility of external partners; MNCs would do well to
train their internal teams on how marketing platforms in the west are developed,
what contributions they should ask their local partners to come to the table with,
and what sort of strategic insights on the patient journey in particular, should be
developed. In addition, ongoing monitoring and mentoring of this dialogue will be
required, as the natural tendency of China marketing teams in particular will be to
focus on price-sensitive tactical work rather than the strategic endeavors that are
going to be required for future success in China.

24. PAGE 24 / The Future of Pharmaceutical Marketing in China / SECTION 5 MOVING FORWARD
6. Require global partnerships with strategic and agencies. For too long,
MNCs have compartmentalized their China agency-led work from work done in
more developed international markets. MNCs should bring to their global agen-
cy partners a clear expectation: either deliver world-class strategy and creative
work with your China team, or we will find someone who can. There should be no
excuse for the drop-off in the level of talent or strategic capabilities of those local
partners in China whose expertise MNCs need in order to develop new solutions
and marketing platforms.
7. Emphasize content-building partnerships. Chinese physicians in particular
crave peer-to-peer dialogue that is scientifically rich and rewarding. In order to
deliver this sort of content, MNCs will need to seek out strategic partnerships with
medical communication firms that have the capability to design and deliver content
at a high enough frequency to get and keep physicians’ attention. Much like the
previous point, this sort of content generation work will require competencies that
global partners understand how to execute upon, but many times lack the team
in China to deliver. That can and will change when MNCs make it clear they need
higherqualitycontentdeliveredacrossmultiplechannelsmorefrequentlythanever
before in China.
8. Stipulate that any commissioned market research or patient journeywork
must include strategic insights and recommendations that stem from the analy-
sis. Too much of the patient journey work that is commissioned in China results in
simple sequential analysis of how patient’s currently find care and educate them-
selves. For many local marketing teams, work that is commissioned around the
patient journey outlines the process, but fails to bring meaningful strategic insights
forward. MNCs should require that all market research and patient journey work
have two additional pieces: what is the MNC to take away from this analysis around
how physicians and patients behave, and what specifically is recommended based
on what this research sheds light upon? Internally, domestic Chinese teams need
training to understand to ask for these insights. Externally, agency partners need
to be challenged to never come to the table purely with tactical analysis. Research
must be delivered alongside strategic insight and recommendations.
9. Build unique disease education capabilities by aligning multi-channel mar-
ketingeffortswiththepublichealthprioritiesoftheChinesegovernment,education
gaps of physicians and the most pressing unanswered health questions of the pub-
lic. One of the areas where MNCs can have the most positive effect for themselves
is identifying what the Chinese government has as its highest priority public health
problems. Where MNCs can clearly demonstrate insight to the government around
how to help families understand the disease, pursue early diagnosis, or engage in
prevention activities, the Chinese government is more likely to view a particular
product as worthwhile. This positive view from government stakeholders can have
benefits during discussions around market access issues, but such a conversation
relies on first proving to the Chinese government that your education endeavors
can create benefits that accrue to the country’s healthcare system.
10. Require all digital platforms to have a coordinated off-line strategy that is as
equally well planned and resourced as its digital counterpart. Digital has become
the end-all, catchall answer to what ails MNC pharmaceutical marketing teams.
Going forward, MNCs should anticipate that several of the initial market leaders
in digital, such as DXY, will change their business model and may exit the market
entirely because they have not found a way to monetize their user base. With this
concern in mind, and with an awareness that digital alone will not drive success
with Chinese physicians, MNCs should require all new digital platforms to have a
coordinated off-line strategy.

25. Contact: Victor Bong Wright – CEO
DAS Healthcare China
1508 Eco City, 1788 West Nanjing Road,
Shanghai, 200040, China
phone: +86 187-2112-83758
email: victor.wright@dasglobal.com
Rubicon Strategy Group, LLC
2018 156th Avenue NE
Suite 100, Building F
Bellevue, WA 98007
phone: +1-888-610-7138
fax: +1-425-644-2185
www.HealthIntelAsia.com