Picture source @Visual China
text | Medical Yao
In the turbulent year of 2023, the global financial environment has suddenly tightened. Whether it is biotech or MNC (multinational pharmaceutical group), their development has encountered severe challenges.
Against the background of weak domestic innovative drug development in the past, MNC once enjoyed super-national treatment in the domestic pharmaceutical market. You can easily make money by just relying on sales and a multi-level distribution model. Who can make it big depends entirely on sales strength.
Nowadays, as China's pharmaceutical industry continues to mature, the gap between domestic pharmaceutical companies and MNCs is rapidly narrowing, and those "imported products" have also encountered a strong impact from domestic innovative drugs. In the new context of medical insurance fee control and medical anti-corruption, the old logic is obviously no longer smooth.
mnc’s era of making money in China has passed. If you want to maintain its leading position in China, you must quickly develop new strategies and methods of play. Under high uncertainty, changes in MNC have become a new trend.
Looking back at 2023, Johnson & Johnson, Pfizer, GSK, AstraZeneca and many other MNCs have launched large-scale adjustments: restructuring and layoffs, structural adjustments, and strategic upgrades. As an important force in China's biopharmaceutical field, MNC's strategic adjustment also affects the ecological pattern of the entire Chinese biopharmaceutical industry to a certain extent.
01 Johnson & Johnson: Goodbye, Xi'an Janssen
Johnson & Johnson's layout in China cannot avoid the golden brand name of Xi'an Janssen.
As early as 1985, Johnson & Johnson subsidiary Janssen of Belgium jointly established Xi'an Janssen with four domestic pharmaceutical companies. As a result, Johnson & Johnson became the first batch of MNCs to enter the Chinese market, and China has also become a key market for Johnson & Johnson's development.
For the Chinese pharmaceutical industry, Xi'an Janssen can be called the original Whampoa Military Academy, cultivating China's first generation of pharmaceutical representatives on a large scale and systematically. The position of medical representative has also become a key part of China's pharmaceutical industry since then. Of course, there are many disadvantages, but it has also allowed China's pharmaceutical industry to quickly integrate with international standards. Although Xi'an Janssen has an extremely excellent sales team, it still cannot solve the problem of subsequent product shortages. Strategic adjustment is just the general trend.
Since 2023, Johnson & Johnson’s domestic strategic adjustments have been continuous.
In terms of personnel, Xi'an Yangsen led a collective change of leadership team. Zheng Lei, the former president of Xi'an Janssen China, left the company, and Huang Chen, the former managing director of North Asia and CEO of Korea, became president of Xi'an Janssen China; Chen Min, general manager of the China Orthopedics Division, resigned, and was replaced by the spine and pcmft division. Vice President Han Wei took over; Chen Xi, general manager of the cardiovascular and professional solutions division, and Wang Jinhe, vice president of operations and professional education, also submitted their resignations to the company.
Shortly after the management change, Xi'an Janssen ushered in a bigger change. The company abandoned the "Xi'an Janssen" brand that it had used for nearly 40 years and changed its name to Johnson & Johnson Innovative Pharmaceuticals.
Of course, this change is a synchronized change based on Johnson & Johnson’s global strategy. As early as November 2021, Johnson & Johnson announced the largest structural adjustment in 135 years and sold the health consumer products department. After the spin-off was completed, Johnson & Johnson fully integrated its two major businesses, medical technology and pharmaceuticals, on September 14, 2023. The pharmaceutical business was renamed Johnson & Johnson Innovative Pharmaceuticals from Janssen.
For Johnson & Johnson, the significance of this name change is reflected in the strategic level. The new name demonstrates the new Johnson & Johnson’s determination to further focus on the research and development of innovative drugs in the fields of oncology, immunity, neurology, cardiovascular and other fields.
Along with the name change comes another organizational structure reform of Johnson & Johnson China. Integrate the existing myeloma and myeloid tumor business department, lymphoma business department and hematology tumor development team and upgrade it to the hematology tumor business department. Through this adjustment, Johnson & Johnson China may also hope to further strengthen its domestic position in hematology, its dominant field.
As the earliest sales-driven company in China, Johnson & Johnson has completed a complete major change in 2023, ranging from the company brand to personnel transfers. This series of actions revealed the future strategic direction of Johnson & Johnson China: weakening sales and focusing on innovation.
02 Pfizer: Abolition of the vaccine market team
Looking at MNC’s strategic adjustments, Pfizer is undoubtedly the most radical. It has eliminated the entire vaccine product team in China.
On November 24, 2023, Pfizer announced that it had laid off all employees of the China 13-valent pneumococcal vaccine (Prevail) team. After disbanding the vaccine product team, Pfizer granted the commercialization rights of Preveil to Shanghai Science Park, a subsidiary of Shanghai Pharmaceuticals Group. Pfizer will continue to be responsible for the development and production of the product and provide the necessary expertise.
In the Chinese market, Prevail is the only vaccine sold by Pfizer. The cooperation between Pfizer and Keyuan also means that after spending a long time trying to sell vaccines on its own, Pfizer finally chose to give up and instead embraced the method of having local companies promote vaccines as agents. It is not a new model for foreign companies to hand over vaccines to local companies for sales. Before Pfizer, two major MNCs, Merck and GSK, had handed over their core vaccine rights to local agents.
Although transferring the commercialization rights of vaccine products will result in a certain loss of revenue, for mnc, this may be the best choice at the moment. Because domestic vaccine sales are not the same as innovative drugs, increasing vaccine volume requires conquering the sinking market. For MNCs with only one or two vaccine products, the cost of building a self-built team is too high. In comparison, relying on agents model is more cost-effective.
In addition, due to the rise of domestic vaccine companies, both Pfizer's Prevail vaccine and GSK's shingles vaccine are facing the impact of domestic substitution. In this context, it may be a wiser choice to let agents end the fight.
Therefore, Pfizer has shown a high degree of acceptance of this agency model and bluntly stated that this is an efficient model to go to the market, which can condense the core advantages of the two companies and give full play to the synergy of both parties, thereby allowing them to innovate vaccines Benefiting a wider range of people in China.
Pfizer’s dismissal of its vaccine team is a typical case of MNC weakening its sales links in China.
03 gsk: structural reorganization
Similar to Pfizer, gsk also gave up building its own vaccine sales team in China, and handed over the sales of shingles vaccine to local agent Zhifei Biotech last year.
Once upon a time, GSK also wanted to make this product bigger, but in the hands of GSK’s self-built team, the sales of this vaccine were not satisfactory. On the other hand, Zhifei Biotech has successfully proved its channel capabilities in the vaccine field through the sales of HPV vaccines.
Giving up on building its own vaccine team is not the only adjustment GSK has made for the domestic market. At the end of December last year, gsk conducted a comprehensive reorganization of its corporate structure in China. Breaking down the original general medicine, core prescription medicine, and HIV business segments, we reorganized three core business departments: vaccine business department, respiratory business department, and specialty drug business department.
In addition to organizational structure adjustments, gsk China has also made new plans for personnel changes. Among them, the head of the respiratory business department is Yu Jinyi, vice president of gsk China and former head of the specialty drugs business. Qi Xin, Vice President of GlaxoSmithKline and General Manager of China, will temporarily serve as the interim head of the Specialty Drugs Department. The adjustments made by
gsk in China are also changes made in line with gsk's global strategy. In recent years, gsk's performance has continued to decline. Global gsk global revenue in 2022 is US$36.121 billion, a year-on-year decrease of 23%. In order to return to growth, gsk has made numerous strategic adjustments in the past two years. Including spinning off the consumer healthcare business and refocusing on business growth.
Under the drastic changes, gsk China has given a very pragmatic wish, that is, striving to become one of the top ten Chinese multinational pharmaceutical companies in 2030.
04 AstraZeneca: Looking for the Chinese model
AstraZeneca has always been the mnc that understands China best, and it firmly ranks first in mnc's revenue in China. However, even such a pharmaceutical company with deep roots in China has gradually begun to weaken the logic of "selling drugs" in recent years.
Looking at the entire 2023, AstraZeneca China has made quite frequent adjustments. But to put it simply, AstraZeneca’s organizational structure adjustment can actually be summarized in two words: dismantling and combining.
At the beginning of the new year, AstraZeneca China merged the Respiratory and Autoimmune Division (r&i) and the Digestive and Respiratory Nebulization Division (gnr) to form the Respiratory, Digestive and Autoimmune Division (rgi). However, this model only lasted for more than half a year before AstraZeneca chose to split again. In August 2023, AstraZeneca China announced that it would officially split RGI into two major business divisions: the respiratory inhalation and biological preparations division and the respiratory atomization, digestion, vaccines and immunotherapy, and autoimmune divisions.
Even after two splits a year, AstraZeneca’s adjustments have not stopped. Beginning in December, the Digestive Oral Business Unit, currently part of AstraZeneca's China Omni-Channel Business Unit, will once again be merged into the Respiratory Nebulization, Digestive, Vaccine and Immunotherapy, and Autoimmune Business Units.
Such frequent strategic restructuring reveals AstraZeneca China’s deep anxiety.
"top student" AstraZeneca's performance in China declined for the first time in 2022. By the first half of last year, AstraZeneca's number one position in China was taken by Merck. The impact of the respiratory business segment behind this cannot be ignored, so AstraZeneca is also taking frequent actions in this business.
If you look away, AstraZeneca China has actually been downplaying the logic of "selling drugs" in recent years. In addition to frequent organizational structure adjustments, AstraZeneca has also established six regional headquarters in China, located in Beijing, Guangzhou, Wuxi, Hangzhou, Chengdu, and Qingdao. Each regional headquarters also has its own different positioning.
At the same time, AstraZeneca continues to expand its local innovation ecosystem, creating the China Smart Health Innovation Center, the International Life Sciences Innovation Park, and the AstraZeneca CICC Medical Industry Fund Group. It is building its own ecosystem, starting from a pharmaceutical company. Enterprises transform into industrial platform enterprises.
The decline in performance is certainly uncomfortable, but AstraZeneca still pays more attention to the future. If the company wants to achieve rapid growth again, it is not enough to just rely on sales. It must accelerate the research and development of innovative drugs and at the same time, rely on the rising local innovation forces to cooperate with them.
05 Toward Industrial Co-Prosperity How high
mnc will reach in the Chinese market depends entirely on their ideology.
In the rising wave of innovative drugs in China, if MNCs still have a superior mentality and want to rely on their sales teams to seize the market, then they will definitely suffer a blow. Countless examples have proven that the value of China’s pharmaceutical market lies not only in “selling medicines”.
Looking to the future, who will become the most competitive MNC in the market? It is undoubtedly the fastest to integrate into the Chinese pharmaceutical industry. In addition to having the world's second largest pharmaceutical market, China also has the world's fastest-growing innovative drug power. MNC's crazy purchase of China's ADC pipeline is a good example.
The Chinese market should not only be MNC’s sales ground, but also their research and development site. All MNCs need to become more flexible, constantly changing and adjusting to adapt to new changes in the Chinese market.
downplays "selling medicine" and moves towards "co-prosperity". This will be the new development trend of MNC in China. This article is based on public information and is for information exchange only and does not constitute any investment advice
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