Bayer Sees A Golden Age For China’s Pharmaceutical Market

Bayer has business locations in 83 countries around the world. Overall, pharmaceuticals are its second-biggest business after crop science, accounting for 41.6% of sales of about 17 billion euros in 2020.

Yet Bayer’s revenue split in China doesn’t match that global mix. Reflecting China’s standing as the world’s No. 2 pharmaceutical market, some 80% of its Greater China business— nearly double the global average —  is tied to that industry. The way Bayer sees it, the growth potential is still large.

“The next decade will be a golden age of China’s pharmaceutical market,” Wei Jiang, president of Bayer Group Greater China, said in a recent interview in Shanghai. Multinational pharmaceutical companies will “need to continuously reshape their strategy to catch up with dynamic market growth and tap its full potential from an innovation and commercial perspective.”

It’s not only Bayer that’s in the mix. A who’s who of domestic and global pharmaceutical companies are expanding and introducing new products in China. Venture capital money is pouring in, too. In the first six months of 2021, new total foreign investment in China increased by 34% to $91 billion. 

Nevertheless, Bayer’s sales in Greater China last year were hurt by fallout from Covid-19, sliding 5-6% to 3.48 billion euros. Growing medical needs are likely to increase China’s spending on pharmaceuticals in the future, Jiang noted. Aging, growing wealth, and expanding healthcare coverage will led to more demand and spending on drugs and treatments. “We see continued strong volume expansion for quality medications, particularly in chronic diseases,” he said.

Jiang knows Bayer from his childhood days in Shanghai back in the 1960s and his parents did, too. Yet Germany-headquartered Bayer goes back even longer in China. The 158-year-old company first started to sell dyes in the country back in 1882, and subsequently did business through trading companies. The pharmaceutical business opened its first plant in China in 1936, an aspirin factory in Shanghai. The next big milestone was in 1986, with the setting up of a representative office in Beijing and liaison office in Shanghai.  In 1995-1997, the company set up 12 joint ventures in China; numerous local partnerships have followed since.

Jiang first joined Bayer in 2012 as the Singapore-based president of the APAC region. Earlier, he started his career with Eli Lily in Boston, after getting degrees in business from Campbell in the U.S. and a master’s degree in economics from Indiana State University. He was the managing director for Guidant Corp. in China in 2004-2006, before he joined AstraZeneca as vice president for strategy and business development and covered Taiwan, Japan/China and the Asia Pacific. 

Jiang said multinational companies have as a group moved through three phases during two decades he has been doing business in China. A “global innovation for China” stage in the 2000s in which multinational pharma companies accelerated the same of products developed overseas into China.  That evolved into “in China, for China” which saw the companies leveraged more local resources for local treatments. The current stage is what he calls “China innovation, for global,” in which innovation that happens in China can benefit patients globally.

In all three phases, winning companies have had this strategy: “You have to have the portfolio to meet the needs of China,” he said, along with “the right leadership and culture to enable ‘better decisions made faster,’ in this highly dynamic marketplace,” he said. “The leaders – not only for today but tomorrow – are those who have local insights and global perspective.”

Bayer has found its best match in the pharmaceuticals business. Its drugs mainly treat chronic diseases, including cardiovascular, diabetes, and respiratory illnesses. “There a large number of patients with those illness in China, and many go undiagnosed,” Jiang said. 

Yet the numbers actually recognized is already huge. Take cardiovascular disease. There were 290 million people with cardiovascular disease in 2018, according to a report last year. There were nearly 130 million diabetics in China, according to an article by the British Medical Journal in 2020.  And yet awareness, treatment and control of diabetes in China was only 43%, 49% and 49%, according to the same journal.  That figure is approximately in line with a figure published by the China Diabetes Society in 2017: 63% of diabetes aren’t diagnosed. 

Respiratory illness also affects more than 100 million Chinese a year. In additional, Bayer is targeting cancer, notably liver cancer. China accounts for more than half of the world’s cases of liver cancer every year. Those four areas – cardiovascular illness, diabetes, respiratory illness, and cancer – account for 85% of deaths in the country every year. With needs poised to expand in the future, will China have the money to pay?  Every policy indication is yes. 

And so it has launched new products in the past several years include: Eylea for diabetic eye disease, Visanne for endometriosis; it has also teamed up with Chiesi for respiratory disease treatments. “Our innovative strategy is to focus on the largest area of innovative needs,” Jiang said.

One China partnership, for instance, is with Hua, to develop diabetes treatments. All in all, Bayer expects to launch eight new drugs in China before the end of 2023: Vericiguat for heart failure, Nubeqa and Xofigo for prostrate cancer, along with two other cancer drugs (Copanlisib for lymphoma and Larotrectinib for solid tumors), and three diabetes solutions.   

Jiang hopes the pace will help Bayer seize the moment of the “golden age” ahead for the pharmaceutical industry in China. “With rapidly increasing investment in innovation, we see innovation from China will bear fruit and will benefit patients globally,” he said.   

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