Pharma's snags in China, India: Fickle reps, local rivals

It's no secret that Big Pharma has been looking eastward for growth, or that major drugmakers see promise not just in China and India's megacities, but in the hinterlands as well. Bayer, Pfizer ($PFE), Sanofi ($SNY) and GlaxoSmithKline ($GSK) are among the big companies making forays out of Beijing and Mumbai into the countryside. But as foreign drugmakers make their move on rural areas, analysts are casting a skeptical eye on the potential obstacles.

Smaller cities may be easier to conquer than rural markets, some say, while others point out the potential competition with domestic drugmakers. Acknowledging the "huge potential" of China's smaller markets, Haitong Securities analyst Wang Youhong told China Daily "having a vast rural market may be just a vision" for Big Pharma. "[E]ntering smaller cities is more practical because market conditions there are not very different from those in big cities, and residents will accept new products with higher prices ... much more readily," he said.

Local competition is also a factor, Samsung Economic Research Institute's Lydia Xu says. Domestic companies already have sales networks, not to mention relationships with governments and hospitals in smaller markets, "which is something that isn't easy for multinational companies to achieve in a short space of time," she says. Hear, hear says Pratin Vete of Sanofi's Indian subsidiary Aventis Pharma: "These are not virgin markets, and there is no dearth of drug brands."

And then there's the problem of hiring salespeople--and keeping them. As a Big Pharma HR manager told the Chinese newspaper, "[r]ecruiting local people with good educations and medical experience is not easy," and dispatching sales folks from HQ isn't practical for cultural and social reasons. One industry executive tells The Economic Times that new sales reps may attend one company's training program, and then jump ship to another drugmaker.

Meanwhile, rural areas can lack infrastructure--even basic things like refrigerators for vaccines. Doctors outside the cities tend to have less training, Vete told the Times. "As we go deeper, the doctor's qualification diminishes." Summing it up is GlaxoSmithKline's managing director in India, Hasit Joshipura. "It's a long haul."

- see the China Daily piece
- get more from The Economic Times