The chilly sales climate in China is just now warming up after last summer's wave of bribery accusations spooked doctors and sales reps. But as far as Merck KGaA is concerned, China is warm enough to deliver doubled revenues in the region. And that's exactly what the German drugmaker's shooting for.
The company has its eye on sales of €1.3 billion in China by 2018, CEO Karl-Ludwig Kley told the German news magazine Wirtschaftswoche. To get there, it will add nonprescription drugs to its offerings in the country. Overall, it will be focusing on treatments for diabetes, thyroid issues and heart problems, Reuters reports.
Those will be manufactured at a new €80 million ($107.7 million) plant in Shanghai--Merck's second-largest in the world, with construction scheduled to wrap in 2016 and commercial production slated for 2017. Drugs made there--including the diabetes meds Glucophage, Concor and Euthyrox--all appear on China's Essential Drug List and "satisfy public healthcare needs," the company said.
With a rapidly growing population that's increasingly afflicted by health problems like diabetes, and a government plowing billions of dollars into improving healthcare access, China has long been a prime growth target for multinational drugmakers. But last year's spate of corruption allegations--kicked off by GlaxoSmithKline's ($GSK) alleged $489 million in bribery--cast a pall over pharma revenues in the region.
With most companies now returning to sales growth in China--save Glaxo itself--Merck is looking to continue boosting its emerging markets penetration, an effort that has so far gone well. Sales in developing countries grew by 9% to around €3.8 billion last year, chipping in 36% of Merck's global haul.
And Glucophage has already driven part of that success: In April, Merck teamed up with Bristol-Myers Squibb ($BMY) to copromote the treatment in China, agreeing to work together to take a number of different formulations to new areas of the country. The deal strengthened Merck's already "solid position" there, according to pharma chief Belén Garijo.
Special Report: Top 10 Drugmakers in Emerging Markets - Merck KGaA