Pharmaceutical companies cross-border business to compete in large health industry

In the recent period, many listed pharmaceutical companies have tested water, health, and other FMCG products in varying degrees in addition to their main business operations.

As a supplier of traditional Chinese herbal medicines, Kangmei Pharmaceutical has joined the army of advancing health and launched fast-moving consumer goods including Juju tea. Last year, Kangmei Pharmaceutical also established a health management company together with the China People's Insurance Group to jointly launch health management services and sales of health products.

The oldest chemical pharmaceutical company, North China Pharmaceuticals, has been making deep-sea fish oil health products in recent years. In addition, such as the Guangzhou Pharmaceutical Group to get back the right to use the red cans Wanglaoji, and Guizhou Braun launched collagen drinks last year, Yunnan Baiyao launched related fast toothpaste, shampoo and other consumer goods.

Cross-border business has its own reasons

Regarding why drug companies operate across borders, several drug companies interviewed by the reporter have given different answers. North China pharmaceutical stakeholders said that the company has been operating health care products business, but compared with the main pharmaceutical, it is only a small part.

Guizhou Braun said that the launch of collagen drinks is a trial operation of the company. Among them, the beverage project is the vanguard of the company's brand-new concept of great health. Since then, it plans to follow up and extend to related fields of cosmetics and health products.

The relevant person of Yunnan Baiyao revealed to the reporter that the company’s business philosophy is to expand the field in which Baiyao is the core, and the related non-pharmaceutical products launched are also operating under the concept of “Chinese medicine cures the disease”. Many Chinese herbal medicines can be converted into consumer products, and the prospects are bright. Because Chinese herbal medicines are of the same origin, many can be converted into consumer products.

In addition, stakeholders in Yunnan Baiyao said that due to the influence of “special commodities” on drugs, most drugs are currently subject to not only the maximum retail price, but also the rising cost of drug production and operation. This has also prompted the company to develop into a large health industry.

Business results "happy and worried"

Taking Yunnan Baiyao as an example, cross-border profit-making is obviously quite good. The reporter saw on the official flagship online shop of Yunnan Baiyao that the shipment of certain toothpaste exceeded 60,000 pieces, and the sales of a certain shampoo also exceeded 30,000 pieces.

In fact, the annual report of Yunnan Baiyao 2012 showed that, in that year, its toothpaste income exceeded 1.7 billion yuan, a year-on-year increase of 45%. In addition shampoo also contributed about 60 million yuan in revenue.

The transformation of Guizhou Braun does not seem ideal. On the website, the top-selling products are pharmaceuticals produced by the company, and collagen drinks are almost unattended.

According to a previous bulletin issued by Guizhou Braun, the company has invested 395 million yuan to establish a beverage base. The collagen beverage project reached an annual production capacity of approximately 13.34 million boxes (200 million bottles), which was temporarily produced by the contractor.

It is worth mentioning that the company’s 2012 annual report shows that last year Guizhou Braun’s net profit attributable to shareholders of listed companies was approximately RMB 220 million. However, there are reports that the high-profile release of collagen drinks in October last year has already been recovered by the group in less than half a year. The original resources will be transferred to health oral liquids.

The big health industry has become a new bright spot

In fact, the rapid development of the great health industry is becoming a highlight of the pharmaceutical industry.

“As a Chinese medicine company, it is more appropriate to make cross-border trades. It is more difficult for pure chemical companies to cross the border.” This is a common view among industry players.

Some industry researchers said that Chinese medicine has a strong consumer base in the country, creating objective conditions for some Chinese medicine resources to follow market pricing, and more importantly, the concept of "Treatment of Chinese medicine is not a disease" continues to increase, subjectively promoting the traditional Chinese medicine to become high-end An important part of the medical market.

Although the pharmaceutical factory was originally a fine chemical plant, there is nothing wrong with pharmaceutical companies entering into Japan and health products. However, while pharmaceutical companies have cross-border, the problems that accompany cross-border issues also deserve attention.

According to the Chinese Medicine Market Report (2012), a blue book published jointly by the Institute of Economics and the Social Science Academic Press of the Chinese Academy of Social Sciences, there is no local pharmaceutical company among the top five companies in the tertiary medicine market.

According to industry insiders, the development of a large health industry by pharmaceutical companies is certainly a road to development. However, it should not give up its main business and it should be extended from its main business.

In addition, people in the industry also pointed out that the existing marketing team, channels, and strategies of pharmaceutical companies cannot be fully applied to the consumer product field. Therefore, it is also necessary to solve the problems of marketing incompatibility.