June 04, 2013

Branding Pharmaceutical Drugs in China

Did you know according to the Chinese Association for Pharmaceutical Equipment group that the Chinese pharmaceutical industry has been growing at an average annual rate of 16.72% over the last few decades?

And that growth isn’t going to slow down anytime soon.

China stands at the cusp of a modern society with an increasingly affluent and growing population. And it’s this growing population that is demanding better services and quality of life – but how will this impact the pharmaceutical industry in China – particularly in regards to branded pharmaceutical drugs?

Not just in the pharmaceutical industry, but for all industries across the board, China has become the must win market. An aging population, increasingly affluent younger population, and the rise of diseases in China all create an emerging need for drugs, which is why The IMS Institute has predicted that by 2016 China will overtake Japan as the second largest pharmaceutical market in the world. So it’s no wonder why billions of dollars a year are being invested in the country.

Many foreign players such as AstraZeneca, Pfizer, Bayer and GSKhave already established themselves firmly in the market and are expanding their services regularly within the country. But with the entry of foreign players in the industry, the competition amongst these players will continue to increase. China has more than 5,000 pharma companies, and in 2010 was the leading country filing pharmaceutical trademarks – even beating out the United States, one of the most mature pharmaceutical markets by nearly 10,000 trademarks filed. Even though China is the global leader filing pharmaceutical trademarks, the majority of the drugs manufactured in China are generic. But as China’s consumer mindset continues to mature and grow, so will the branded pharmaceutical sector.

Why the continued growth?

Specifically for pharmaceuticals, powerful product brand names are important tools to offset competitive pressure from generics and to build customer loyalty. Though heavily regulated by state legislations, in China’s case the SFDA, brand naming for pharmaceutical products is unique, and can greatly affect marketing decisions.

In highly competitive environments, a strong brand will rise above the clutter and demand attention. With a strong brand, you secure a unique position of credibility in the consumer mind, have more influence on your market and motivate customers to purchase from you.

From a marketing perspective, brand naming for a pharmaceutical product may take into consideration aspects such as the chemical/biological nature of its active ingredient, composition/formulation, therapeutic indication, associated medical condition, benefit and adherence to the corporate identity.

From a communication point of view, pharmaceutical branding specialists must decide whether to focus on the functionality or the end-user benefits. It is also from the same angle that pharmaceutical naming is usually considered of great complexity, as most of the time, both audiences should be targeted.

Chinese regulations on pharmaceutical drug naming frown upon utilization of characters that are either indicative of curative effect, intended use, target audience or may imply efficacy.
Regardless of the market you’re in, developing a strong pharmaceutical name is tough, but in China it can be particularly challenging. You must keep in mind translations, the use of characters and regulatory conditions. Biological and pharmaceutical products rely heavily on the protection of intellectual property rights, so it’s essential for foreign companies to gain thorough understanding of China’s IPR protection system before entering the market.

Multinational companies have greatly expanded their businesses in China over the years and have aligned with local pharmaceutical companies, which has proven to be a winning strategy for both parties. And as these companies and other foreign players continue to expand their footprint in China, competition will become fierce as each seeks to penetrate the market. Pricing, intricate knowledge of regional markets and developing strong brands will determine who gets ahead and who doesn’t.

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