An advertisement for White and Black, a cold medicine, in a subway station in Beijing. Bayer HealthCare bought the brand in 2006 for 100 million euros ($141 million). [Photo / China Daily]
The drugmaker says relocation is scheduled to be completed by June this yearBEIJING - The pharmaceutical company Bayer HealthCare (BHC) is moving its general medicine headquarters to Beijing, which is a first among multinational drugmakers.
"We expect this step to speed up the decision-making process and to promote more general efficiency in our day-to-day work," Chris H. Lee, the managing director of BHC China, said on Thursday. "For Chinese patients, the relocation of our general medicine headquarters will allow for more efficient product launches in China and focus greater attention on unmet local medical needs."
BHC, a subsidiary of Germany's Bayer AG, said the decision to move was made late last year and the relocation is expected to be completed in June of this year.
Chris H. Lee, managing director of BHC China
BHC plans to introduce some 20 new products in China over the next five years, including those in the fields of oncology, cardiology, women's healthcare, and diagnostic imaging. Two new products also will be launched this year. The company unveiled four new products and undertook 22 clinical trials in China in 2010.Lee said that the increasing importance of the Chinese market and BHC's rapid growth in the country had led to the relocation. The company is one of the top three multinational drugmakers in China, with sales from the business growing above the industry average at 22 percent year-on-year in 2010, according to the independent medical care researcher IMS Health.
General drugs account for 82 percent of the company's business. In this sector, Chinese sales contribute 12 percent to the global total. "What we do in China will have an effect on other developing economies," Lee said.
According to IMS Health, China is now the world's third-largest pharmaceutical market, and is predicted to grow between 25 percent and 27 percent to more than $50 billion in 2011.
In addition to moving its general medicine headquarters, BHC is moving to a regionalized structure by dividing the huge Chinese market into three regions; the central China unit will be based in Beijing, southern China will be controlled from Shanghai, and the operations center for the west of the country will be located in Chengdu.
"The strategy will enable us to be customer-centric, to disaggregate operational complexity, be more flexible, and speed up operational decision-making at the frontline. It will help us to stay close to front-line employees and be more attentive to their needs and development," said Lee.
Currently, the central region accounts for 45 percent of the company's business in China. The southern operations make up 35 percent, and the western region 20 percent. "We believe the western region will grow faster than the others," said the managing director.
The company will also strengthen its sales force by adding 1,000 positions in 2011 in its core markets and lower-tier cities.
Despite the current enthusiasm of multinational companies for merging or acquiring local counterparts, Lee said that "at the moment" the company is "focusing on organic expansion".
But when there are good opportunities, the company will engage in mergers and acquisitions, he added.
"It is a sort of shortcut for the multinationals to expand their product portfolios, obtain medicines tailored for local requirements and penetrate the grassroots market," said Guo Fanli, an analyst at the China Investment Consulting.
In the "On-The-Counter" market, BHC paid 100 million euros ($141 million) for the cough and cold medicines portfolio of the domestic drugmaker Topsun Science and Technology Co Ltd in 2006.
