• Shanghai No. 1 Pharmaceutical
• Huashi Chain Store - purchasing manager - one branch manager
• Eight other drug stores
bc
HKG
h4
100%
80
60
Percent of Team
Resources
40
20
0
PrPree--Ppllaannniningng
Shanghai Nanjing Changzhou
June/July
China Distribution Strategy Workplan
Roll-out Field
• Structure
- pricing and margin
• Key distributor profiles and evaluation
• Tier ቤተ መጻሕፍቲ ባይዱ vs. Tier 2/3 city trends
- rural vs. urban
• Regulatory trends
- insurance
- on government drug list in several major coastal provinces • Changes in healthcare and reimbursement system • Emergence of new retail and distribution channels • Uncertainty in predicting scale of changes and impact
• Assessment of Bayer performance
- what works/what does not work
• Future forecasts
- city prioritization
• Size and segmentation by hospital size
• Purchase criteria/behavior
Project
• Develop re-entry strategy for Bayer’s OTC business in China
• Initial focus on Eastern China: Shanghai, Nanjing and Changzhou • Focus on four product categories: GI, pain, anti-fungal and multi-vitamin • Conduct primary research and integrate findings into factbase and strategy
- pricing and margins
- logistic requirements
- decision making process
• Characteristics for different product categories
- western vs. TCM
- pharmaceutical vs. OTC products
Bc
China Distribution Strategy Eastern China: Shanghai, Nanjing, Changzhou Interim Review: Shanghai
27 July 1999
China Distribution Strategy Agenda: 27 July 1999
- reimbursement • Other country
market evolution
- Europe (Germany?) and US?
bc
HKG
h3
China Distribution Strategy Project Background
Bayer
• Previous attempts to enter China OTC market not fruitful • Introduced three OTC products over the past year with initial success
Market
Hospitals/Doctors
Retailers
Distribution
Regulatory
• Market size
- by channel
- by products
• Leading manufacturer performance
- including case studies
Research
Data Synthesis/ Integration
Strategy Integration
Option Development
August
September
bc
HKG
h5
Distributor
Retailer
China Distribution Strategy
Activities To Date (June 18 - July 27)
Hospitals
Other
Shanghai:
• Seven first tier distributors/branches, including:
- Shanghai Pharmaceutical
- China Pharmaceutical
• Four second tier distributors
- payment terms
- logistics requirements
- product usage
- decision making process
• Key retailer profiles
• Size and segmentation by retailer type
• Structure
• Introduction/Project Background • Eastern China Findings • Critical Issues • Next Steps
bc
HKG
h2
China Distribution Strategy Critical Issues
Develop an entry strategy for Bayer’s OTC business in China