The paper “ The Main Opportunities for Abbott in the Chinese Market - Making Aggressive Inroads in Diabetes and Cardiovascular Drugs and Monitoring Equipment" is a spectacular example of a case study on marketing. Abbott Laboratories is a broad-based global healthcare manufacturing company headquartered in the United States with facilities in all continents. It specializes in major drugs in the areas of anesthesia, anti-infectives, cardiovascular, diabetes care, hematology, oncology, pain care, renal care, vascular and virology. The company also manufactures equipment for immunodiagnostics and clinical chemistry (www. abbott. com). Abbott sells a number of its products, including Paclitaxel Injection/Anzatax, Enflurane/Ethrane, Isoflurane/Forane, Sibutramine Hydrochloride Capsules/Reductil, Propafenone Hydrochloride Tablets/Rytmonorm, Ademetionine Enteric Coated Tablets/Transmetil, etc.
in China. In this paper, I will develop a marketing plan for entry into China’ s pharmaceutical market more aggressively, with manufacturing facilities in the country. To begin with, I will describe the macro scenario in China, with special emphasis on the demand and supply of western drugs in the country. Then, I will go into the microanalysis, studying the competitive scenario within industry segments. Finally, I will undertake a SWOT analysis for Abbott Laboratories in China and recommend a marketing plan for the company. Macro AnalysisChina, the world’ s most populous country with 1.31 billion people, began its growth trajectory relatively recently.
The country turned from a centrally planned economy to a market-oriented one in the late 1970s. The restructuring of the economies has resulted in fast growth, particularly in recent years. China recorded a growth rate of Gross Domestic Product (GDP) of 9.9 percent in 2004-05. Of the GDP at purchasing power parity of $8.859 trillion in 2004-05, 14.4 percent was contributed by agriculture, 53.1 percent by industries and 32.5 percent by the services.
On the other hand, 49 percent of the labor force was occupied in agriculture the same year while 22 percent was engaged in industry and 29 percent services (CIA). Thus, while the population has been predominantly agricultural, China has made great strides in industries, particularly manufacturing industries, so that a greater share of the GDP is contributed by this sector. Despite the high growth in GDP, China has relatively low per capita income, making it a middle-income country in terms of purchasing power parity.
Growth in China is concentrated in the coastal areas and about 150 million people continue to live in poverty. The one-child policy in China has resulted in a rapidly aging population in China, with 50 percent of the population above 35 years of age (Deutsche Bank, 2006). This is one reason why China’ s pharmaceutical market remains underdeveloped. Of the 1.31 billion people, 870 million live in rural areas with little access to healthcare facilities. The general healthcare facilities in China are as low as in India or in Pakistan.
The country has a “ 2 track” healthcare system in which the urban areas have very sophisticated care facilities while the rural areas are still served by “ barefoot” doctors. Yet, due to the sheer number of people in urban areas, the pharmaceutical market in China has the largest potential in Asia. The present drug market in China is estimated at $19.2 bn in 2005 (Price Waterhouse Coopers) although about 75 percent of the healthcare market is catered to by traditional Chinese remedies. About 97 percent of the sales of western drugs are generics or counterfeit products manufactured locally.