China has about 731 million internet users but tech giants such Google, Facebook, and Twitter have little relevance in the country, where their platforms are banned.
HONG KONG and NEW YORK — China is not exactly uncharted terrain for pharma. The country’s pharmaceutical market is the second largest in the world, trailing only the U.S., and is forecast to grow from $108 billion in sales in 2015 to $167 billion by 2020.
That said, pharma and healthcare marketers see a wealth of untapped opportunity. China has about 731 million internet users, comparable to Europe’s total population of 742.3 million, and 95% of them (695 million) have mobile devices. Yet tech giants such Google, Facebook, and Twitter have little relevance in the country, where their platforms are banned.
As a result, pharma companies have sought to partner with the country’s homegrown alternatives, including Alibaba, Tencent, and Weibo, to reach Chinese consumers. Better still, for pharma companies not yet established in the market, the opportunities outweigh the challenges, according to Li Ma, VP of Alibaba Health, the health division of Chinese e-commerce giant Alibaba. Sure, there are China-specific challenges — in market access, distribution, pricing, and reimbursement, which aren’t exactly slam dunks elsewhere — but the market’s size overrides most concerns: about 1.4 billion people and growing.
There’s also acute need. Rising income levels, changes in diets and lifestyles, and the impact of
air and water pollution have contributed to an increase in chronic conditions such as diabetes, heart disease, and cancer.
According to the World Health Organization, chronic conditions account for 85% of about 10.3 million deaths per year, and constitute 70% of the total burden of disease in the country. More than 2.8 million people in China died of cancer in 2015, with lung cancer claiming the most lives.
Moreover, there are a variety of ways to approach the market, says Mark Natkin, founder and managing director of Beijing-based Marbridge Consulting. “Increasingly, we’ve seen pharma companies allying with big tech companies to introduce information, or some sort of free equipment or medical devices, to introduce their brand and product.”
In 2016, Sanofi and Alibaba signed an agreement to partner on online and offline health services, disease management, and patient education, with the two companies planning to devise a detailed plan by the end of 2017. The focus would be on delivering programs for the management of chronic diseases, Jean-Christophe Pointeau, GM of pharma at Sanofi China, said at the time.
In February 2017, Eli Lilly collaborated with physician social network Ding Xiang Yuan and Tencent, known for mobile messenger WeChat, on a diabetes-management program. The program provides patients with blood-glucose testing devices, educational tools, and patient-care services, with doctors able to access data collected from the devices in real-time. Meanwhile, Bayer, Novartis, and Pfizer have set up corporate pages on the Twitter-like platform Weibo.
Ma says Alibaba’s venture into health is part of its “double H” (health and happiness) strategy. “Alibaba believes that what China needs most in the next 10 to 20 years is health and happiness,” she explains. “Ali Health hopes to improve healthcare outcomes and transform public health-management capabilities through our strengths in internet technology, big data, and innovation.”
Alibaba, which has about 500 million active users on its platforms, launched Ali Health in 2014. The unit’s main areas of focus are online healthcare services, health management, product traceability (ensuring safe drug production, circulation, and use), and pharma e-commerce.
By all accounts it has been an immediate success: Ali Health reported a 739% increase in year-over-year revenue in the 12 months ending March 31, from 56.6 million yuan ($8.5 million) in 2016 to 475.1 million yuan ($71.7 million) in 2017, driven by its over-the-counter e-commerce business. The company has partnerships with more than 200 pharmacy chains, covering more than 20,000 drugstores in more than 100 cities.
|Alibaba and GSK China have partnered to launch an unbranded adult vaccination service system through Taobao, China’s version of Amazon.|
GSK DIVES IN
In August 2017, GlaxoSmithKline China and Alibaba announced a partnership to launch an unbranded adult vaccination service system through the Alibaba-owned online shopping app Taobao, China’s version of Amazon. It is GSK’s first collaboration with a big tech company in China.
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“It started with a conversation around how we could partner and leverage GSK’s wealth of information around a disease. In this case, it was related to cervical cancer prevention,” explains Leslie Chang, VP and GM of vaccines at GSK China.
The drugmaker’s Cervarix became the first HPV vaccine approved by the China Food and Drug Administration (CFDA) in 2016 and launched in July 2017. It arrived at a time of need: According to the HPV Information Centre, cervical cancer is the eighth most common cancer among women in China and the second most common cancer among women aged between 15 and 44. Yet a 2010 study by the National Center for Biotechnology Information found that only 21% of about 52,000 Chinese women was screened for cervical cancer via a pap test.
“Alibaba has the big data that can direct traffic, especially if we’re looking at a younger cohort of women who would benefit from the vaccine and are social media savvy,” Chang explains. “At the same time, we’re leveraging GSK’s disease-awareness knowledge and [targeting] patients — in this case, healthy women — who want to get vaccinated at the right venues in China.”
Users can access the system through the app’s My Health section, where they can access vaccine information, consult with registered HCPs and bots, locate nearby healthcare centers that offer vaccinations, and book in-person consultations. The system aims to help health centers better manage their workload by assisting them in scheduling appointments and thus reducing the volume of walk-ins.
Currently, the service is available at about 500 healthcare centers in more than 20 provinces in the country. About 10,000 women have booked appointments through the system in the two months since launch, Chang reports. GSK and Alibaba aim to make the service available in 1,500 centers across more than 100 cities, including Beijing, Shanghai, and Guangzhou, by early 2018.
|Hundreds of people wait in line at a Chinese hospital (left), while a healthcare worker helps a woman access the vaccination service’s app at a healthcare center (right). Photo credits: Leslie Chang, GSK|
COMPANY SEES ‘PROMISING SIGNS’
While Chang notes “it’s probably too early” to assess the effectiveness of the system, he says the company has already seen “promising signs” that visitors are arriving at the portal from various Ali platforms. “We now need to move them through to make sure that when they hit the ground, the POV [point of vaccination] is linked up and there is supply,” he adds, noting individual patient data is kept private.
The ability of GSK and Alibaba to hit that 1,500-center target hinges on price approval of Cervarix in each province. In China, drugmakers need to negotiate with provincial authorities to register the price of their vaccine or medication in those pro-vinces. Through late October, GSK had resolved bidding in about 20 out of 31 provinces, Chang says.
“Once you get listed [in a province], you get the POV to sign up with Ali Health. Getting CFDA approval is not the end of the road. That’s only the start of it. It’s a trick and a half,” he explains.
The challenges don’t stop there. Glenn Hou, founding partner of China Insights Consultancy, says the regulatory environment in China makes it difficult for drugmakers to enter the market.
Search engine giant Baidu learned this the hard way in 2016. After a paid medical listing scandal that year — a cancer patient reportedly died after taking an alternative treatment recommended in a paid listing on the search engine — Baidu shut down its mobile health unit to refocus on AI-powered healthcare innovations, such as healthbots. The incident led Chinese regulators to tighten control over online advertising, including a demand that Baidu limit marketing information to no more than 30% of the space on each web page.
Hou is skeptical about the effectiveness of pharma/tech partnerships in the country. “It’s a strategy around financial performance, not a corporate-development strategy,” he explains. “[Tech giants] have so much money, they just invest in 10 companies and wait to see which one will succeed.”
However, Hou does see potential in the treatment of chronic disease, rare disease, and cancer. In those areas, he believes that partnerships can help patients manage their daily lives and access educational resources.
Natkin agrees, adding, “To the extent that a pharma manufacturer can establish a relationship with not just doctors but also with patients and patients’ families, and establish some trust and ongoing relationships, that will help the manufacturer penetrate the market much more deeply.”