Individual pharmaceutical promoters a dying breed in China
Shanghai. December 26. INTERFAX-CHINA - Individual pharmaceuticals promoters are starting to disappear due to pressure from the Chinese government to standardize the way they do business, industry insiders told Interfax.
"Individual pharmaceutical marketing agents are being pushed down easier-to-regulate career paths, such as becoming marketing managers within pharmaceutical distribution companies or setting up [more legitimate] distribution companies," said Niu Zhengqian, marketing director of Jointown Group Co. Ltd.
The individual pharmaceutical marketing agent is a 1990s phenomenon, when growing Chinese prescription drug marketing demand encouraged the emergence of a group of independent drug distributors. As a rule, they are not licensed to sell drugs as individuals but are usually affiliated to drug distribution companies.
Characteristically, pharmaceuticals promoters market their products using close ties that they have forged with individual doctors and hospital officials, relying heavily on offering kickbacks to generate product sales.
However, in early 2006, the Chinese government started to single out hospitals as being a key target in its anti-corruption campaign, as a way of lowering the large medical bills an average individual in China faces. A number of initiatives have been employed to try to cut down on kickbacks with punishments for offenders ranging from name-and-shame lists up to custodial sentences. As a result, hospitals and doctors have started to distance themselves from individual pharmaceutical promoters, while some hospitals have gone so far as to prohibit drug marketing agents from their premises.
Despite the government's attempt to render the marketing tactic obsolete, pharmaceuticals promoters are unlikely to disappear completely or even in the short term, given the state of current Chinese economic development levels. "Due to the low income of doctors, the policy factor can never get rid of the alliance between pharmaceutical marketing agents and hospitals," said Li Weimin, general manager of Beijing M4 Consulting Co. Ltd.
Nevertheless, the pressure upon individual promoters to find a new marketing angle is sufficient that a significant number are simply repositioning themselves in the pharmaceutical distribution market.
"Some agents are happy to take a position within a distribution company, often as management, but this isn't the ideal solution for all of them, as those agents who were quite successful are accustomed to being their own boss," Li said.
The other way in which these individual promoters are redefining their role in the changing market is by setting up their own companies or, for the better off, acquiring small existing distribution companies, giving them more legitimacy but enabling them to carry on being in charge, according to Niu. "Some of these people became millionaires from selling drugs to hospitals, so setting up or buying a company is no great difficulty for them."
Zou Xiang, board chairman of Shenzhen Longer Organisms & Science Co. Ltd., a distributor of chemical drugs and plant medicines, said earlier this month at the ninth China Pharmaceutical Enterprise Marketing Sales Summit in Kunming that his company has worked with over 10,000 individual pharmaceutical promoters across China in the past and is happy to start taking them in as employees. "These pharmaceutical promoters have helped drug enterprises in their marketing and contributed to the development of the pharmaceutical industry."
"In one way or another, we will see the pharmaceutical marketing agent as we used to know him gradually disappear as he changes with the Chinese market," Li said.
"Individual pharmaceutical marketing agents are being pushed down easier-to-regulate career paths, such as becoming marketing managers within pharmaceutical distribution companies or setting up [more legitimate] distribution companies," said Niu Zhengqian, marketing director of Jointown Group Co. Ltd.
The individual pharmaceutical marketing agent is a 1990s phenomenon, when growing Chinese prescription drug marketing demand encouraged the emergence of a group of independent drug distributors. As a rule, they are not licensed to sell drugs as individuals but are usually affiliated to drug distribution companies.
Characteristically, pharmaceuticals promoters market their products using close ties that they have forged with individual doctors and hospital officials, relying heavily on offering kickbacks to generate product sales.
However, in early 2006, the Chinese government started to single out hospitals as being a key target in its anti-corruption campaign, as a way of lowering the large medical bills an average individual in China faces. A number of initiatives have been employed to try to cut down on kickbacks with punishments for offenders ranging from name-and-shame lists up to custodial sentences. As a result, hospitals and doctors have started to distance themselves from individual pharmaceutical promoters, while some hospitals have gone so far as to prohibit drug marketing agents from their premises.
Despite the government's attempt to render the marketing tactic obsolete, pharmaceuticals promoters are unlikely to disappear completely or even in the short term, given the state of current Chinese economic development levels. "Due to the low income of doctors, the policy factor can never get rid of the alliance between pharmaceutical marketing agents and hospitals," said Li Weimin, general manager of Beijing M4 Consulting Co. Ltd.
Nevertheless, the pressure upon individual promoters to find a new marketing angle is sufficient that a significant number are simply repositioning themselves in the pharmaceutical distribution market.
"Some agents are happy to take a position within a distribution company, often as management, but this isn't the ideal solution for all of them, as those agents who were quite successful are accustomed to being their own boss," Li said.
The other way in which these individual promoters are redefining their role in the changing market is by setting up their own companies or, for the better off, acquiring small existing distribution companies, giving them more legitimacy but enabling them to carry on being in charge, according to Niu. "Some of these people became millionaires from selling drugs to hospitals, so setting up or buying a company is no great difficulty for them."
Zou Xiang, board chairman of Shenzhen Longer Organisms & Science Co. Ltd., a distributor of chemical drugs and plant medicines, said earlier this month at the ninth China Pharmaceutical Enterprise Marketing Sales Summit in Kunming that his company has worked with over 10,000 individual pharmaceutical promoters across China in the past and is happy to start taking them in as employees. "These pharmaceutical promoters have helped drug enterprises in their marketing and contributed to the development of the pharmaceutical industry."
"In one way or another, we will see the pharmaceutical marketing agent as we used to know him gradually disappear as he changes with the Chinese market," Li said.
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