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Bayer’s Big Bet On China

Drug giant Bayer has rarely seen risk-taking as a cure for its ills. But next month’s relocation of its general medicine headquarters from Germany to Beijing will make Bayer AG the first multinational pharmaceutical company to open a global corporate cent

Bayer’s Big Bet On China
Shen Jianyuan


BEIJING - Chris H. Lee, Managing Director of Bayer HealthCare China, recalls the not-very-serious reaction in the company's German headquarters when he first suggested this "whimsical" idea of moving one of Bayer's divisions to China. At that time, in 2008, the China branch of Bayer HealthCare (BHC) was still under the administration of the Asia Pacific regional headquarters, although sales in China, third largest globally after the U.S. and Japan, already qualified it to be a "Direct Territory."

Nonetheless, Lee kept on pushing his idea whenever possible, even after he was promoted to Asia Pacific Director. In 2008, sales of BHC China contributed 500 million euros to Bayer group's global total, and it was becoming clear that China was destined to eventually be the biggest market for Bayer. While Bayer was laying off employees elsewhere across the globe, China hired more than 1,000 new staff. In the past 5 years, BHC China's turnover has grown to €660 millions, an eleven-fold increase.

Still, the rapid consumer growth is not Bayer's main reason for the "exceptional" strategic decision to move the general medicine headquarters to Beijing, which was finally approved in late 2010. "They finally realized that this is probably going to affect the development of Bayer in the next several decades, and if they don't act promptly, other companies might take the first step," Lee says.

Reaching to be the first

Bayer is not the only competitor putting core investments in China, a market ripe with opportunities, but also teeming with competition. Novo Nordish has announced its intention to invest $100 million in the next five years to expand its R&D center in Beijing. The three outsourced R&D centers of Eli Lilly and Company in China account for 20% of its chemical analysis and early clinical studies work. GlaxoSmithKline has co-founded a joint venture with Shenzen Neptunus Interlong Bio-technique, investing 21 million euros in China's first vaccine production base.

In March, BHC China announced it had decided to structure China's market into three regions, the Northern zone, Southern Zone and Middle zone, with their regional operations centers based in Beijing, Shanghai and Chengdu respectively, so as to cater to the needs of each zone and operate at different development stages, thus enabling Bayer to respond quickly and appropriately.

Chris Lee invited He Qian, the then General Manager of Bayer Animal Health, to join him in BHC China's new strategy. Having already worked for Bayer Animal Health for 15 years, He Qian understood what business and market development are all about in its strategic sense.

Ms. Gu Xinxin who was originally responsible for Bayer's North ASEAN countries also joined Lee's team and is responsible for the "Strategic market zone (Southern China region)". "The next ten years should probably be the 10 golden years of Bayer in China. I do not want to miss this opportunity", Ms. Gu says.

But to be informed directly of regional market information is not BHC China's only goal in restructuring China's operations. Ms. Gu says that after Bayer set up the Southern zone operations center, numerous backbone sales staff of the competitors have come to join Bayer, increasing personnel to 1500 this year.

Lineup and tactics

For Bayer AG Germany, the Chinese market is defined as one of "high growth and high complexity." Chris Lee says all multinationals have broader development objectives and direction which do not necessarily reflect the regional objective. "The first requirement is to satisfy the regional need and then try to reach the global objectives based on that," Lee says.

Nonetheless, the sales managers of BHC China get a different message. "Don't feel pressure on your sales, your first goal is not in how to increase your sales but in providing the best service to doctors," Lee says he always tells new recruits. "Don't act with undue haste, this is what I tell them all the time."

Currently, Bayer's brand reputation in the southern region is still not as well regarded as that of its competitors. But Ms. Gu believes that economic maturity doesn't equate with market maturity; it takes time for the concept to be fostered. Faced with training medical representatives, understanding the characteristics of the market needs, and designing the educational methods, "all these steps require elaboration, it will take at least 2-3 years. We are patient." In comparison with the GDP over $10,000 in Guangzou and Shanghai, the Western region's GDP is only around $2,000-3,000, so it is almost a pure investment strategy for Bayer. "Even if Bayer put people here, it's going to take at least five years for them to start making profits', a hospital director in the Western region estimates.

According to the latest market research data announced by the Ministry of Industry in late April, Bayer HealthCare is the world's leading multinational drug manufacturer in terms of sales, yet it is still not the champion of the Chinese market among the multinational drugs manufacturers.

Read the original article in Chinese

photo - Conanil

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FOCUS: Russia-Ukraine War

The Russian Orthodox Church Has A Kremlin Spy Network — And Now It's Spreading Abroad

The Russian Orthodox Church has long supported Russia’s ongoing war effort in Ukraine. Now, clergy members in other countries are suspected of collaborating with and recruiting for Russian security forces.

Photo of Russian soldiers during mass at an Orthodox church in Moscow.

Russian soldiers during mass at an Orthodox church in Moscow.

Wiktoria Bielaszyn

WARSAW — Several countries have accused members of the Russian Orthodox clergy of collaborating with Russian security services, pushing Kremlin policy inside the church and even recruiting spies from within.

On Sept. 21, Bulgaria deported Russian Archimandrite Vassian, guardian of the Orthodox parish in Sofia, along with two Belarusian priests. In a press release, the Bulgarian national security agency says that clergy were deported because they posed a threat to national security. "The measures were taken due to their actions against the security and interests of the Republic of Bulgaria," Bulgarian authorities wrote in a statement, according to Radio Svoboda.

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These reports were also confirmed by Russia's ambassador to Bulgaria, Eleonora Mitrofanova, who told Russian state news agency TASS that the priests must leave Bulgaria within 24 hours. “After being declared persona non grata, Wassian and the other two clerics were taken home under police supervision to pack up their belongings. Then they will be taken to the border with Serbia" she said.

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