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Pharmaceutical giants rethink rebate marketing [China Daily: Hong Kong Edition]
[April 12, 2014]

Pharmaceutical giants rethink rebate marketing [China Daily: Hong Kong Edition]

(China Daily: Hong Kong Edition Via Acquire Media NewsEdge) NANNING - Pharmaceutical multinationals operating in China are rethinking rebate marketing as the country presses reforms in the industry, experts said at a medical conference that concluded on Friday in South China.

Pharmaceutical industry needs shot of innovation  GSK's China sales may be down 30% on bribery scandal Fu Bin, an agent for several pharmaceutical multinationals in Southwest China, said that many companies, in the face of stricter governmental supervision, have gradually abandoned the marketing gimmick following a spate of scandals that have tarnished their images.

Rebate marketing is a popular way of boosting product sales in the pharmaceutical sector, in which salespeople recommend new medical products to doctors and pharmacies using promotional funds from their companies.

The promotion efforts have resulted in bribery scandals, as some sales agents, under pressure to meet sales targets set by their companies, secretly offer lucrative kickbacks to doctors and pharmacies in a variety of forms, including refunds, overseas visits, conference expenses, and traveling opportunities, Fu said.

This often leads to doctors prescribing more drugs and abuse of antibiotics, added Fu, who was among scores of representatives of medicine manufacturers and pharmaceutical companies at the conference on pharmaceutical distribution in Nanning, capital of Guangxi Zhuang autonomous region.

China has seen a slew of cases of big pharmaceutical companies suspected of bribing doctors to ramp up benefits.

In July 2013, British pharmaceutical giant GlaxoSmithKline (GSK) was put under investigation for suspected bribery and tax-related offenses by Chinese authorities.

Just one month later, Beijing municipal authorities set up a joint investigation team to probe French drugmaker Sanofi after a Chinese newspaper published bribery allegations against the company.

On the heels of the reports, the National Health and Family Planning Commission vowed to step up its efforts to curb commercial bribery in the pharmaceutical industry and health service sector, planning to blacklist pharmaceutical companies and individuals involved in bribery.

Pharmaceutical industry needs shot of innovation  GSK's China sales may be down 30% on bribery scandal Government clamp-down and strengthened societal supervision have motivated pharmaceutical companies to reconsider their marketing strategies to rebuild their images, according to Fu Bin, who has experience dealing with these companies.

GSK, for instance, has announced that it would scrap funds used for hiring healthcare professionals to promote their products to those authorized to prescribe drugs.

The pharmaceutical juggernaut, which closely linked salaries to sales, will also adopt a new marketing model in China by focusing on the needs of patients, according to Herve Gisserot, senior vice president of GSK.

Zhang Mingfang, a professor at Guangxi University of Chinese Medicine, said that such changes are an inevitable trend in the industry.

Zhang's view echoes that of Zhang Heming, secretary with the board of directors of China Shijiazhuang Pharmaceutical Group Co Ltd, who sees the waning rebate sales model as a sign of pharmaceutical companies "moving in the right direction." "Other international pharmaceutical companies will follow suit if GSK's new model works in China," Zhang said.

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