Competitiveness of the Chinese Pharmaceutical Industry: Environment, Drivers and Strategies

Abstract

China has become the second largest pharmaceutical market since 2014 and its industry is highlighted as the most attractive in the emerging countries. However, its specialities are rooted in historic reasons and the current dynamic situation in addition to the uniqueness of the pharmaceutical industry, make it complicated and unclear to market participants. On the other side, a lack of serious and systematic academic research about the competitiveness of the Chinese pharmaceutical industry, and the existent studies still wander at an entry level or dispersive areas further make those participants hardly stand at a higher position to draw out their strategy for a long-run. This research starts from the definitive discussion of competitive advantages in the pharmaceutical industry, and a review of various capabilities or competencies (classified as drivers to competitive advantage) at different stages of the drug lifecycle process especially related to the Chinese pharmaceutical industry. Based on these, we designed the competitiveness conceptual framework by combining traditional competitive mechanism and “environment-strategy-performance” model. A further study builds upon the mixed method approach with elite interviews and a structured survey. Qualitative analysis on the elite interview data provides a systematic description on the Chinese pharmaceutical industry, and also links the dispersive research results from previous studies about the competitiveness of this industry. Together with a chronological review on the evolution of the Chinese pharmaceutical industry since 1949, Pearson’s chi-square analysis based on survey data draws out a broad picture about this industry, not only from a historic point of view and a static anatomy of current status: principles of its regulatory system, regulatory influence on innovation, safety and risk management, cost and availability; but also from the strategic group’s perspective to explore the competitive landscape by their heterogeneities and homogeneities analysis on behaviour patterns, including major investment in the past five years, causes of today’s success (failure), perception on future’s challenges, as well as future strategy selection. Data from the survey also demonstrates how the mechanism operates and influences Chinese pharmaceutical firm’s strategy selection for future development. Using principal component analysis (PCA) and multinomial logistic regression (MLR), this research builds a strategy selection model to identify these significant factors for each fundamental strategy that the Chinese pharmaceutical firms will select for their future, and to illustrate dynamic conduction among environmental factors, drivers to competitive advantage and strategy selection. This research commits to build a bridge on the gap between part and the whole of current academic research about the competitiveness of the Chinese pharmaceutical industry, and the gap between the superficialness and depth of it also.

Date of Award	31 Dec 2019
Original language	English
Awarding Institution	The University of Manchester
Supervisor	Hongwei He (Supervisor)