At the time many people were in need of medical care, there was no national distribution network and the government was trying to reform the system.

    Multinationals were also trying to get involved, aiming to make big profits from the reforms.

    Somthing similar ocurred 20 years ago in Japan, where Lee also used to work.

    Lee, managing director of Bayer Healthcare in China, said the ongoing reforms of China's healthcare system will eventually become a benefit for multinational pharmaceutical companies, which have seen similar reforms in the United States, Western Europe, Japan and South Korea.

    "It is about the time that policy makers and the industry set up different mechanisms to satisfy needs of different kinds of people," said Lee in an interview with China Daily.

    Since last year, the Chinese Government has set a goal to provide basic healthcare services in almost all urban communities by 2008 and rural regions by 2010.

    Statistics from the Ministry of Health show that only 10 per cent have joined the health insurance network, although 300 million more people are expected to participate in the scheme this year.

    In response, China has stepped up efforts to build community hospitals and bring down drug prices with measures such as separating the processes of prescribing and dispensing, developing drug retail shops and encouraging private hospitals and drug stores.

    Bayer Healthcare claims to be the seventh-largest player in the Chinese pharmaceutical market last year with 2 billion yuan (US$250 million) in sales. It was the fastest-growing among global pharmaceutical giants in China with an annual growth rate of 30 per cent, according to the US-based market consultancy firm IMS Health.

    Lee said the sales of his company maintained a 30 per cent growth in the first quarter over the same period last year, which is likely to last for the whole year.

    Bayer Healthcare, traditionally strong in prescription medicine, is now seeking balance between prescription and over-the-counter (OTC) medicine business. This comes after acquiring Roche's consumer health unit last year, which was a top performer in China's OTC market.

    "We'd like to be seen as a total solution provider in China," said Lee.

    He said that prescription drug business currently contributes to 60 per cent of Bayer Healthcare's total China sales, and OTC accounts for 15 per cent. The rest comes from diagnostics and animal healthcare.

    The OTC medicine business is believed to have huge potential in China, with the encouragement from the government and a higher awareness about healthcare among the people.

    According to a white paper on China's pharmaceutical industry by the global consulting firm PricewaterhouseCoopers in March, sales of OTC medicines accounted for less than one-fifth of the country's pharmaceutical market. But it grew by 11.2 per cent last year to US$4.2 billion, making it the fourth-largest OTC medicine market in the world and the fastest-growing among all major economies.

    Rajiv Chopra, general manager of the consumer care unit of Bayer Healthcare China, said his unit aims to become one of the top three drugmakers in China in a few years, although it was not even in the top 20 last year.

    He expects sales from the OTC business will grow by 50 per cent this year to 420 million yuan (US$52 million).

    With the acquisition of Roche's consumer health unit, Bayer now owns its top-selling vitamin C product Redoxon and analgesic medicine Saridon.

    From the former Roche unit, Bayer Healthcare also took over a team of about 20 employees and 10 major distributors in six provinces and more than 100 distributors in second-tier cities, mainly in provincial capitals.

    (Source: China Daily)