Decision analysis on entering the China pharmaceutical market: Perspectives from Taiwanese companies

Abstract The China pharmaceutical market is the second largest in the world. There has been increasing infrastructure development for logistics and distribution after 1980s. Entering the China pharmaceutical market has been viable and beneficial options for international and multinational companies. However, the opportunities and challenges and their interrelations are not well discussed yet. This study aims to (1) determine key dimensions for Taiwanese pharmaceutical companies entering the China pharmaceutical market through literature review, eliciting experts’ preferences, and cluster analysis; (2) to analyze the relative weights of assessment dimensions and their interactions by applying the DANP method to the results of the expert interviews that had been conducted with a DEMATEL questionnaire; (3) to provide investment philosophy and suggestions to Taiwanese pharmaceutical companies for entry strategies to the China pharmaceutical market. The result shows that the financial dimension gets the highest weight, followed by personnel, product development, distribution, market and policy/regulations. This study suggests that Pharmaceutical companies should carefully evaluate the development and sufficiency of investment funds and protection of management rights in China. Pharmaceutical companies should also carefully develop personnel in China by enhancing professional competence, loyalty, stability and practical experience. From the distribution perspective, the companies should pay attention to choose agents or distributors, and choose the business partners who have local sales channels as the first priority. The policy/regulations dimension is a significant facet which suggests that the companies should exactly know what the Chinese medicine policy/regulations and their changes. In the market dimension, the companies should assess medical needs in China with the arrangement of internal resources to enhance enterprise strength for developing China pharmaceutical market. China has a vast territory where the distribution and operating risk are not negligible. The companies should firstly deploy their business in the regulatory compliance city or regional markets. This study also applies appropriate statistical methods for DANP reliability test to fill the research gap of conventional DANP analysis.