China Speech 2017 – Industrie-Club Düsseldorf

On June 20th Johannes Dietsch, CFO at Bayer AG, provided an outlook on challenges and opportunities arising from global mega trends and their influence on the Chinese health care market. The key note speech was part of the annual “China Rede” at the Industrieclub Düsseldorf. Next to digitalization, which is the omnipresent megatrend these days, Dietsch particularly emphasized the growing strength of local competitors and the complementary need for global players to adapt to the local market.

According to Dietsch, digitalization in the health-care sector will significantly change the way healthcare companies work and how patient experience evolves. Companies along the entire value-added chain would have to move quickly to take advantage of the numerous opportunities, among them advanced data aggregation. In this context, Dietsch stressed the significant role of start-ups in engaging and shaping the development of innovative digital services. Their contribution would accelerate the transformation process not only in the health care sector but across all industries.

Dietsch also highlighted the growing number of high-quality products “Made in China”. Local brands increasingly erode the supremacy of established foreign brands that neglected long overdue adaptations to local consumer needs. Multinational pharma giants are already confronted with the negative effects of this trend as they face the growing challenges from local Chinese competitors. Global players need to take further steps to strengthen their local competitiveness – an important point which holds true beyond the healthcare sector.

Strategic joint-ventures or acquisitions, such as Bayer’s acquisition of the Chinese Dihon Pharmaceuticals Group Co. Ltd., are therefore gaining further importance. The extended Life Science portfolio resulting from the acquisition significantly strengthened Bayer’s OTC-position in China and at the same time helped to meet the demand of local Chinese consumers. Adapting to the local market environment upon entering emerging countries not only helps global players to keep up with local competitors, it can also give them the cutting edge.

These points illustrate one thing in particular: Rapid digitalization and the rise of emerging markets like China are putting pressure on many multinational companies. If they want to succeed in this changing environment, they definitely can’t rest on their laurels from the past.