"We are very well established in Europe and Japan," explains Florence Cousté-Bemer. "For our geographic expansion, we wanted to conquer other strategically important Asian markets. In terms of cattle population, China has excellent potential for products that prevent neonatal diseases, one of the categories of products that Biokema sells internationally. But China is a very challenging country in terms of prices, cultural differences and product registration. China requires us to reconsider our approach in order to increase our efficiency, particularly in terms of production costs."
But what has been Biokema's approach to conquering the Chinese market? Despite Biokema's years of international experience in almost 20 countries, China's remains a true challenge due to its cultural specifics. For the company from Vaud, which employs around 60 people and produces its medicines in Switzerland, the first step towards China was to commission a market study to assess competition, needs in terms of prevention products for cattle and the price elasticity of the Chinese market. Result: despite weak prices, there is a place for Biokema in the Chinese market because volumes are promising.Florence Cousté:
Prices in China have nothing to do with prices in Europe. But considering the potentially huge volumes in China, we believe it is worth trying despite the constraints.
Product registration and import authorization
Times to market for veterinary products are generally quite long. It is thus not surprising that registering pharmaceutical products with the Ministry of Agriculture takes at least two to five years according to the applicable regulatory status. Furthermore, according to the product's status, obtaining an import authorization can take three years.
But Biokema has a significant advantage: there are no products on the Chinese market comparable to those of the Vaud-based company. Furthermore, almost none of its European competitors are present on the Chinese market.
Finding a local partner
The market study also showed that, given the specifics of the market, it was necessary to find a local partner in order to set up in China. "We could have partnered with an international laboratory to distribute our products but it would have had to go through a Chinese partner anyway. This would have forced us to further trim our margins." S-GE helped the company to find potential partners in record time in order to register and distribute its products.
Finding a Chinese partner on our own would have required a crazy amount of energy. That's why we asked S-GE for help.
Based on the market study that was conducted and the profile of the partner sought by BIOKEMA, S-GE and Swiss Business Hub China selected a handful of Chinese companies. A delegation from Biokema went to China to meet with these potential partners. After further discussions with two of them, BIOKEMA made its choice.
Long contract negotiations with the Chinese partner
Biokema opted for the company that showed the greatest willingness to work with it, the one with which it had the best communication. Then contract negotiations started, a very difficult process due to China's particularities. Once again, Biokema was helped by a China-based lawyer who understood well the legal and culture differences between Switzerland and China. It took eight months of discussions to successfully conclude the contract, says Florence Cousté.
What lessons did Biokema's export manager learn from this initial experience in China?
Quality is capital. Being from a European country doesn't mean that we don't have to prove the quality of our products. We were surprised to learn that the Chinese were as cautious as we were! An excellent lesson!
It ended up being worthwhile, not just because of the great potential of the Chinese market. "China is forcing us to take a different approach to improve efficiency and profitability. And this is preparing us to enter other emerging markets!»
BIOKEMA SA is a Swiss company that develops, produces and sells pharmaceutical products for veterinary applications.
Since its creation in 1959, BIOKEMA SA has been wholly owned by private Swiss shareholders. In 1960, it received an operating and sales license with a catalog of more than 40 veterinary products.
Since then, BIOKEMA SA has continued to develop and market its own products in Switzerland and abroad, particularly in the areas of immunoglobulin, drug concentrate and antibiotics.
For many years, BIOKEMA SA has also been partner to pharmaceutical companies
BIOKEMA SA is active in 3 principle areas:
Distribution of medicine and veterinary products in Switzerland. In addition to its own brands, BIOKEMA SA is the exclusive distributor of products from various international laboratories
Veterinary drug manufacturing at its site in Crissier, Switzerland.
Overseas development and marketing of its own brands.