Foreign
dairy firms have made significant efforts to promote their infant formula in
hospitals across China because the formula provided by hospitals has a
significant impact on the purchasing choices of new mothers.
According
to a report by state broadcaster China Central Television on Sept. 16, foreign
formula companies such as Dumex have bribed hospital personnel to use their
formula to feed newborns.
The report,
however, is only the tip of the iceberg. To increase their penetration rate in
hospitals, foreign companies have adopted several methods of benefiting from
medical staff and hospitals, reports the Guangzhou-based 21st Century Business
Herald, citing Xu Jian, an executive at a foreign milk supplier's Chinese
branch.
Xu said
that overseas dairy firms are purchasing the personal information of expectant
mothers from hospitals for up to 30 yuan (US$4.90) per individual. Each milk
supplier also provide dozens of boxes of infant formula to large hospitals free
of charge to encourage hospital personnel to the use their formula, and ensure
that newborns get used to it and prefer it over breast milk.
The formula
is sold to doctors and nurses at half price, and the doctors sell the milk
powder to mothers as retailers, while the companies provide gift boxes for
expectant mothers, allowing doctors to earn up to 50 yuan (US$8.20) for each
gift box distributed to their patients.
Xu added
that many of the firms launch classes for new mothers, where they promote their
products. Meanwhile, some also sponsor hospitals to print baby health
handbooks, advertising their infant formula on the pages within.
Xu
explained that since the foreign dairy companies allow obstetrics departments
to earn up to 1 million yuan (US$163,400) a year, hospitals are willing to take
the risks involved even though government regulations prohibit them from doing
so.
China's
infant formula market is divided into two groups: foreign brands, including
Dumex, Wyeth, Abbott, and Mead Johnson, and companies with strong ties to
hospitals and domestic milk suppliers, such as Yashili and Yili. However,
hospitals are reluctant to promote domestic formula brands following a series
of safety scandals — most notably the melamine milk powder scandal in 2008 that
caused hundreds of thousands of infants to develop kidney stones, resulting in
six deaths.
The top
five foreign formula makers in China are Mead Johnson, which takes 12.3% of the
market share, Dumex with 11.7%, Wyeth with 11%, Abbott with 7.7%, and Nestle
with 3.7%. These companies have spent 3%-5% of their operational income to
penetrate the Chinese healthcare sector, which is equivalent to 500-900 million
yuan (US$81.7 million- US$147 million).
No comments:
Post a Comment