Traditional Chinese Medicine In China Market example essay topic

EXECUTIVE SUMMARY Company: TCM Healthcare Corporation wants to be a very unique healthcare provider who can improve people's health and well being by marketing efficacy-proved Traditional Chinese Herbal Medicine (TCM) /dietary supplements in the US market and the rest of the world in response to the increasing demand for complementary and alternative therapy. The market is huge and expanding because the fact of conventional medicine has no and never has all answers to all diseases! Patients need to have alternatives. Launching Products: TCM Healthcare enters into the market by providing a series of Traditional Chinese Medicine as herbal supplements. The first product will be launched is related to the conventional post-menopause therapy which is proved having more risks (harmful side effects) than benefits by the National Institution of Health since August 2002. By searching in Traditional Chinese Medicine in China market, consulting TCM doctors, and collaborating with TCM manufacturers, we have found at least three products having promised efficacy.

The products are very effective in alleviating symptoms of post-menopause with no side effects. They all have gone through clinical trials in China and components are all originated from ancient formula with enhancement. The ingredients are extracted from natural herbs without any chemical residues. The Market: In the United Sates, more than six million women use Hormone Replacement Therapy (HRT) for post-menopause and related symptoms. Many women have been alarmed by the result of the study conducted by the NIH: 41 percent increase in risk of stroke; 29 percent increase in risk of heart attack; 26 percent increase in breast cancer. Women who suffer menopausal symptoms are seeking alternatives to hormone replacement therapy.

Since a new drug discovery and development is a long-term and less certain process, the post-menopause therapy currently opens a huge potential market to enter. Profit Projection: Most women at age of 45-60 may experience the post-menopause symptoms from months to years (average 4 years) and the therapy is needed daily. This could generate a high profit from the right products (Wyeth pharmaceutical HRT drug Premarin and family has reached annual sale 2 billion dollars). TCM Healthcare expects more than 120,000 women will take our products after they are launched in the first year, which will generate annual sales of $36 million. The growth rate expected could be 10% thereafter.

The return on the investment is expected to be %. Finance: TCM Healthcare is seeking $equity investment. The fund will be used to fund the web site design and development, business operation, marketing research, product distribution and promotions, etc. Payback period to the investment is projected to be years. Exit strategy: Since the demand for complementary and alternative medicine (CAM) is increasing, the trend will attract investor's interest. We are confident in building up our product pipelines by continually finding series unique TCM products with special efficacy and less side effect for various diseases because there are thousands of research projects undergoing each year in China and a great of patient base offering an absolute advantage for clinical trials.

We whole-heartily look for visionary business builders to be our partners in making people live healthier and longer life. To realize this goal, we are willing to accept any exit strategy available. The Company's Mission / Vision The mission of TCM Healthcare is to improve people's health and well being by introducing quality alternative medicine products from China to the US. and the rest of world. These alternative medicine products would include traditional Chinese Herbal medicines and other therapeutic products sold in the US as dietary supplements, which do not require FDA approval. Our vision is to be recognized as a very unique health care company offering high quality products and premier customer services. Products Based on the theory of Traditional Chinese Medicine, the symptoms of post menopause can be overcome by gaining rebalance of body's function.

Chinese doctors have successfully treated millions of the suffered women without any knowledge of hormones. During a long history of experience consolidation, several products have been formulated to alleviate symptoms and bring up energy of those women. Although the selected products are all used for alleviating the same symptoms, each product has been formulated specifically for certain profiles of body's condition, as the similar concept in conventional medicine, there are genetic, structural and functional variations of each person, this variation makes each person's response to the same medicine differently. In considering the variations, we have selected three products. The strategy that gives consumers more options to choose the best suitable treatment for them and help to overcome the resistance differentiating our products and service from our competitors in addition to competitive advantages of these products. Another important feature of our products is that they do not contain any ingredients that have been warned by FDA for possible toxicity and they do not have side effects.

The product quality will be guaranteed by our close inspection of manufacturing process and compliance with FDA regulations. Market Demand Of 292 millions population in the US, women at age 45 to 60 (population of 27 million) may experience some sort of uneasy symptoms during their menopause transition and post menopause period (last average 4 years) (1). These symptoms affect their mood, sleep, function and energy, as a result, reducing their work efficiency and quality of life. That is the reason that the conventional treatment "Hormone Replacement Therapy (HRT) " had generated a high profit for the manufacturers. Wyeth pharmaceuticals, the leading supplier of Estrogen and the combination of Estrogen / Progestin sold $2 billion in 2002, in addition to more than 20 similar products in the market. In contrast to the year 2002, under the shock of the study result reported by National Institute of Health in August 2002 and continued unfavorable news for HRT, Wyeth lost its sales of 50% (679.3 million vs. 1,122.9 million) in 2003 (2).

We believe that such a market would be very receptive to unique Chinese alternative medicines that can be sold as herbal supplements. Our Competitive Advantages (SWOT Analysis) Strength: . We have unique and truly effective products. There are many advantages to the use of Traditional Chinese Medicine during menopause and for a variety of other women's health complaints.

First, it is one of the most holistic medical systems available today. Second, it has not side effects. Third, it's emphasis is on prevention. Fourth, it has a lone history of successful treatment for gynecological disorders. Fifth, it offers self-empowerment. So far there is no such an IDENTICAL herbal supplements in the US market.

Especially our proprietary treatment schedule that has been uniquely invented for postmenopausal relief. We can say that we " re the first to present in the market; . Technology know-how: Our organization structure enables us to evaluate products from different viewpoints that include our knowledge in conventional medicine, Traditional Chinese Medicine, drug manufacturing, drug evaluation, research, clinical trial and marketing... Prepared for FDA regulations: We have studied through all related FDA regulations for dietary supplement and possible opportunity for Over-the-Counter or prescription drug application of botanical products in order to pursue our long- term goals... A board range of product pipeline: China has more than a thousand TCM pharmaceutical companies and institutes that research and develop TCM products, which offer us a lot to choose in expanding our product pipeline... Easy access and communicate with suppliers: Most of our staff comes from mainland of China in which the traditional Chinese Medicine is originated and best developed.

To understand both cultures, business environments, and languages compose of our unique skill in developing good buyer and supplier relationship... Sound marketing strategies differentiate us from competitors. Weaknesses: . We are new in the market and have less experience in marketing botanical products (no company has tried mass marketing Chinese herbal medicine.

In this sense, we will be the market leader)... Available products may need to improve for adapting to the US consumer's taste... Weak financial support. Opportunities: .

Huge market and high product demands. Strong market developmental potential: from regional to national. Product development: Introduce more effective and unique products for other diseases, such as cancer, hypertension, diabetes, nephritis and mental disorders... Forward integration: development our own manufacture facility in China or in the US... Global expansion: from the US to North America and worldwide. Threats: .

So far there is no direct threat in the market from any competitors to our products, however, possible product copy or imitations do exist because the formulas are not patent protected, although they could be treated as trade secrets... FDA regulations: FDA continually updates its regulations on dietary supplement which could make the market entry difficult and may need more investment... Potential entry to the market is relatively easy. Therefore, marketing strategies, scope and first-in will be critical factors for obtaining competitive advantages Industry and Competitions Market Positioning Under the Dietary Supplement Health and Education Act of 1994, botanicals are categorized into dietary supplements in the US. Therefore, Chinese herbal medicine currently can only be marketed as dietary supplement. However, FDA has allowed botanicals to apply for over-the-counter drugs or prescription drugs if they have been proven with superior efficacy or less toxicity than marketed drugs (3).

Industry Surveys (4) find that the dietary supplement industry generates billions of dollars in sales annually, making it one of the most dynamic sectors of the U.S. economy. According to the Natural Marketing Institute (NMI), which monitors consumer trends in the marketplace, demand for dietary supplements corresponds with a strategic shift in how consumers view health and wellness, more than ever before, consumers feel empowered to manage their health and are either actively using supplements or are searching information about them. For this reason, new survey research conducted for the Dietary Supplement Information Bureau finds that dietary supplements have become an American standard. Today, three in five consumers -- 59 percent -- take supplements on a regular basis. The Nutrition Business Journal, a publication of New Hope Natural Media / Penton Media, Inc. reported (5) that supplement sales exceeded $16.8 billion in 2000. Of this total, the sales of herbal supplement exceeded $4.1 billion, or 25 percent of the dietary supplement market in 2000.

In 2002 World Health Organization proposed its first global WHO Traditional Medicine Strategy (6) to respond the increasing demand and practice of Traditional Medicine. In the proposal, it has mentioned: " In many developed countries popular use of complementary and alternative medicine (CAM) is furled by concern about the adverse effects of chemical drugs, questioning of the approaches and assumptions of allopathic medicine, and greater public to health information. At the same time, longer life expectancy has brought with its increased risks of developing chronic, debilitating diseases such as heart disease, cancer, diabetes and mental disorders. For many patients, CAM appears to offer gentler means of managing such diseases than does allopathic medicine". Figure 1 shows the percentage of population that has used CAM at least once in selected developed countries. Fig. 1, Source: World Health Organization.

WHO Traditional Medicine Strategy 2002-2005 Competitions Unprepared pharmaceutical companies run out of product pipeline for this particular market (they still try to play with hormones). Since the development of a new drug needs at least 10 years, which gives alternative remedy an excellent opportunity. Rapidly responding to the market demand, some dietary supplement manufacturers have produced several products within a short period. These products produced are based on home remedy experience from ethnic minorities, research results, observation on racial difference among menopause women, chemical structure similarity from plants to animal hormone. There are several products such as Soy Isoflavones, Estrohealth, Menopause Support, Estrogen sold in the COSCO and Wal-Mart.

Due to the lack of data regarding to the efficacy of these products and their sales information, it is difficult to make an accurate evaluation. However, they are manufactured in the US. We believe that by providing authentic Chinese products and backing our claims with research studies proving effectiveness that we will increase our competitive advantages. It is worth to mention here is that the major difference of Traditional Chinese Medicine from the rest of botanic supplement. TCM products have been generated according to its systemic theory and aim at turning disturbance into balance. It does not treat only one but all possible related problems at same time, so that a comprehensive benefit would be the result.

Other competitors we face distribute their herbal products for menopausal symptoms primarily through local Chinese Stores in the Chinese communities of New York and California. These products include Fe-Mon-9, Green Dragon, Calm Women, Zi zhu Pill, Mid-Life Formula, which are made of different combination of Chinese herbs with a higher price. They reach only a tiny portion of the several million potential customers for menopausal products. We feel that these local Chinese community competitors do not pose a competitive challenge to our products, because their business goal is only the sales and their consumer segment target in only in Chinese population. Most important, they do not have courage, or intention, or knowledge, or competent management team to shift their vision to mainstream of medical field, and provide health related services besides the sale. Our Marketing Strategy Product Name of the products: Paus-Relief, , , are the names for three products respectively.

This name will be immediately recognized by women as a product that will provide relief to them from the annoying and troublesome symptoms of menopause. Packaging: The products are capsules and packaged in bottle or pack with 14 days supply, because most of users will see the benefit in one to two weeks and this package provides consumer an option to try our product with a low cost. Product protection: The methods that we will use to protect the products include 1) sign a trade secret contract with suppliers; 2) rename the products (they all have Chinese names in China market); 3) apply trade marker in the US; 4) label partial ingredients on package plus a propriety blend, this method has been used in the US market universally. Price: Price is determined based on the cost plus mark up. The prices for three products separately are range from $8.50 to $16.50. Marketing and Promotion.

Initial Market / Distribution: We will have a three prong strategy for the distribution of our products. Our marketing strategy will be national-wide and our products will be distributed through: 1) Natural food and supplement stores, 2) Large retail chains, and 3) On-line... Our marketing theme:" Only Effective!" ... Advertising in specialty magazines that middle age and older women frequently read, such as Modern Maturity, Good Housekeeping, and Women & Home would be primary tool...

Website marketing will be used as a major information provider for consumers and physicians... Attending professional association activities, such as women health events, and any events that are held for middle age or older women... Money-back guarantee: The products will be offered on an unconditional, money back guarantee of satisfaction. Most people don't bother returning things, even if they are not satisfied, but they like the though when they are buying that they can return it. They feel like there is no risk...

Discount approach may not suitable for healthcare products, especially drugs. Some other promotion could be introduced, such as referral reward, group buy discount and commission for doctors. Referral reward will be used for on-line sales. People purchase products online or register with the TCM Healthcare will be given referral reward - a bottle of Paus-Relief for free if she refer the products for 5 people. Namely, if one of her friends purchase the product because of her referral, she will get one point for the reward. Five points can be used for change for a free bottle of Paus-Relief.

Financial Analyses.