【正文】 OX。 physician interviews。 Retail pharmacy interviews。s heavy advertising Only around 10 % of those seeking treatment purchase drugs Only 1% would follow prescription Total incidence* Do not seek treatment Seek treatment Not aware 100~5~0~5~ 1 0~ 7 0~ 2 0 * The incidence rate is around 5% in Shandong Source: Physician and pharmacy interviews。 retail pharmacy interviews。 third, patients are usually familiar with me and they will feel awkword.” —— Zhangyongxin town level clinic interview Yantai ~ 1 0~5~0~ 6 0~ 4 0~ 2 0~ 3 0~ 5 581997 1999 2023 Retail Pharmacy Hospital Clinic Jining ESTIMATE IN ADDITION, GYNO DAKTARIN NEEDS TO GROW THE MARKET SHARE ESPECIALLY THOSE OF COUNTY AND TOWN Source: Distributor interviews。 McKinsey analysis ~5~0 ~ 1 0~ 3 0~ 4 5~ 2 0~ 4 5~ 6 5~ 8 01997 1999 2023 Retail Pharmacy Hospital Clinic “ Gyno patients will usually e to hospital for body check and go to pharmacies to refill drugs. For such kind of disease, people still trust large hospitals. However, more and more people purchase drugs in pharmacies” —— Liangshan hospital, Gyno physician interview “ I don’t have many gyno patients. This is because of 3 reasons. First, I am a man。 McKinsey analysis Sales by strata Mn RMB, % Motilium Sidashu(斯達(dá)舒 ) Wei’ershu(謂爾舒 ) Mosapride(莫沙比利 ) Tidines(替丁類藥 ) GI drugs 15 26 19 41 15 22 20 43 22 37 26 15 26 44 21 9 18 50 23 10 1 17 17 66 YANTAI JINING Vaginal Infection Category Review FOR VAGINAL INFECTIONS, PATIENTS ARE MORE AWARE OF THE DISEASE AND GO TO HOSPITAL FOR TREATMENT Percent Less latent demand Almost all patients aware of the disease due to obvious symptoms and regular check up 80% of patients seek treatment Large hospital is important influencing channel Most patients seeking treatment will go to large hospitals Though half or more will purchase prescribed drugs in pharmacies Market player should focus on share gain Total incidence Do not seek treatment Go to large hospital Go to small clinic Self medicate at pharmacy Seek treatment Not aware 100~ 2 5~0~ 5 5~ 8 0~ 2 0~1 Source: Physician, pharmacy and clinic interviews Hospital is still number 1 channel to push Gyno Daktarin sales Pharmacy is being increasingly important 30% would use branded drugs, while 70% would use nonbranded drugs FOR GYNO DAKTARIN, HOSPITAL IS CRITICAL FOR PRESCRIPTION BUT PURCHASING HAS BEEN GRADUALLY SHIFTING TO RETAIL PHARMACY Anecdotes Quantitative examples SubTA sales by channel Percent Source: Hospital interviews。 hospital pharmacy interviews。 retail pharmacy interviews。 McKinsey analysis Total = RMB million Village County Town City IN BROAD MARKET, MOTILIUM IS LOSING OUT BIG TIME IN RETAIL PHARMACY CHANNEL … Retail pharmacy Hospital Clinic Source: Distributor interviews。 physician interviews。 retail pharmacy interviews。 McKinsey analysis FOR GI DISFUNCTION DRUGS AS A WHOLE THERE IS SIGNIFICANT LATENT DEMAND。 persuaded by pharmacy clerk Perceived drug available but persuaded by pharmacy clerk Changed mind by myself “ When I go to the pharmacy without a drug in mind, I just ask the pharmacy clerk to remend. Then I will check the drug’s introduction sheet, if this drug covers my disease, I will have a try” – Yibin city level focus group Total drug sales breakdown Percent Pharmacy Hospital Clinics 314516323235425233133037%Overall Motilium Gyno Daktarin Sibelium XJP should design special initiatives to target pharmacy channels CLINICS ARE PLAYING IMPORTANT ROLE ESPECIALLY AT COUNTY AND TOWN AND BELOW Source: Interview。 Focus group。 McKinsey analysis Drivers Increased price sensitivity Changed medical insurance policy Improved highway infrastructure Rich information access TV Newspaper Increased life pace No time to visit hospital Pharmaceutical market deregulation policy More and more pharmacies clinics Conveniently located Middlesmall hospitals find it hard to survive due to lack of patients Severe symptoms Town hospital Minor symptoms Largest hospitals in city and county Middlesmall hospitals in city and county Pharmacy/clinics Rural patients City patients A LARGE PROPORTION OF DRUG SALES COMES FROM RETAIL PHARMACIES。 focus group。 ? provide business model / proposal for XJP to capture the broad market McKinsey Broad Market Study Process ? Project design (Q1, 2023) ? Project review with local and regional JC team (Apr. 03) ? Survey market selection (Apr. 03) ? Field work in 2 cities in Shandong (May 03) ? 1st interim report (midJune 03) ? Field work in 2 cities in Sichuan (midJune – midJuly 03) ? 2nd interim report and Killer Idea workshop (end July 03) ? Final report (Aug. 03) ? Presentation to corporate management (Sept. 03) BROAD MARKET CAN BE DEFINED AS CLASS 2 HOSPITALS AND BELOW AT REGIONAL CITY LEVEL AND ALL HEALTH CARE INSITITUTIONS AT COUNTY LEVEL AND BELOW Regional city County Town Village Class 3 hospital Class 2 below hospital Pharmacy Clinic Broad market Source: McKinsey analysis BROAD MARKET DRUGS INCLUDE OTC AND “OUT PATIENT” Rx DRUGS Source: McKinsey analysis Targeting easily diagnosed, nonlife threatening diseases Easy to use Relativ