Viagra in China: A Prolonged Battle over Intellectual Property Rights

VIAGRA IN CHINA: A PROLONGED BATTLE OVER INTELLECTUAL PROPERTY RIGHTS

Introduction

This Essay is based on a case study conducted by the Asia Case Research Centre of the Hong Kong University. In 1998 Pfizer launched the erectile dysfunction drug Viagra, two years later they entered the Chinese market. By this time the local market was already flooded with Viagra counterfeits. Pfizer therefore struggled in gaining market share; moreover they faced huge challenges in defending its Invention, mainly due to weak legal protection of intellectual property in China. The objective of this essay is to analyse the case and to come up with possible conclusions and recommendations for Pfizer’s entry strategy. We therefore introduce with a general profile of Chinese culture, before we dig into local economic environment as well as specific conditions in the pharmaceutical industry.

China: Political and economical Environment

There is a strong interdependence between firm competitive environment and government policy. China did indeed achieve the impossible under only a little change in their political system. In the begging of 1978 the market reforms that were passed achieved an impressive economic growth over the last three decades in which China doubled it’s GDP within 9 years (1978-1987). In the years after 1996 the annual growth rate still remained con an average of 10%. The transition in the political and economical environment of this country has been from being an authoritarian regime to an authoritarian market economy, which is characterized towards a market economy under the conditions of authoritarian political control. China’s market economy has gone through institutional reforms towards a freer market economy where it has implemented more pro- competition policies rather than protection of property rights and even less effort to the rule of law. Despite that the private economy violates the traditional socialist regime in China, the private