Let Traditional Pharmaceutical & Medical Device Business Embrace the “Internet plus” (I)

October 24, 2016 was a symbolic day for Terry Yuan, chairman of Ddu. China's cross-border medical trade development summit, sponsored by Ddu, was solemnly held in Shenzhen city’s Kylin Villa with the main focus of thummit being the development of the Indian market. The summit attracted over 100 influential people including some exceptional leaders of pharmaceutical companies , pharmaceutical researchers Internet pioneers and some of the financial investment elite, to discuss the development of China's high-quality medical trade suppliers and what the future holds in store for them. At the same time, the success of the summit also marked a more mature and stable development stage of the cross-border B2B vertical platform, Ddu (www.drugdu.com).

Beginning of a venture: Earning the first month’s  income  through reputation

Terry Yuan, smartly dressed in a light-colored lounge suit, looked steady and prepared for the initial introduction. He graduated from Sun Yat-sen University and was the Chairman of the Student Union of the Graduate School of Chemistry. After graduation, Mr. Yuan came to Shenzhen alone and worked in an oil trading company, searching for the right opportunities and direction.

Due to the fact that he lacked the relevant industry experience, Mr. Yuan felt that he needed more confidence and so, in order to enhance social competitiveness, he  optimized his commuting hours by learning English.

“At that time I often went out with an English dictionary, whispering words to myself everywhere I went, even on bus! Passengers looked at me as if I were a madman.” Mr. Yuan smiles. It was this discipline and the growth of his knowledge of English which laid the solid foundation for his future business, visits abroad and foreign communication.

Over the past few years, Terry Yuan gradually accumulated a lot of practical experience related to the trade industry. By virtue of his vast international experience and excellent foreign language proficiency as well as his knowledge of chemistry and medicine, Mr. Yuan decided to embark on the road of entrepreneurship and set up his own medicine trade company---- Shenzhen Mellow Hope Pharm Industrial Co. Ltd ("Mellowhope") which mainly provided drug import and export services.

Like many other entrepreneurs, Mr. Yuan’s path has not been a smooth one. “In the process of dealing with international merchants, personality and credibility play an important role”. In 1997, Mr. Yuan conducted business with an international trader .   There was a delay in the delivery which could have meant a high compensation for Mr. Yuan but instead, he forwent the damages with the principle of mutual understanding, leaving a deep and positive impression.

After this the Asian financial crisis broke out which caused the credit crisis in the international trade industry. On the basis of friendly relations and cooperation as well as their exceptional reputation, Mellowhope won the recognition of various international traders during this time. A well-known Italy pharmaceutical company granted credit to Mellowhope of nearly a million dollars for 3 months, with the agreement that medication could first be sold, and repayment could be postponed for three months. Relying on adequate credit lines, Mr. Yuan quickly opened the sales channels and dug out the first barrel of a medical device business . Later, Mr. Yuan conducted negotiations with Spanish and Indian pharmaceutical companies to acquire a fair amount of credit each month.

Since then, Mellowhope has set sail, catching up with the dividend period of the export of raw materials, Mellowhope is smoothly going from strength to strength.

Innovation: The first export order of China's vaccine

In the initial phases of the business, like most companies, Mellowhope mainly engaged in "penicillin" and other ordinary bulk drug export services. Gradually, Terry Yuan realized that ordinary API exports were very common and the competitive advantage of price alone was difficult to maintain, so instead, he tried to act as the agent for an innovative API, when no one was exporting it, with great success.

However, as a visionary, Mr. Yuan did not feel optimistic about the future of API exports. Although innovative APIs were the new wonder medicine, similar products emerged quickly and Yuan began to think of ways to transform his business model. This time he set his sights on vaccines.

At that time, the export of vaccines was still monopolized by developed countries as a high-end industry output. With years of trade experience and expertise, Mr. Yuan thought that China's vaccine manufacturers had already had the ability to export to developing countries. There was a need for a pioneer to test the waters. If successful, the market life cycle of vaccine products would not only help his company to achieve yet another great leap, but also win honor for the entire pharmaceutical industry in our country.

Opportunities are always there for those who have a willing mind. By accident, Mr. Yuan became involved with Mao Jiangsen, the inventor of the hepatitis A vaccine and an academician of Chinese Academy of Sciences. Academician Mao was also interested in exporting the product to an international market. They hit it off and were soon working together to export the hepatitis A vaccine.

Even though his strategic intentions were good, Terry Yuan had to put most of the company's liquidity into the export of the hepatitis A vaccine. Mellowhope was caught in financial difficulties, but Mr. Yuan never thought of giving up. “Some people found it difficult to understand why I’d rather try to export vaccines than APIs, since the future of vaccines was unclear but I insisted that where there is innovation, there is the future. Vaccine exports were promising.” Faced with liquidity problems, all employees took a pay-cut of 20%, but no one left and finally, all their suffering was rewarded.

Everything comes to him who waits. After five years of endless struggle and great effort and with the weak market of APIs in 2006, Mellowhope officially registered to export the hepatitis A vaccine. This was the first time the vaccine was promoted with China's independent intellectual property rights aboard. Thus, Mellowhope smoothly transformed from API export-oriented enterprise to vaccines and biological agents export-oriented enterprise. Today, the business is thriving.

With the improvement of the quality of health products in China, in 2007, Mr. Yuan decided to establish and improve on their vaccine development system, which provided a sustainable export trade development model and it is now expected that  exports will reach one billion within the next five years.

Recently, the Pharmaceutical Economic News reported that Mellowhope is one of China's leading vaccine export enterprises. In the first half of 2016 it was reported that the main companies which export the vaccine to India are Chengdu Institute of Biological Production and Mellowhope, accounting for 89.5% of the total export of human vaccines.