Kirin Kunpeng Biological Pharmacy Co., Ltd. (China) (“Kirin Kunpeng” for short) --- the biggest medical project, which Kirin Brewery Co., Ltd., the renowned Japanese enterprise, has invested in abroad. Its Chinese partners include Shanghai New Medicine Research and Development Center, Zhangjiang Hi-Tech Park Development Co., Ltd., Chinese Academy of Medical Sciences (CAMS) and Oriental International Enterprise, Ltd. The Kirin Kunpeng Project entered Zhangjiang Hi-Tech Park at a time right before the initiation of the “Focus-in Zhangjiang” Program, and added fuel to the construction of “Zhangjiang Medicine Valley”. The project was a vital event in the field of biological pharmacy in Shanghai or even in China, and drew enormous concern from many. In the first phase of the construction plan, two world-patented and most successful recombinant genetic pharmaceuticals – Recombinant Human Erythropoietin (rh-EPO) and Recombinant Human Granulocyte Colony Stimulating Factor (rh-G-CSF) – were introduced. Rh-EPO, whose Chinese trade name is Lixie Bao, is mainly used to treat renal anemia, a severe complication appearing in chronic hemodialysis sufferers, accompanying renal dysfunction, and anemia complicating other diseases such as tumor. And, with the introduction of rh-EPO into clinical application, the treatment of renal osteodystrophe is remarkably improved, therefore greatly ameliorating life prognosis of the patients. Rh-G-CSF, whose Chinese trade name is Hui Erxie, is mainly used to treat neutrophil leukopenia caused by chemotherapy and radiotherapy. And it is especially indispensable in hematopoietic stem cell transplantation and marrow transplantation, being of critical importance in raising the living quality of cancer sufferers and helping recover their health. The Kirin Kunpeng project also introduced the technology in the production of biologicals and management system as well as product quality guarantee system, building up a biological pharmacy factory that measures up to international standard. In the six years after the foundation of Kirin Kunpeng Biological Pharmacy Co., Ltd. (China), the enterprise has reached the top among Chinese biological pharmacy enterprises in terms of brand establishment, product quality, after-sale service, product development and economical benefit. It has achieved such success through the following six aspects: advancement of management, cultural exchange, people-orientation, specialization-oriented position, unceasing exploration and appropriate localization, and now it’s running towards the best biological pharmacy enterprise in China.

Advancement of management:

When enacting the project feasibility report, we already set the introduction of advanced management as a goal that must be reached. Advanced technology and high quality products need to be guaranteed by a good managing system, therefore the introduction of advanced philosophy and system of management is, in some perspectives, more important than the introduction of technology. It is Kirin Kunpeng’s essential management goal to promote advanced management philosophy, to promote a change of conventional way of thinking and acting of the staff, and to be established in the market through forming an internal high-quality management system. According to the characteristics and the development objectives of joint venture, we brought in from abroad an advanced medicine production quality control system as well as relevant experience, and have built up a production-quality supervision and control system that fits the reality of our company. We’ve also been perfecting the system through practice, achieving notable success. The factory has till now been running for 4 years, and has not yet reported a single case of production failure. The quality of products has been consistently good. We have proved through practice that one of the reasons why the products of Kirin Kunpeng always boast high quality is that we have earnestly and comprehensively put GMP into practice, transforming the philosophy and intention of our enterprise into a guide of activity, so that we’ve presented the modern philosophy concerning quality through the quality of our products. Meanwhile, Kirin Kunpeng pays special attention to the inculcation and cultivation of the sense of law in its staff. The company has issued a brochure of law instruction and a staffer manual defining behavioral regulations forbidden to be violated. Abiding by the law has become a rule that every staff member follows. The regulation of duty and right, goal management system and achievement assessment system institutionalize the responsibility, duty and objective of every staff member’s work. Everyone must take up his or her responsibility and must not trespass on others’ right. The administrators and managers constitute only 9% of total staff, indicating high working efficiency. Democratic and centralized decision-making becomes the basic mode of policy-making. Now Kirin Kunpeng has almost built up an effective management system that fits its characteristics, thus guaranteeing that we make the best of the technology and advanced equipment we’ve introduced in, achieving the goal of applying advanced management.

Cultural exchange

In the process of economical globalization and the future development of the enterprise, the exchange of Chinese and foreign culture is always an important issue. When management, technology, products and foreign high-level managerial personnel are brought in, foreign culture comes with them. Therefore, comprehensive exchange of Chinese and Japanese culture and establishing a culture that accords with the enterprise, making it the impetus for development, is a significant part of work for a joint venture. It is a prolonged and trying process to establish our own enterprisal culture based on two different cultures, but it is also work that high-level managerial personnel must take the initiative to embark on. The high-level managers of both Chinese and Japanese nationalities are obliged to communicate and exchange their ideas, get to know about and respect each other’s culture and way of thinking. Chinese managers need to support the philosophy of management of their foreign colleagues as well as their tradition, and at the same time they need to provide solution schemes to crucial issues and carry out plans on just grounds, to our advantage and with restraint; they should also take on the responsibilities. In order to achieve such performance, the Chinese high-level managers have to obtain a broad range of knowledge of profession, law and management; and it is in this way can they win the respect of foreign managers, so that the goal of maintain managerial efficiency and prestige can be reached. Kirin Kunpeng has done a comparatively good job in this aspect. Under the aim of steady development of the corporation, both Chinese and Japanese managerial personnel seek common ground while reserving differences, discuss major issues together, unite as a body, and have gradually established an effective management system through cultural exchange and mingling, thus have enabled the steady development of the enterprise. The Japanese general manager was awarded the Shanghai White Yulan Recordative Prize in 2004 because of his notable achievement in tending, managing joint venture as well as social contribution.

People-orientation

Our mission statement is “make contribution to Chinese medicine through high-quality biopharmaceuticals.” This mission statement sums up the guideline of strict quality, the guideline of consistent new product development, the guideline of fair and open marketing and the guideline of raising human health level and contributing to social progress. But it is not an easy job to reach the goal. It is our staff who operate the advanced machines; it is our staff who promote our product; it depends on the effort of everyone of our people, both Chinese and foreign, to reach success. People-orientation is one of the core management philosophies of Kirin Kunpeng. It is our goal of management to have confident, happy, healthy, law-abiding staff members. For internal management of an enterprise, staff members are the basis, the important resource, therefore a joint venture need to be cautious when making decisions concerning its staff members. This is a way to express respect to our employees and advancing mutual respect among staff members themselves. In order to achieve this, we established a “labor-capital meeting” system. Democratically elected staff representatives can talk with managers over the concerns of both the staff members and the managerial personnel in this regular meeting, thus enabling the employees to know clearly about the whereabouts of the company’s management and operation while prompting the company to take employees’ ideas into careful consideration in daily operation and policy-making. The enterprise has established a humanized management system, a reasonable salary-bonus system, and a relatively comprehensive welfare system to express our concern with employees through the provision of good and stable labor protection system and material welfare. Otherwise, Kirin Kunpeng has also established a education and training system to provide the employees with long-term training programs of all kinds and all levels to raise their quality and ability. Because of the maturation of Chinese staffers, foreign high-level managers have decreased by 40%, while Kirin Kunpeng has founded a firm place in fierce competition.

Specialization-oriented position

Up to now, Kirin Kunpeng produces and sells only two products: Recombinant Human Erythropoietin (rh-EPO) and Recombinant Human Granulocyte Colony Stimulating Factor (rh-G-CSF). The small number of products has denied extension, but we can make them crack products. This is our thinking. From a global perspective, our two products are of the greatest importance and are among the most profitable, especially rh-EPO, whose global sale has almost reached 10 billion USD. Due to economical development and standard of living in China, the two pharmaceuticals have now reached a sale of only hundred million RMB. When Kirin Kunpeng put into production, the market had already been severely competitive. There have emerged tens of factories which produced mimic products and entered the market by means of very low product price. And with frequent and sophisticated public bidding and continual policy-related price reduction adding to the adversity, the market, to some extent, could be described as “treacherous”. But when there’s danger, there’s opportunity. In order to overcome the hardship, Kirin Kunpeng embarked upon its undertaking with great perseverance. Medicine has very highly technical content, and when used clinically, should be applied adapted to the particularity of a patient’s condition. Thus, new methods of treatment that base on this medicine have been constantly appearing. Therefore, specialized promotion is the breakthrough point and the key to sustenance. Kirin Brewery Corporation Japan and Kirin Kunpeng have explored together the use of EPO, G-CSF in renal, hemal and tumorous sciences, and have regularly invited world famous specialists and experts from both China and abroad to all kinds of academic forums and academic reports. In this way, Kirin Kunpeng has not only provided a platform to raise Chinese experts’ academic status internationally, but also contributed to the advancement of medical treatment of renal, hemal and tumorous diseases with widely acknowledged accomplishment, and established a praiseworthy image in relevant medical academia. With its high quality products, advanced academic service, specialized sales, well-controlled financing and nationwide logistic network, Kirin Kunpeng has successfully carried out the business strategy of “differentiation” and “specialization”, setting up the image of the top brand in the professional medical field of China.

Unceasing exploration

Unceasing new product development plan is the driving force of an enterprise. Any enterprise that wishes sustainable development need to continuously develop new products that meet market demand. An important aspect of introducing foreign capital is how to make the best use of the technical resource of the foreign parent company to develop new patented products and exploit new market. When bringing in the Kirin Kunpeng project, we had already contracted the introduction and development of a series of new products. Kirin Corporation Japan is the strategic partner of Amgen Inc., the biggest biological pharmacy enterprise in the world, which ranks among top enterprises in terms of biotechnology. And these resources form the foundation of Kirin Kunpeng’s new product development. After Kirin Kunpeng began operation, we founded a research group consisting both Chinese and Japanese researchers and discussed for more than one year on various issues, and made a detailed plan of new product development, deciding to embark on new product development together with the parent company in Japan, shorten the period of developing and marketing of new products in China and try to export them. Because of Chinese managing staff’s familiarity with Chinese laws and technological regulations and their knowledge of the technical aspect of new medicine development in international terms, it is Kirin Kunpeng’s Chinese staff who have sponsored new product development. This is also a noteworthy part of the enterprise’s joint management culture. The development of new products, also, cannot be indiscriminately done. It should accord with the specialization strategy of the enterprise, focusing effectively on the specialized field as planned. Kirin Kunpeng, accredited by the patent, technically supported by Kirin Corporation Japan, is now endeavoring to develop the following new products: the Epoetin Alfa injection, which is a new generation of controlled release recombinant genetic human enthropoietin stimulant albuman injection, Sevelamer Hydrocholoride, which is used to treat hyperphosphoremia frequently appearing in renal failure patients, and the Baishufei injection, used in pretreatment of marrow transplantation and hematopoietic stem cell transplantation. Together with the increase of indications of our present products, we use these new products to expand the market. Further more, Hi-Tech Enterprise Acknowledgement and Enterprise Technology Development Acknowledgement have also enhanced the status of the New Product Development Department of our enterprise, pushing forward new product development into a new phase. With the strengthening of its developing ability as well as the perfection of China’s intellectual right protection, it is within our expectation that Kirin Kunpeng will speed up the introduction of more new products.

Appropriate localization

The whole construction of the Kirin Kunpeng project was contracted to our Japanese partner. The most advanced equipment was used, and the Chinese construction was almost a duplicate in the mode of the Japanese factory; the management system was also very similar to the original one. But inevitably, a kind of misfit appeared. Take for example the automatic filling machine assembly line and the equipment for producing pure water and water for injections. These machines are of very high technology and have a high degree of automation, but their alarmingly high rate of waste, low efficiency and high cost of maintenance directly affected the cost of production. After an in-depth research and analysis of these problems, we made an efficiency-enhancement scheme aiming at them, and significantly lowered the production cost without reducing product quality, which is a highly beneficial result. The 2004 budget is by 10 million Yuan lower than the 2001 budget, when the factory first went into operation, but there has never been a single accident in terms of product quality. Kirin Kunpeng has, to quote the Japanese staff, reached or even surpassed the Kirin pharmacy factory in Japan in terms of quality assurance.

Remarkable economic benefit

Although the total investment of the Kirin Kunpeng project was RMB 250 million Yuan, according to the new national standard of enterprise scale categorization, Kirin Kunpeng is a small enterprise in terms of sale volume and number of staff. Nevertheless, Kirin Kunpeng has boasted admirable achievement in a limited market under its limited scale. The corporation has up to now distributed to its shareholders a sum of dividends of 25 million Yuan. It now has a circulating fund of 90 million Yuan, and its yearly profit is well above 10 million Yuan. The enterprise has entered a benign stage of operation, and is among the top of recombinant genetic pharmaceutical manufacturers in China.

The clear strategy of establishing a leading brand, effective marketing and management policies, consistently high quality products and high level academic service constitute Kirin Kunpeng’s winning elements in the competitive market. Therefore, although under unfavorable market conditions, Kirin Kunpeng still occupies the predominant place among recombinant genetic pharmaceutical manufacturers in Shanghai or even in China in terms of industrial output value, sale volume and net profit. And we are confident in expecting Kirin Kunpeng Biological Pharmacy Co. Ltd. will be sure to become a model enterprise in the field of biological pharmacy in China or even Asia.

Written by Li Guangping

Vice president