After 31 years in China, Smecta achieves digital leadership through brand innovation

New retail and all-channel approach are key to widening and deepening access to high-quality medical resources, says GM Alan Chen

After 31 years in the Chinese market, Smecta, a signature product of Beaufour-Ipsen, is taking advantage of brand innovation and all-channel distribution to enjoy a greater presence in China.

Montmorillonite powder, the key component of Smecta, went viral online at the beginning of this year, as it was said to treat the possible emergence of a new subvariants of Omicron.

"Our products were sold out at once. We didn't expect the sudden popularity. We really appreciate customers' acknowledgement to our brand," said Alan Chen, general manager of Beaufour-Ipsen (China).

"Even until March, our products were still in great demand from customers. Workers in the factory worked around the clock to increase the production capacity. We didn't take a day off, even during the Spring Festival holiday. We changed the shipment of raw materials from sea transportation to air to accelerate the delivery," Chen said.

"With increased production capacity, we increased the output by around 30 percent. Even with all these efforts, there is still a supply and demand gap existed," he said.

Expanding China market

Smecta has been on sale worldwide since 1975, selling more than 15 billion bags and benefiting nearly 700 million patients in more than 80 countries for more than 48 years.

In China, production of Smecta began in 2000 at Beaufour-Ipsen's Tianjin production base, using raw materials imported from France.

Chen noted that before 2016, Smecta only had a single specification of 10 bags, and the outer packaging for hospital channels and retail channels was the same.

"We found that consumers outside hospital have a strong demand for the product, with different preferences for packaging and taste. Therefore, after 2016, we established a retail team and introduced some concepts, including new packaging, 15 bags package and flavors," said Chen.

Currently, Smecta has a family package of 15 bags, with orange and strawberry flavors, so that the taste of the medicine is better accepted by babies.

The outer packaging has a smiling face on it, conveying the idea that "with Smecta, I am fully recovered from diarrhoea and can smile back at life." Currently, Smecta needs to be dissolved in water.

In order to meet the surging demand of consumers who are traveling or on business trips as well as young consumers' pursuit of high quality, the company will introduce a new ready-to-use dosage form. It will be the only ready-to-use dosage form of Montmorillonite powder on the market at present, a significant breakthrough in 30 years.

Digital transformation

"As a multinational corporation that has been deeply rooted in China for over 30 years, we have always been paying attention to market changes and policy trends, and making changes correspondingly.

"We've noticed that during the past 30 years, China's digital economy has been burgeoning, and Chinese consumers see digitalization as an important tool. They prefer to communicate with each other with more digitalized methods.

"For young consumption groups who grew up in a digital era, online platforms are their main consumption scenario. They wish to use internet tools, especially short videos and shopping apps, to acquire information about daily health and satisfy their healthcare demands," Chen said.

To meet these surging demands, the company launched an intestinal self-test mini program on WeChat, and explored e-commerce channels on Eleme and Meituan, so that consumers are able to self diagnose, purchase drugs online and complete self healthcare management.

"We are growing with China's development in the healthcare and consumption sector, driven by the demands of consumers and patients. Facing changes in the Chinese market, we have always adjusted our business strategies, actively seeking more business development paths. As a leading global biopharmaceutical company, we also have the gene of retail, realizing the all-channel transformation that combines hospital, retail and e-commerce," Chen said.

All-channel approaches

Ever since 2016, Smecta has been sold in hospitals and retail channels. But now, its main distribution channel has switched from hospitals to retail. Currently, its sales network covers 31 provinces, municipalities and autonomous regions. Its retail market share has increased from more than 30 percent in 2016 to more than 50 percent now. In terms of hospital channel, the company launched efforts with strategic partners for promotion and market exploration.

For example, the company signed agreements on distribution channel cooperation with Shanghai Pharma in 2020.

This raised the accessibility of Beaufour-Ipsen's medicine nationwide. Likewise, in the same year, the company signed a strategic partnership with Baheal Pharma Group, enabling patients to get the company's products in a more convenient way.

In terms of retail channel, the company owns hundreds of distributors across the country, which helped it expand to more pharmacies.

Through cooperation with chain stores, Smecta is offered in nearly 300,000 pharmacies nationwide, taking a leading position in the market share of Montmorillonite powder. It means consumers and patients can purchase Smecta from more than half of the pharmacies in the country.

Research institutions estimate that in the next five years, the market volume of online pharmacies will surpass that of brick-and-mortar pharmacies. Therefore, the company has been actively making more efforts in e-commerce. Apart from entering online pharmacies of Alibaba and JD, it is also cooperating with online-to-offline platforms such as Meituan and Eleme, as well as internet hospitals and online short video platforms.

"With the help of e-commerce, we hope to make more interactions with consumers. In the future, we plan to open flagship shops on JD and Tmall so that consumers can purchase our products in a more convenient way," Chen said.

As a French company, Beaufour-Ipsen is committed to carrying out its social responsibility in China to benefit patients and the public. During the initial outbreak of the COVID-19 pandemic, it donated drugs to front-line care facilities including Wuhan's Huoshenshan Hospital.

Working with the China Biodiversity Conservation and Green Development Foundation on its Water Safety Program, Beaufour-Ipsen donated water purifiers, drinking cups and cup sleeves to help children in rural primary schools in Bijie, Guizhou province have access to purified water.

In association with public welfare organization Vibrant Community, it launched the Migrant Children Healthcare Program, hosting events including parent-child days, picture book donations and other activities.

French President Emmanuel Macron visits China from April 5 to 7.The visit is expected to help the French leader better understand China, boost cooperation and tackle common challenges.

Beaufour-Ipsen said that it will continue to enhance its presence in the Chinese market, accelerate the expansion of its product pipelines and expand commercial partnerships to meet the growing health demands of patients and consumers.

This year, the company plans to launch new products, including probiotics and bowel cleaning drug, in the Chinese market. It will team up with more strategic partners to explore China's healthcare market and continue to explore new sales models in the digital era, such as livestreaming marketing.