Yunnan Baiyao Case Study

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Yunnan Baiyao Case Study Yunnan Baiyao is a well established household brand in China, known for its unique traditional herbal medicines used in the treatment of open wounds, muscular strains, bruising, arthritis and the invigoration of blood circulation. Baiyao, the core product of the company, was originally formulated in 1902 and approved for commercial sale in 1916. The formula and manufacturing process of Baiyao had been kept secret for a number of years even after it was passed along to the Chinese government in 1955 after the death of the founders’ wife. In 1971, various forms of Baiyao and related products saw rapid development in its mass production, research and application. It was during this period that the active ingredients had been identified and the pharmacologic activity had been determined. In the mid nineties the company moved to a more modern enterprise system which brought about funds for technological upgrading, standardizing operations and management practices. The company continued to experience a series of reforms, restructurings and strategic moves through the nineties and early 2000’s that moved Yunnan Baiyao in the direction of becoming a diversified and vertically integrated organization. The acceptance of China into the World Trade Organization in 2002 presented significant opportunities and many challenges to the Chinese pharmaceutical industry. Issues of the Case Reform of the industry and the accession of China to the World Trade Organization has brought about changes to the competitive landscape. As a result of the WTO designation several diversified and vertically integrated pharmaceutical companies had appeared, shaping the industry landscape. This changing competitive landscape will put pressure on existing firms to either grow bigger through integration and diversification or be eliminated through competition. As a state

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