Life Sciences and Health Care in China
Opportunities, challenges, and implications
In recent years, China’s annual GDP growth rate has exceeded 10 percent on average. Even besieged by the global recession in 2009, China’s GDP maintained a growth rate of 8.7 percent. As a result of its continued economic prosperity, the country’s standard of living has improved significantly, fueling residents’ awareness of the importance of personal health as well as their demand—and ability to pay—for more sophisticated health care services.
The Chinese life sciences and health care industry has demonstrated impressive growth since the mid-1980s, at a rate far exceeding that of the nation’s annual gross domestic product (GDP). China’s total health care expenditures in 2009 totaled 1.61 trillion RMB, up 10.9 percent from 2008. And the recently proposed health care reform plan is generating spirited discussions about the industry’s future. When implemented, the plan is expected to transform China’s health care system, significantly impacting all stakeholders.
In order to help industry players better understand this vast and critical market—and how it might change in the very near future—this report provides a comprehensive overview of the life sciences and health care industry in China today. Specifically, it explores the opportunities, challenges, and implications for participants in four industry sectors—pharmaceutical, medical devices, biopharmaceutical, and hospitals—and provides insight about what companies can expect from a market that is only just beginning to enter a significant era of growth.
Some key findings include:
- Opportunities exist for pharmaceutical companies in OTC, low-cost drugs, and M&A: With the Chinese government investing heavily in its rural health care system, social medical insurance coverage, and community hospitals, drug sales (mainly OTC and low-cost drugs) should increase. Capital-rich pharmaceutical firms may consider mergers with and acquisitions of smaller companies to boost their product portfolios and build their presence in China.
- Well-positioned device manufacturers may become market leaders by targeting the right products: Health care reform will significantly enlarge the market size of China’s medical device sector, with devices for primary care hospitals likely to see rapid growth. And as the Chinese medical device sector is highly decentralized, well-positioned manufacturers may be able to capture a significant share of the sector.
- MNCs face opportunities and risks when investing in the China hospital sector: Understanding local practices and regulations is essential for MNCs to mitigate potential risks and succeed in China. This is particularly important in the hospital sector, where foreign players offer quality services that are highly valued by China’s growing wealthy population. Capturing this market segment should help increase profits as well as support the growth of the private hospital sector.
Download the full report below.