China LSHC Industry Survey: Embracing the Era of Refined Growth

China LSHC Business Outlook & Considerations

Over sixty percent (63%) companies believed their China’s business performance in 2025 was better than in 2024, yet only 27% have met internal expectations. Notably, local companies reported "worse than planned" fell by 28% from 2024. In contrast to life sciences companies, medtech sector continues to face pressure and is performing well below expectations.

VBP/NRDL and new product launches throughout the product lifecycle remain the top considerations for all stakeholders, while supply chain localization has gained significant attention. In addition, companies' business confidence in the Chinese market has significantly recovered compared to last year, and accelerating the development of management model tailored to the Chinese market that embodies the "in China for China" strategy is critical for long-term success. Geopolitical risks are generally considered manageable over the next year.

Q: How did your company perform (top line) in 2025?

For the 2026 outlook, surveyed companies are generally optimistic about their China business in 2026, with overall expectations shifting toward moderate growth, and local players being the most ambitious. High-growth expectations have declined compared to last year, indicating that the industry is transitioning from explosive expansion to measured, sustainable growth. Foreign players show more balanced expectations. The reduced high-growth expectations and nearly doubled steady growth expectations among medtech companies reflect the sector has broadly accepted "slower but sustainable" as the viable operating model under VBP and anticorruption pressures.

Q: How do you foresee your China business outlook for 2026?

New regulatory and technology impact

The survey indicates that China's regulatory framework remains crucial for both local and foreign players. Nearly half of the respondents see the regulatory environment unchanged in 2025; Foreign companies believe that tightened expectations have subsided, while local companies perceive that continue to tighten, reflecting differences in the development stages and priorities of the two types of enterprises. Additionally, impacts of data privacy and export restrictions are showing structural divergence, leading to a rise in demand for "China-specific solutions."

Also important to note that, data governance and compliance management have been elevated to top priorities, reflecting a shift from reactive firefighting to proactive system-building under intensifying regulatory scrutiny. At the same time, innovative products and market access remain the focus of businesses development. Data analysis and process automation lead the application scenarios of generative artificial intelligence (GenAI), with large and foreign companies taking the lead in adoption.

New business investment shifts

Enthusiasm for investing in new channels has declined overall, particularly among local companies, indicating a strategic shift from a "land grab" expansion to "precision operation" of existing channels. With the eased foreign investment restrictions, the local competition continues to intensify. Over 70% of companies are consistently increasing their investment in local R&D, local companies have increased their R&D investment the most (75%). Meanwhile, foreign companies are investing more in local supply chain (69%) than in their local business capabilities (65%), reflecting their strong emphasis on supply chain security.

Furthermore, market size remains a key consideration and one of the primary attractions of the Chinese market, with growing emphasis on business models and supply chain strategies. Amid challenges posed by geopolitical friction and the uncertainty of the capital market recovery, "risk-and-benefit sharing" has become the industry norm for going global. Companies are further focusing their development strategies in China on localized operations, reflecting their determination to align with market trends and deeply engage in China's local innovation ecosystem while strengthening local operational capabilities.

In conclusion

Establishing a more precise value proposition is critical to winning in the Chinese market. Companies are accelerating the shift in strategic focus, placing portfolio value management at the core. Flexible partnerships and transaction models have become a shared consensus for global expansion. All industry players in China need to revisit their market strategies, develop full-lifecycle asset management tailored to local payer mix and competition, actively build a China-specific management model and reshape talent structures, to enhance local operational capabilities, drive strategy execution, and strengthen long-term competitiveness in China.

A total of 112 valid questionnaires were collected from industry executives and investors, among who 68% are C-level and above. The majority of the company types are foreign companies and local companies (accounted for 78% and 22% respectively), and the industry sectors mainly covered from pharma/biotech to medical devices/medtech (accounted for 91% in total). Among all the companies surveyed, over half of them with revenues more than RMB 1 billion.

Note: [1] Large companies: company with 2025 revenue exceed RMB 1 billion; [2] WOFE: Wholly Owned Foreign Enterprise