Post on 30-Mar-2015
China Healthcare Industry and Market
Industry Introduction
Challenges & Opportunities
Industry Introduction
13.20%
28.60%
26.10%
19.50%
22.80%
25.60%
18.00%
13.66%15.64%
12.91%
14.60%
16.50%
15.10%
13.10%
13.30%
9.60%
10.00%
20.52%
22.40%
25.70%
27.80%
21.40%20.20%
15.30%
16.70%16.80%
10.90%11.80%
13.50%
14.50%
0
2000
4000
6000
8000
10000
12000
14000
1978
1979
1980
1981
1982
1983
1984
1985
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1987
1988
1989
1990
1991
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1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008 0%
5%
10%
15%
20%
25%
30%
35%
2010 China’s Health Expenditure was 5.1% of the GDP
From WHO statistic yearbook and Tengwei 2013 semiannual summit
China’s Health Expenditure:17.6% of average growth rate in 30 years
Huge room for healthcare industry improvement
World’s average was 6.4%
Developed Countries’ average was 8.1%
China ranked 149 in the world
394
16431860
2673
11.45
1289
78 01 02 03 04 05 06 07 08 09 10 11 12E 15E
China’s Healthcare Expenditure per person:12%-13% of increase in future 5 years
Reasons for fast growth of health expenditure
Macro economy’s growth leads to income increase
Urbanization and aged population growth
Changes of Disease Spectrum:Death rate increase in: Malignant Tumor, Cardiovascular and Cerebrovascular diseases,Mental Disorders, and Nutrition metabolism and endocrine system diseases
Government investment increase
Insurance
Healthcare Industry CapabilityChemicals: 3454API: 1318Chinese Medicine: 2577Biotech: 202VDR: 62Chinese drug decoction pieces:1236
Manufacturers:
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Q3
0%
5%
10%
15%
20%
25%
30%
Healthcare Industry Total OutputGDP
From WHO statistic yearbook and Tengwei 2013 semiannual summit
In 2012, China’s GDP growth rate dropped to 7.8%
Healthcare Industry Output increased to 21.3%
2006 2007 2008 2009 2010 2011 2012'1-11
5340 6718
8381 9946
12349
15707 16378
20.0%
25.8% 24.8%
18.7%24.2%
27.2%
21.3%
Total Output Growth Rate
Sub Industry
Output( B
RMB)
Year-on-year
%
API 298.5 15.80
%18.23
%
Chemicals 455.2
24.30%
27.79%
Biotech 166.6 18.70
%10.17
%
Devices 140.1 20.80
%8.55%
Materials 118.0 24.60
%7.20%
Chinese Med 369.2
21.50%
22.54%
Decoction
Pieces90.2
26.60%
5.51%
Healthcare Industry Revenues
40 62
84
106 140 158 157
13.7%
54.9%
35.4% 25.6% 32.6%23.2%
16.2%
Total Revenue(B RMB)Year-on-year growth rate
Sub Industry
Revenue( B
RMB)
Year-on-year
%
API 183.3 0.02% 13.29%
Chemicals 434.2 26.11% 31.04%
Biotech 180.9 7.01% 12.37%
Devices 127.2 15.09% 9.23%
Materials 86.7 31.13% 6.30%
Chinese Med 324.4 16.97% 23.82%
Decoction Pieces 53.7 16.69% 3.95%
From WHO statistic yearbook and Tengwei 2013 semiannual summit
In 2012, Revenue growth rate increased to 16.23%, lower than output increase
Service Factor Market
HR Supply
Medicine Supply
Equipment Supply
Material Supply
HR Demand
Medicine Demand
Equipment Demand
Material Demand
Service Market
Insurance
Healthcare Service Demand
Healthcare Service Supply
Social Outcome
Insurance
Financing Market
Residential Outcome
Governmental Outcome
Healthcare Market
From 2009-2013 China Healthcare market report and Industry analysis
Relations Between Characters
Industry Chain
Health services related factors of manufacture, circulation
Medical equipment, diagnostic reagents, medical supplies
Wholesaler
Wholesaler
Middle Products
Source Medicine
Raw Material
Final Products
Source Medicine Producing
Final ProductsProducing
Distribution
Drugstores
Hospitals
Patients
Patients
Healthcare Insurance
Healthcare Insurance
Healthcare Services
From 2009-2013 China Healthcare market report and Industry analysis
2011 Top 5 Manufacturers
Rank Name
1China Resources Medications Group Limited
2Harbin Pharmaceutical Group Holding Co
3Shanghai Pharmaceutical (Group) Co. Ltd.
4 Shiyao Group Co. Ltd.
5Yangtzejiang Pharmaceutical Group Co. Ltd.
2011 Top 5 Distributors
Rank NameSales Income(10K
RMB)
1 China National Pharmaceutical Group Co. Ltd. 12456339
2 Shanghai Pharmaceutical (Group) Co. Ltd. 4880000
3 China Resources Medications Group Limited 4122375
4 Jiuzhoutong Pharmaceutical Group Co. Ltd. 2479820
5 Nanjing Pharmaceutical Group Co. Ltd. 2013727
2011 Top 5 Chemicals
Name Manufacturer %
1 Clopidogrel Sanofi0.70
%
2 AlprostadilBeijing Taide Pharmaceutical Co., Ltd.
0.67%
3 Atorvastatin Liaoning Dalian Pfizer Inc.
0.59%
4 MoxifloxacinBayer healthcare Co. Ltd. of Beijing
0.56%
5 ActoveginLiaoning Jinzhou Ahon Pharmaceutical Co Ltd
0.51%
2011 Top 5 Chinese Med
Name Manufacturer %
1 Kangai injectionJilin Changbaishan Pharmaceutical Group Co. Ltd.
1.90%
2 Xiyanping injection
Jiangxi Qingfeng Pharmaceutical Group Co. Ltd.
1.81%
3 Shuxuetong injection
Mudanjiang Youbo Pharmaceutical Group Co. Ltd.
1.76%
4 Danhong injection
Shandong Buchang Pharmaceutical Group Co. Ltd.
1.46%
5Shenshifuzheng injection
Guangdong Lizhu Group Limin Inc.
1.42%
SDFA Southern Healthcare Industry Research Public
Retailing: Drugstore Geographic
Percentage
China has 0.42 million retail drugstores.
Guangdong, Sichuan, Shandong, Jiangsu, and Hunan possess 38.8% of the total.
Total Number of Drugstores and growth rate
20112010200920082006 2007
SDFA Southern Healthcare Industry Research Public
Local Healthcare Service
102
254329
441
535
703149.0%
29.5% 34.0%21.3%
31.4%
0
100
200
300
400
500
600
700
800
2007 2008 2009 2010 2011 2012
0
0. 2
0. 4
0. 6
0. 8
1
1. 2
1. 4
1. 6
Growth Rate of Local Use of Medicine( 0.1Billion RMB)
38.6
165.3200.7
273
351
464328.4%
21.4% 36.0% 28.6% 32.2%0
100
200
300
400
500
2007 2008 2009 2010 2011 2012
0
0. 5
1
1. 5
2
2. 5
3
3. 5
Growth Rate of County Level Use of Medicine (0.1Billion RMB)
63.488.7
128.3
168184
23939.9%
44.6%
30.9%
9.5%
29.9%
0
50
100
150
200
250
300
2007 2008 2009 2010 2011 2012
0
0. 05
0. 1
0. 15
0. 2
0. 25
0. 3
0. 35
0. 4
0. 45
0. 5
Growth Rate of Local Community Use of Medicine (0.1Billion RMB)
66% of the total market
34% of the total market
SDFA Southern Healthcare Industry Research Public
Treatment Local Distributions
86.9 87.2 84 82.8 81.5
39.5 42.5 46.2 47.5 49.5
0102030405060708090
100
2007 2008 2009 2010 2011
7. 598. 27 8. 77 8. 74 8. 66
2007年 2008年 2009年 2010年 2011年
( )诊疗人次 亿次
12712. 417247. 3
34740. 440950
26080. 2
2007年 2008年 2009年 2010年 2011年
( )诊疗人次 万次Visits (10K) Visits (0.1B)
Local Community Health Centre Visits County Hospital Visits
Local Health Institution Charges (RMB)In 2011, there were 3.8 billion visits to local health institutions. It was 60.7% of the total visits.
Local Community Health Centre’s average charge is 81.5 RMBCounty Hospital’s average is 49.5 RMB
Hospitalization was 37.75 million held 25% of the total number.
SDFA Southern Healthcare Industry Research Public
Local Healthcare Terminals70.3 billion
RMB, 6.5%
Hospital Terminals:774.6 billion
RMB, 72.1%
Drugs Retailer Terminals:230 billion
RMB, 21.4%
420K stores
21979 Hospitals2012 Drug
market cap:1075 billion
RMB
Urban6347, 5
9.1%
Rural1399, 1
3%
Three terminals pattern
County Hospitals, 464, 4.3%
Local community Health Centre, 239,
2.2%
SDFA Southern Healthcare Industry Research Public
Challenges and Opportunities
Recovery of macro economy
OPPORTUNITIES
Government investment growth
Encourage innovation
Base propellant expansion and designated production
The improvement of bidding mechanism
Promotion of the new version of GMP implementation
Reformation of drug technology transfer examination
CHALLENGES
Assessment of generic drugs quality’s consistency
Control of drug price
Control of hospital costs and 0 extra fees
Costs pressure
Shrink of external demand
Patent protection
Supplements and devices development support
Base propellant expansion and designated production
2012
307 500
2009
2013.01.09 Chen Zhu said at the national health work conference, new version of base propellant has approved to pass.
•First-tier health institutes are required to equip with base propellant
•Second-tier hospitals’ base propellant usage and sales should reach 40%-50%
•Third-tier hospitals’ base propellant usage and sales should reach 25%-30%
OPPORTUNITIES SDFA Southern Healthcare Industry Research Public
1. Improve drug quality
evaluation system, figure out an
efficient way to lower price.
2. Expand purchase area, put
high quality and price materials
into purchasing list.
3. Centralize essential and non-
essential drugs purchasing.
Changes
Platform building
Innovation of mechanism
Lower price Quality and price oriented
Drug bidding Purchasing contract and
usage
Main Point
Changes in bidding mechanism
OPPORTUNITIES SDFA Southern Healthcare Industry Research Public
The first 3 generic drugs
can make price
Already on sales
After the first within 5 years,the 2nd and 3rd drug
After 5 years
More than 4 manufacturers
Make price standard
90% price of first generic drug
90% and 80% of the first generic drug
Government set the price
Government set the price
Innovation and
generic drugs have
priority
Based on level of
innovation, set the
price
First will have a
higher margin than
the second
Market selection
Patent protection
Innovations
Priority of making price standard for first generic drug
OPPORTUNITIES SDFA Southern Healthcare Industry Research Public
5071
3731
4490
5050
4682 47684881
4516 45534706
03 04 05 06 07 08 09 10 11 12 13
Eliminated more than 2000 enterprises since last round of GMP
New round of GMP will bring more M&A
There are 597 enterprises get approval
of new GMP
New GMP pass rate is about 15%
?Encourage good enterprises produce more
pharmaceutical productions
Encourage enterprises get approved quickly
Limit registration of enterprises which didn’t approve on time
Make approval of producing requirement more strict
Let the leverage of price be exerted adequately
Give bonus for Implementation of centralized drug purchase
Support GMP project
Promotion of the new version of GMP implementation
New policies:
OPPORTUNITIES SDFA Southern Healthcare Industry Research Public
12.6%
10.7%
9.3%
6.2%
2008 2009 2010 2011
Growth Rate of Visit Fee
13.5%
9.5%8.2%
4.3%
2008 2009 2010 2011
Growth Rate of hospitalization Fee
Control the growth of healthcare fee
Growth rate of visit fee and hospitalization fee shouldn’t be higher than local growth rate of GDP (8%) Results will be recorded into annually audit
Lower the purchasing costs
Prepay visit fee; hospitalization fee should based on insurance payment type
CHALLENGES SDFA Southern Healthcare Industry Research Public
Only about the
consistency with the
original drug
Low quality Generics
Regular Generics
High quality Generics
Same with the
original drug
Better than
original drug
5 consistenciesIngredients, type, standard, safety,
efficiency
In the future four years, China is going to finish 570 types of drugs evaluation, with 33 thousand approvals and 2400 generics consistencies.
Assessment of generic drugs quality’s consistency
CHALLENGES SDFA Southern Healthcare Industry Research Public
0
50
100
150
200
250
300
97- 99年
2000年 2001年 02- 03年
04- 05年
2006年 2007年 2010年 2011' 3 2011' 8 2012' 3 2012' 9 2013' 2
31st average↓15%
High price drugs↓20%
Drug price control
Set a ceiling for drugs profit margin
Cancel some foreign drugs’ individual price making policy
Supervise costs and finished goods price margin
Support high quality generics
CHALLENGES SDFA Southern Healthcare Industry Research Public
Future Trends
New medicines are focusing on prevention
Aging population forces to change the structure of healthcare market
Chronic diseases are becoming major factors
Huge potential of new rural cooperative medical system