China Healthcare Industry

Frost & Sullivan's Johnny Huang talks about China's healthcare system and reform, foreign investments on Chinese hospitals, and the current and future of the China medical devices industry. Please give a bird's-eye view of China's healthcare system. Health institutions in China consist of hospitals, community medical centers, public medical institutions, clinics, and other disease prevention institutions. Hospitals accounted for more than 80% of the total healthcare revenue in China in 2010 according to MOH statistics.

Most hospitals in China are owned or controlled by the Government, including central and local health authorities, state-owned enterprises, and the military. In 2009, the Government declared a long-term health reform to achieve the objective of "everyone can have access to the essential healthcare service" and invested at least another incremental CNY 850 billion to develop the healthcare system in China, focusing on primary healthcare system.

MPA: How is China's healthcare system post-world economy recession?
The world economy recession in 2008 had very little impact on China's healthcare industry because China is an over 1 billion population country with gigantic medical needs to address.

MPA: Is China really opening opportunities for foreign investors?
After the implementation of the health reform in 2009, the Government gradually deregulates foreign investments and allows establishment of foreign-invested hospitals. However, how policies
go far and widely remains uncertain yet. Also, we still believe that public hospitals would play the role of tough competitors in the long term, because Chinese patients traditionally intend to see doctors in
large well-recognized public hospitals with state-of-the-art medical technology and best medical human capital in China. Joint hospitals between Chinese and foreigners could be prevalent in the future.
We believe such hospitals would impact little on China's healthcare industry, although patients would benefit from more alternatives on medical service.

MPA: What are key opportunities in China's healthcare market for local and foreign investors alike?
The gigantic medical needs and increasing health affordability are two key elements to attract local and foreign investors. China has hundreds of millions of chronic diseases patients with hypertension,
diabetes, asthma, and chronic pain as well as millions of new cancer patients annually. When the ongoing health reform has successfully developed a universal medical insurance network covering its 1
billion population, the market is expected to speed up its growth in the next years, creating various opportunities in all therapeutic segments in the market.

MPA: How has the Government's USD 125 billion healthcare reform changed the medical devices industry of China?
The investment of USD 125 billion was prioritized in the primary healthcare market, including the development of both urban and rural community healthcare centers. As a result, the essential
medical devices could benefit the most from such investment. After 2 years since the reform, the Government has declared that a primary healthcare network has been basically built to serve the essential needs of China's patients. The infrastructure has been improved greatly; consequently, the growth of outpatients visiting community health centers was much faster than the average level.

MPA: What medical devices regulations cover medical imaging, laboratory and IVD, and hospital supplies?
The State Food and Drug Administration is the institute responsible for medical devices regulation; it has a system with a number of provisions that regulate the medical devices market, including imaging, laboratory, and IVD. Regarding the diversification of China's patient needs, each large country has a chance to become China'sAdidas Adilette Slides