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healthcare
healthcare

China Healthcare Insights:

Resilient growth opportunities amidst

current economic uncertainties

Wilson Tan

Director of Data Insights

Date: August 2012

To achieve its goal of providing universal healthcare by 2020, China requires significant levels of

To achieve its goal of providing universal healthcare by

2020, China requires significant levels of investments, providing continued growth opportunities

7,410 Per capita Healthcare Expenditure (USD, 2009) 2,713 309 132 U.S. Japan China India As
7,410
Per capita
Healthcare
Expenditure
(USD, 2009)
2,713
309
132
U.S.
Japan
China
India
As a
proportion
16.2%
8.3%
4.6%
4.2%
of GDP

Sources: EIU, WHO, World Bank, Clearstate internal databases

Three basic medical insurance schemes which vary greatly and cater to differing need of rural

Three basic medical insurance schemes which vary greatly and cater to differing need of rural and urban Chinese population. The provisions of these three schemes are still flawed and far from being universal

Urban healthcare coverage Responsibility for financing healthcare spending has shifted from the government and
Urban healthcare coverage
Responsibility for financing healthcare spending has shifted from the
government and state-owned enterprises to individuals as the economic
reforms of the 1980s led to more people working outside of the state sector
Urban Employed Basic Medical
Urban Resident Basic Medical
Insurance (UEBMI)
Insurance (URBMI)
Compulsory insurance
required by the government
for all working people living in
urban cities
Voluntary insurance designed
for non-working urban
population
 Around 221 million population is
currently covered under this
insurance programme.
 Employees pay 2% of their salary
while employers pay 6%. The average
urban population earning around
 This is a new pilot insurance initiative
to provide insurance coverage for the
non-working children and elderly
living in the urban cities. It was first
launched in September 2007 and is
currently being piloted in 79 cities.
RMB 3,000 would have an annual
medical insured amount of around
RMB 70,000. subjected to the specific
 The government plans to roll out to
80% of all non-working urban
population in 2009 and all non-
working urban population by 2010.
provincial government policy.

Rural healthcare coverage The scheme currently covers around 80% of rural population , while leaving out nearly 200 million rural Chinese without any insurance

New Rural Co-operative Medical Scheme (NRMCS)
New Rural Co-operative Medical
Scheme (NRMCS)

Voluntary insurance where the participation ratio is currently around 80% of rural population

The insured personnel pays RMB 10, while the central and the provincial government each pays RMB 20 to make up to RMB 50.

The government plans to increase the premium to RMB 100 whereby the current contributions doubles from each entity.

China’s impending ageing population and changing lifestyles drives evolving healthcare needs China: Population

China’s impending ageing population and changing lifestyles drives evolving healthcare needs

China: Population statistics  Beijing China  Shanghai
China: Population statistics
 Beijing
China
 Shanghai

Distribution by Age Group (2008)

Under 15 years old: 18.5%

15

to 64 years old: 72.3%

65

years and older: 8.1%

Health demographic indicator

2010

2025

Population (million)

1,341

1,429

Annual rate of growth

0.47%

0.30%

Population in urban areas (%)

45.1%

55.2%

Life expectancy at birth (years)

71.8

76.8

Population median age (years)

35.3

38.9

Infant deaths per 1,000 live births

20

17

Total fertility rate (per woman)

1.8

2.0

Sources: CIA World Factbook; UN Population Division; UNICEF; UNFAO

While China is currently the worlds’ most populous country, its population is

growing very slowly, and negative

growth is expected beyond 2030.

Strict government policies and a cultural preference for boys has given China a skewed sex ratio and declining fertility

rate.

At the same time, the population is aging; the median age will rise from 34 now to 39 by 2025.

With an aging population, healthcare

focus is likely to lean towards chronic diseases in the elderly. By 2020, 11.8% of China’s population will be over the age of 65, compared to 8.56% in 2004.

Industrialization and poor lifestyle habits leading to the rise of chronic diseases, especially in diabetes,

Industrialization and poor lifestyle habits leading to the

rise of chronic diseases, especially in diabetes, hypertension, cancer, and coronary heart diseases

Top ten morbidity rates of chronic diseases

2003 (%)

2008 (%)

Hypertension

26.2

54.9

Gastroenteritis

10.3

10.7

Diabetes Mellitus

5.6

10.7

Rheumatoid Arthritis

8.6

10.2

Cerebrovascular disease

6.6

9.7

Intervertebral Disc Disorder

5.0

9.5

COPD

7.5

6.9

Ischaemic Heart Disease

4.6

6.0

Cholelith & Cholecystitis

5.7

5.1

Peptic Ulcer

3.7

3.3

There are an estimated 260 million cases of chronic disease in China in 2008.

Over the past 10 years, both hypertension and diabetes incidence have quadrupled, while coronary heart disease and cancer have more than doubled.

WHO estimates that without action, almost 400 million people will die from chronic diseases in the next 10 years.

In addition, China is increasingly affected by

obesity, where more than 20% of 7-17 year old children in large cities are overweight or obese. This will be the further driver of chronic disease growth.

Hospitals, especially level 3 hospitals, are seeing disproportionately high patient volumes due to overwhelming patient

Hospitals, especially level 3 hospitals, are seeing disproportionately high patient volumes due to overwhelming patient preference over primary health facilities; RMB 16.5 bil budgeted for 2009-2011 to expand primary healthcare infrastructure and address the imbalance, implying a shift in growth opportunities from urban to rural / lower tier cities

China: Healthcare facilities statistics by type (2009)

China: Healthcare facilities statistics by type (2009) Tertiary healthcare: 1.9 bil outpatients in 2009

Tertiary healthcare:

1.9 bil outpatients in

2009

Primary healthcare:

376 mil outpatients in 2009

Outpatients

Tertiary

healthcare

providers:

20,291

facilities

Outpatients Tertiary healthcare providers: 20,291 facilities Primary healthcare providers: 27,308 facilities Source:

Primary

healthcare

providers:

27,308

facilities

facilities Primary healthcare providers: 27,308 facilities Source: Ministry of Health, China Statistical Yearbook 2010

Source: Ministry of Health, China Statistical Yearbook 2010

Tertiary healthcare:

85 mil inpatients in

2009

Primary healthcare:

2 mil inpatients in

2009

Inpatients

Community Health Centre (CHC) facilities growing by 35.8% CAGR reaching 7,085 facilities by 2010, leading

Community Health Centre (CHC) facilities growing by 35.8% CAGR reaching 7,085 facilities by 2010, leading to expected rise in demand for medical consumables, monitoring and diagnostics equipment, and rehabilitation equipment

China: CHC infrastructure growth, 2004 to 2010

YOY 22.5% 50.3% 52.1% 27.7% 29.2% 35.8% Growth 7,085 5,216 4,036 3,160 2,077 1,382 1,128
YOY
22.5%
50.3%
52.1%
27.7%
29.2%
35.8%
Growth
7,085
5,216
4,036
3,160
2,077
1,382
1,128
2004
2005
2006
2007
2008
2009
2010(f)

Source: Ministry of Health, China Statistical Yearbook 2010

The annual growth rates of numbers of CHCs increased from an annual average of ~22.5% before 2006 to an average annual rate of 39% as the government increased focused on CHC development.

This strong growth trend was further

boosted after 2009 due to the healthcare

reform plan.

~RMB 4.1 bil was disbursed from the central government for the set up or upgrade of 2,400 CHCs in needy cities; while the rest of

the 1,300 CHCs development will be borne

by the local government.

Tier 1 provinces are currently more cosmopolitan in outlook, while Tier 2 provinces are more

Tier 1 provinces are currently more cosmopolitan in outlook, while Tier 2 provinces are more “Local”, with significant differences in economic status and international exposure. Tier 2 provinces will adopt more cosmopolitan preferences, while Emerging provinces are expected continue its high growth trajectory. Growth for international brands expected to be strongest in Tier 2 provinces.

China: Conceptual province development spectrum Pre-take off Rapid development Stabilization Maturity Tianjin Tier 2
China: Conceptual province development spectrum
Pre-take off
Rapid development
Stabilization
Maturity
Tianjin
Tier 2 provinces
Zhejiang
Jiangsu
Capital cities in these provinces are
Shandong
highly developed but have a local
flavour, with lower international
exposure. Typically harder for
foreign products to penetrate
Liaoning
Inner Mongolia
Fujian
Cosmopolitan Tier 1 provinces
Leading cities in Guangdong (Guangzhou and
Shenzhen) and the special municipalities are
highly developed and have the characteristics of
a cosmopolitan city, with international exposure,
and acceptance and preference towards foreign
products
Jilin
Sichuan
Chongqing
Shaanxi
Guangdong
Shanxi
Beijing
Emerging provinces
Shanghai
Capital cities in these provinces are
rapidly growing,
but growth is limited
to the capital cities. Cities are highly
industrial and domestic products are
widely preferred
Legend
Municipalities
Provinces
Growth rate (GDP growth)

Economic development (per capita GDP)

Note: The province development spectrum is a conceptual map indicating the relative levels of development of the provinces, based on statistics sourced from China’s National Bureau of Statistics and the Economist Intelligence Unit and in-depth Clearstate analysis

Healthcare infrastructure and medical expertise is currently centered around the Healthcare Hubs and Emerging Centers

Healthcare infrastructure and medical expertise is currently centered around the Healthcare Hubs and Emerging Centers of Excellence. State-of-the-art

medical expertise is still focused in Beijing, Shanghai and Tianjin, although

scattered leaders in the medical field may be found in Guangdong, Zhejiang, Jiangsu, Xi’an (Shaanxi), and Wuhan (Hubei)

Per capita

healthcare

expenditure

(RMB)

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

Better healthcare infrastructure

Emerging Centers of Excellence Healthcare Hubs Key cities in these provinces host hospitals well-equipped with
Emerging Centers of Excellence
Healthcare Hubs
Key cities in these provinces host hospitals
well-equipped with the latest medical
technology; nationally renown specialists may
be present in some cities, but are scattered
across specific hospitals and overall level of
With highly developed healthcare
infrastructure, the provinces hosts the
nations’ healthcare hubs; leading
medical specialists and where healthcare
facilities are equipped with cutting edge
Shanghai
Beijing
specialisation falls behind that of the
medical technology
Healthcare Hubs
Zhejiang
Guangdong
Tianjin
Jiangsu
Fujian
Liaoning
Higher healthcare
expenditure
Shandong
Chongqing
Inner Mongolia
Jilin
Hubei
Shaanxi
Sichuan
Hebei
Shanxi
2
2.5
3
3.5
4
4.5
5
5.5
6
6.5
7

# of hospital beds (per 10,000 population)

Sources: China Statistical Yearbook 2010; China Health Statistics Yearbook 2010; provincial health bureaus

ABOUT CLEARSTATE 10

ABOUT CLEARSTATE

ABOUT CLEARSTATE 10
About Clearstate asia pacific life sciences market intelligence  Clearstate offers life sciences and med-tech

About Clearstate

asia pacific

life sciences

market intelligence

Clearstate offers life sciences and med-tech market tracking intelligence

complimented by strategic advisory services to help medical device,

pharmaceutical, biotechnology, and healthcare service firms understand their current and potential markets, and implement pragmatic and innovative strategies to ultimately tap into new growth opportunities within Asia Pacific where participants are starved for actionable market

information.

m e d i c a l

are starved for actionable market information. m e d i c a l d e v

d e v i c e s

i n f o r m a t i c s

m e d i c a l d e v i c e s i n

s e r v i c e s

d r u g s

e d i c a l d e v i c e s i n f

v a c c i n e s

a p p l i e d

e d i c a l d e v i c e s i n f

s c i e n c e s

Fact-based growth advisory  Clearstate analyzes substantial market data and facts through healthcare- centric

Fact-based growth advisory

Clearstate analyzes substantial market data and facts through healthcare- centric framework and model to formulate pragmatic and actionable recommendations for growth in Asia Pacific.

Fact Value-add foundation Growth analytics advisory   Health facts and data reflecting market realities
Fact
Value-add
foundation
Growth
analytics
advisory
 Health facts and
data reflecting
market realities
Market and sales-
centric advisory
Actionable Asia-
centric growth
 Up-to-date market
recommendations
facts fed into
healthcare analytics
Data interpretation
that addresses
business issues
Healthcare-centric
framework and
analytical models
Intimate knowledge of Asia CHINA Largest diabetics population 92.4 million adults INDIA Surge in cardiac

Intimate knowledge of Asia

CHINA Largest diabetics population 92.4 million adults
CHINA
Largest diabetics
population
92.4 million adults
INDIA Surge in cardiac disease prevalence 6 in 10 patients worldwide INDONESIA Technology upgrade &
INDIA
Surge in cardiac
disease prevalence
6 in 10 patients
worldwide
INDONESIA
Technology
upgrade & adoption
~50 CT scanners
purchased a year
AUSTRALIA Reimbursement cuts impact pricing AUD 416 million pathology funding reduction
AUSTRALIA
Reimbursement
cuts impact pricing
AUD 416 million
pathology funding
reduction
CHINA CHINA Healthcare reform Strong primary extends coverage healthcare focus USD 124 billion allocated USD
CHINA
CHINA
Healthcare reform
Strong primary
extends coverage
healthcare focus
USD 124 billion
allocated
USD 625 million
upgrade budget
SOUTH KOREA
Private sector
drives growth
90% of beds and
specialists
INDIA Urban health insurance uptake 37% YoY growth @ 2% penetration VIETNAM Steady rise in
INDIA
Urban health
insurance uptake
37% YoY growth @
2% penetration
VIETNAM
Steady rise in
patient volume
45 million IVD tests
with 15% CAGR
MALAYSIA Hypertension is prevalent 7.6 million potential addressable pop.
MALAYSIA
Hypertension is
prevalent
7.6 million potential
addressable pop.
JAPAN Large aged related surgeries volume 1 million orthopaedic surgeries/ annum
JAPAN
Large aged related
surgeries volume
1 million
orthopaedic
surgeries/ annum

Intimate understanding of the healthcare and medtech stakeholders’ demand needs, business growth trends,

stakeholders’ demand needs, business growth trends, regulatory challenges and future user adoption behaviours
stakeholders’ demand needs, business growth trends, regulatory challenges and future user adoption behaviours
stakeholders’ demand needs, business growth trends, regulatory challenges and future user adoption behaviours

regulatory challenges and future

user adoption behaviours in Asia.

Being based in Asia, we can closely monitor rapid and dynamic changes in the region.

can closely monitor rapid and dynamic changes in the region. We are not only healthcare analysts
can closely monitor rapid and dynamic changes in the region. We are not only healthcare analysts
can closely monitor rapid and dynamic changes in the region. We are not only healthcare analysts
can closely monitor rapid and dynamic changes in the region. We are not only healthcare analysts
can closely monitor rapid and dynamic changes in the region. We are not only healthcare analysts

We are not only healthcare analysts but locals who are born and bred in the region. We

analysts but locals who are born and bred in the region. We JAPAN Pharmacies dominated by
analysts but locals who are born and bred in the region. We JAPAN Pharmacies dominated by
analysts but locals who are born and bred in the region. We JAPAN Pharmacies dominated by
analysts but locals who are born and bred in the region. We JAPAN Pharmacies dominated by
JAPAN Pharmacies dominated by chain 20% chains stores dominate 70% of business
JAPAN
Pharmacies
dominated by chain
20% chains stores
dominate 70% of
business

speak the language, understand

the culture and work daily in the local environment.

stores dominate 70% of business speak the language, understand the culture and work daily in the
stores dominate 70% of business speak the language, understand the culture and work daily in the
stores dominate 70% of business speak the language, understand the culture and work daily in the

13

Extensive medical professional network Our clients are able to access a comprehensive network of users,

Extensive medical professional network

Our clients are able to access a comprehensive network of users, decision

makers and key influencers of pharmaceuticals, medical devices and consumables in 14 countries in Asia. Our panel-based medical professionals network has extended to cover near to 15,000 personnel across the region.

to cover near to 15,000 personnel across the region. Senior Management network • Hospital C-level staff
Senior Management network •
Senior Management network

Hospital C-level staff who are Key

Purchase Decision Makers

Specialist network •
Specialist network

Senior doctors and users who are Key Influencers in the purchase decision making

Procurement Network •
Procurement Network

Purchase facilitators who are familiar with the decision-making and purchase processes

Technical network •
Technical network

Medical equipment maintenance specialists who are intimately familiar with the strengths and weaknesses of the equipment and device

14

Proprietary hospital profile databases Our ongoing research needs demand that we continuously build our healthcare

Proprietary hospital profile databases

Our ongoing research needs demand that we continuously build our

healthcare facility contacts and extend out understanding of each facilities profile, in terms of bed size capacity, specialization, ownership, location and medical technology usage and needs. Hospital facility profile that we have covers 14 Asian markets covering near to 70% of hospitals in the universe.

markets covering near to 70% of hospitals in the universe.  ~5,200 hospital in China 

~5,200 hospital in China

~7,000 hospitals in India

~1,500 hospitals in Japan

~800 hospitals in South Korea

~600 hospitals in Australia

~400 hospitals in Taiwan

~800 hospitals in Thailand

~900 hospitals in Vietnam

~800 hospitals in Indonesia

~800 hospitals in Philippines

~300 hospital in Malaysia

…complete coverage in HK & Singapore

~20,000 HOSPITAL PROFILES

in Philippines  ~300 hospital in Malaysia …complete coverage in HK & Singapore ~20,000 HOSPITAL PROFILES
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healthcare
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