SHANGHAI, China – A surge in demand for better healthcare coverage and outcomes and widespread calls for a reduction in high medical treatment costs are driving structural reforms and market-opening initiatives in China’s rapidly expanding healthcare market, industry executives, officials and experts have said. The market is forecast to increase from $761 billion in 2017 to nearly $2.4 trillion by 2030.

The whole of Chinese society is now focused on “disease prevention and health awareness,” Li Chuyuan, chairman of Guangzhou Pharmaceutical Group, a major Chinese pharmaceutical company, recently told an international conference in Guangzhou.

In 2017, Li said, the market size of China’s healthcare industry reached 5.1 trillion yuan ($761 billion) and is estimated that by 2020 it will exceed 8 trillion yuan (US$1.19 trillion).

Moreover, China’s National Health Commission has forecast the total size of China’s healthcare industry will reach 16 trillion yuan ($2.39 trillion) by 2030.

The projected growth in the 1.4 billion people strong healthcare market, industry executives say, presents enormous commercial opportunities for domestic and foreign healthcare goods and services providers from new drugs to high-tech diagnostics and medical equipment, and more personalised medical treatment.

This was evident by the large participation of over 300 medical equipment and healthcare products companies (including AstraZeneca, Johnson & Johnson, Medtronic, Merck, Novo Nordisk, Novartis, Philips, Roche, Sanofi) at the first China International Import Expo (CIIE) in Shanghai (5-11 November).

During the opening ceremony Chinese President Xi Jinping, in a keynote address also announced a series of market opening measures, which included “accelerating opening in areas such as telecommunications, education, medical services, and culture.”

In particular, Xi stated, “the foreign equity caps are going to be raised in the education and medical service sectors, where there is both huge interest among foreign investors and shortage in domestic supply.” He elaborated that in the next 15 years “China’s imports of goods and services are expected to exceed $30 trillion and $10 trillion respectively.”

Healthcare industry leaders welcomed Xi’s declarations.

“Commitments recently made to improve market access and investment issues are welcome. China has made important strides in promoting innovation as well as in advancing access to treatments for patients. This momentum must be maintained so there can be positive outcomes in both economic and healthcare returns for China and its citizens,” Thomas Cueni, director general of the International Federation of Pharmaceutical Companies and Associations (IFPMA), told Health Policy Watch.

“It’s a huge step forward and China will be a boom market for health,” said a former western European trade negotiator told Health Policy Watch, and added, “China also has export interests in this especially in the area of traditional Chinese medicine.”

A survey by the American Chamber of Commerce in Shanghai, “2018 China Business report” which polled 410 companies in April-May, however, found that US companies faced operating challenges in the Chinese market. A high 60 percent of respondents said China’s regulatory environment lacks transparency and hampered good business practice, while 61 percent identified lack of intellectual property rights protection as a major regulatory challenge, and about 54.5 percent of respondents singled out government policies favouring local companies.

A recent report, “European Business in China position paper 2018/19,” compiled by the European Union Chamber of Commerce in China, critically declared, “China’s healthcare development has reached a turning point.”

Life expectancy and the population’s overall level of health in China, it says, “have reached that of a middle- to high-income country. However, China is only now starting to face the challenges that many developed countries have already faced for several decades. For instance, an aging population with a number of chronic diseases, many of which are expensive to treat. For the past decade, China’s healthcare expenses have been growing at an annual double-digit rate.”

Rapid urbanization, changing lifestyles, high levels of air pollution, and increased life expectancy at birth (average 76.3 years in 2015, up from 67.9 in 1981) and projected to reach 79 years by 2030, are also driving demand for treatment of chronic diseases including from respiratory illnesses, heart disease, diabetes and cancer, health experts say.

In 2017, China was the world’s 6th biggest import market for pharmaceuticals with shipments valued at $25.3 billion and the 4th largest import market for medical equipment, with shipments worth $7.4 billion, according to World Trade Organization statistical data. In the same period, China was the world’s 15th biggest exporter of pharmaceuticals with shipments valued at $7.3 billion and 6th largest exporter of medical equipment with shipments worth $5.9 billion.

Aside from Xi’s latest announcements, China has been ushering in a spate of reforms and policy initiatives to try and address the country’s huge healthcare challenges, especially in the treatment of chronic diseases such as cancer

This has included the simplification (since 2015) by China of approval of novel imported drugs.

In the past it took several years, now the approval is obtained in months, a China-based representative for Roche Pharmaceuticals told Health Policy Watch.

In August, the Roche Group announced that China’s National Drug Administration granted approval of Alecensa (alenctinib) a novel drug used to treat ALK-positive non-small cell lung cancer, just eight and nine months after European Medicines Agency (EMA) and Food & Drug Administration (FDA) approvals in Europe and the United States, respectively.

According to a report in the Shanghai Daily, the first prescription in China of Alecensa was issued just 46 days after it was approved, marking an unprecedented step in “China speed.”

As part of its Healthy China 2030 plan, the government wants to improve the overall survival rate for cancer by 15 percent from current levels and by the same target date, chronic disease care and management will cover the lifelong needs of all people.

According to the World Health Organization’s International Agency for Cancer Research (IARC) in 2018, there were in China 4.28 million new cases and 2.86 million deaths with lung, colorectum, stomach, liver, and breast, the five most frequent cancers.

IARC says China’s cancer burden in 2040 is estimated to increase to 6.67 million new cases and 5.12 million deaths.

In pursuit of policies to extend survival rates and to slash treatment costs, in July 2017 the government of China, after price cutting negotiations with domestic and foreign companies, included 36 drugs (for cancer, diabetes, and cardiovascular diseases) in the National Reimbursement Drug List (NRDL). Overall the average reduction was 44 percent.

However, in order to have high-cost anti-cancer drugs included in the NRDL list which is covered by basic insurance, a number of leading foreign anti-cancer drug manufacturers (such as China market leaders Roche, AstraZeneca, and Novartis) cut prices for some blockbuster anti-cancer drugs by as much as 70 percent, industry executives told Health Policy Watch.

Similarly, in October 2018, China’s State Medical Insurance Administration after months of price reduction negotiations added another 17 new anti-cancer drugs to the NRDL list and eligible for insurance coverage. Reductions for China-made drugs on the list were slashed by nearly 57 percent and imported drugs by 36 percent, according to Chinese news reports.

The five-year survival rate for patients on new anti-cancer drug treatment is more than 70 percent, and without less than 20 percent, experts say.

In addition, in May the government of China lifted tariffs on most imported pharmaceuticals, including all anti-cancer drugs, and slashed the value-added tax for imported anti-cancer drugs from 17 percent down to three percent in a bid to enhance the public’s access to costly drugs.

Image Credits: John Zarocostas.