12/7 Deloitte Webcast on Health Care Reform in China: State-of-Play and Implications for U.S. Companies

In 2009 China pledged to provide state healthcare for its 1.3+ billion citizens by the year 2020. The webcast first outlined a comparison between the U.S. and China, then detailed China’s healthcare reform and China’s 12th Five Year Plan, and finally provided an outlook for domestic and foreign investors. Note that the slides are available on Deloitte’s websites though this link: http://www.deloitte.com/us/dbriefs/archive

Facts and Figures:
Health expenditures as a % of GDP – China: 4.7% U.S.: 17.6%
Per capita health care spending - China: $108 U.S.: $8,086
Public expenditures as a % of GDP - China: 67.9% U.S.: 46.5%
Life Expectancy at birth – China: 75 U.S.: 78
Physician density/1000 – China: 1.4 U.S. 2.7
Cancer deaths/1000 – China: 287 U.S. 245

The U.S. uses an allopathic medical model, or western medicine model that trains doctors in a formal education setting that teaches the parts and systems of the body. Both allopathic and traditional Chinese medicine models are used, using a more holistic, spiritual methodology of healing.

The 10-year health care reform blueprint has three phases. China is ending the initial stage, spanning from 2009-2011. This phase comprises of five objectives and implications: begin basic medical insurance system, issue the national essential drug list, focus on fundamental health service systems, equalize public health services, and industry consolidation/public hospital reform. The second stage (2012-2016) will strengthen the basic health system and deepen the reforms of other segments in the system. The final stage (2017-2019) will monitor adjustments to the healthcare system based on circumstances.
 

It should be noted that there are three government healthcare schemes: insurance for non-workers, insurance for commercial urban citizens, and insurance for rural areas.

China’s 12th Five-Year Plan (2011-2015) aims for “inclusive growth” – spreading the benefits of development among all Chinese to realize balanced economic and social progress. This also lends to healthcare available to Chinese citizens throughout the country. And as pharma & biotech is one of the seven strategic emerging industries in the current Five-Year Plan, there will be a focus on innovative drugs, bio-pharmaceuticals, advanced medical equipment, generic engineering, and stem cell research.
 

Foreign investors in China will use the future market size in China and advantages of domestic R&D as drivers, and will target the China market to expand market share. Chinese investors (outbound investing) will be driven by big Chinese pharmaceutical companies when industry consolidation comes to a close. They will target tech advancement in both the biotech and pharma industries, and will enhance brand and market awareness.