China has made major healthcare strides over the past decade with regulatory reforms, infrastructure improvements, and the advancement of universal healthcare. While the COVID-19 pandemic revealed the need for further reform, the country continues to pursue the healthcare transformation goals established in its Health China 2030 program. These aspirations are set to be impacted by factors such as anageing population and a continued push for home-grown innovation.
Over the past ten years, China has not only grown to become the world’s second-largest global economy by GDP, but the country has also made significant efforts to modernize its healthcare system and as a result raised its life expectancy from 70.6 in 2000 to 76.6 in 2020. Although challenges remain, many of which were highlighted by the pandemic, China, having quadrupled its healthcare spending from 2008 to 2018, aspires to further develop its healthcare ecosystem. This goal was set forth in the Health China 2030 program in which President Xi Jinping established healthcare as a priority, declaring health as a prerequisite for economic and social development.
Reforms, Universal Healthcare and a Push for Innovation
The first big step towards updating China’s healthcare system came with the National Medical Products Administration (NMPA) regulatory reform, which began in 2015. Through the reform and its subsequent iterations, review processes for innovative medicines have been streamlined. In addition, through the reorganisation of the NMPA, reimbursement has become more centralised and transparent and regulations have been put in place to control end prices.
China has also reinforced its healthcare infrastructure with the construction of over 15,343 infrastructures and the upgrade of over 90 percent of its existing hospitals. And thanks to the country’s 2009 Health Reform, which set out to provide universal basic healthcare to all by 2020, 95 percent of the population is covered by the basic medical insurance system.
These factors have encouraged life sciences innovation with 277 innovative drugs being approved between 2017 and 2021, up from 248 for the period between 2010 and 2016, and the percentage of domestic innovation approvals went up from 5 percent in 2017 to 46 percent in 2021.
Despite these advances, a number of long-standing issues continue to put strain on the Chinese healthcare system, namely its under-developed diagnostic and primary care capabilities, which has resulted in a system focused largely on treating diseases that are often diagnosed late. Moreover, China’s healthcare system also suffers from strained funding, a shortage of qualified medical personnel and disparities in access across the country’s different regions.
Ageing and Lifestyle Changes
In coming years, China’s aspirations to continue reforming its healthcare system will be impacted by a series of trends that, according to Deloitte’s China Health Ecosystem 2030: A Scenarios Analysis, may present both challenges and opportunities.
Perhaps the most important of these trends is the shift in health conditions and diseases due to an ageing population undergoing a number of lifestyle changes. By 2030, China will have the world’s largest senior population with about 247 million people over 65 while a large part of China’s younger demographic will continue to make lifestyle changes, like moving to urban areas, and will face an increased incidence of non-communicable diseases (NCDs) such as cancer and cardiovascular disease.
Beyond the shifting spectrum of disease, the Chinese populace, with a growing middle and upper-income demographic, is also becoming more informed and aware of health issues. China’s over one billion mobile Internet users have increased access to health-related information, causing patient and consumer to become more aware, and active.
Local Innovation
What China has is the beginning of a very powerful industry
John Oyler, CEO, BeiGene
A trend that has already been underway for some time is China’s shift from manufacturing centre for generics to a country that encourages innovation. As such, the country has seen the rapid proliferation of new drug discoveries that have increased its share of the global innovation pipeline to 13.9 percent in 2020 from 4.1 percent in 2015.
China is expected to continue to nurture home-grown innovation with increased R&D funding and favourable policies, and by encouraging local innovation clusters such as those at Bohai, Yangtze River Delta and Greater Bay. These clusters have thus far attracted an ecosystem not only of multinational pharma companies, but of local biotechs and contract service organizations.
Chinese companies have traditionally been fast-followers, with examples like Top Alliance’s version of Merck’s PD-1 anticancer treatment Keytruda. While this strategy is expected to continue, Chinese life sciences companies are also moving towards their own differentiated therapies, with promising upstarts like Chi-Med, CStone Pharmaceuticals, Hua Medicine, or BeiGene, whose CEO, John Oyler said in a 2017 interview: “What China has is the beginning of a very powerful industry.”
Meanwhile, Chinese innovations are also expected to continue going global with more international partnerships and Chinese biopharma innovations garnering international regulatory approvals.
