navigating through hina’s evolving healthcare market · navigating through hina’s evolving...

Navigating through China’s Evolving Healthcare Market Healthcare by 2020

August 2015

www.clearstate.com


©Clearstate Pte Ltd 1

Contents

Foreword ....................................................................................................................2

Executive Summary ....................................................................................................4

Growth Prospects for China’s Healthcare Industry .....................................................5

5 Key Trends in China’s Healthcare Market by 2020 ................................................ 10

Getting ready for 2020: Are you prepared .............................................................. 19

About Clearstate ...................................................................................................... 21



Ivy Teh, Managing Director at Clearstate, an Economist

Intelligence Unit business.

China has shored up healthcare spending tremendously since it announced the need to reform its inefficient healthcare system back in 2005. Since then, major initiatives have been launched and substantial investments made, resulting in the building and upgrading of thousands of hospitals and community health facilities across the nation. However, despite near to a decade of reform push, China still has a long way to go in achieving its aim of equal access to public healthcare for all its citizens by 2020. China’s struggle to meet healthcare demand led by a fast-aging population, are made more pronounced as the nation faces its slowest economic expansion in the last two decades.

Both the on-going reform and the headwind faced by its

economy are challenges that are rapidly changing China’s

healthcare business landscape. While it may be getting tougher,

China’s sheer size and the relative robustness of its healthcare

demand, ensure that it remains the priority geography for most

companies looking for growth.

Foreword



Players in the space, from pharmaceutical, medtech and health

services companies, need to understand and be ready for these

changes that will inevitable change how they operate in China

in the next 5 years. Our current paper provides the reader with

some level of clarity on the major trends that we anticipate will

have significant impact to China’s healthcare landscape. We

provided our views and predictions on how these trends will

alter the environment and made suggestions on how

companies will need to rethink their business model and more

importantly the way they engage healthcare stakeholders.

Clearstate, an Economist Intelligence Unit business, is a

healthcare market insight and intelligence consultancy that

specializes in discovering opportunities in emerging economies

for pharma, medtech and health services clients. We hope that

through this whitepaper, we are able to provide not just an

update on China’s healthcare development and future progress

but also some new perspectives to think about in terms of risks

and opportunities.

We do look forward to your feedback and will be happy to

generate continuing conversation with you on this topic.

Best regards,



Executive Summary

hina is entering a new era of economic development. The decades of rapid, double digit growth that

China has enjoyed is now transitioning to slower but more sustainable and “higher quality” growth.

This has raised concern on whether China’s healthcare market will be adversely impacted, and if it

remains a key market for multinational companies to continue to focus and invest in. In this paper,

we highlight the key macroeconomic factors at play that will drive continual and solid demand for healthcare

services and products in China. While growth will be slower, China will remain a strong growth market and in

fact, will be the fastest growth market among the Top 10 healthcare-markets globally.

The healthcare industry in China is also undergoing significant changes, driven by ongoing healthcare

reforms, opening up of government policies, introduction and adoption of new technologies such as

wearable devices and mobile apps. All of these have profoundly impacted the type of healthcare products

and services consumers need and where patients seek care. Needless to say, this also alters the competitive

landscape with the growth of local players. This paper highlights the Top 5 Trends that Clearstate

anticipates will be realized by 2020, requiring companies to rethink how they engage key stakeholders

including the government, payer, service providers, physicians, patients and even their industry peers.

C



End of double digit GDP growth: Transition to more sustainable growth

he Economist Intelligence Unit (EIU) has forecasted China’s GDP growth to be at a CAGR of 6.5%

from 2014-2018, the weakest in 24 years. Unlike previous dips due to regional or global crises, we

see this as the start of a structural shift that sees the government moving away from rapid but

sustainable growth. As Xi Jinping’s economic reform package is being implemented, China’s

economy is expected to slow as it re-balances for “healthier” growth (see figure 1).

T

0

2

4

6

8

10

12

14

16

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Rea

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(% c

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Growth Prospects for China’s Healthcare Industry: Slowing but still strong

Asian financial crisis, restructuring under Zhu

Post-WTO entry export boom; investment in property and manufacturing spikes

Global financial crisis and government stimulus package

Figure 1: China’s GDP Growth

Post-Tiananmen recovery and Deng’s southern tour

“Long, soft fall”: Focus on quality rather quantity of growth

Source: The Economist Intelligence Unit (EIU)



The drivers for GDP growth however, are shifting. Fears of overcapacity and excessive debt levels

have led the government to crack down on lending and investment. On the other hand, a weak global

economy, especially in the EU, will continue to exert a drag on China’s export sector. However, rapid

growth of the service sector in recent years has been lifting personal incomes and thus consumers’

expenditure. The encouraging element for the healthcare sector is that the new sources of economic

growth are coming from domestic demand.

China is urbanizing: Driving healthcare expenditures along with healthcare demand

EIU projects that China’s urban population will grow to 900 million by 2019, driven by a new

urbanization plan, the hukou reform, as well as the loosening of one-child policy in urban areas. As

urbanization intensifies, the healthcare expenditure per head will intensify along with increased public

insurance coverage on hukou holders in urban areas. As such, urbanization will fuel healthcare service

demand, particularly in smaller cities. Governments are now gearing up to increase healthcare

infrastructure and supply of healthcare services to meet expected rise in demand within the next decade.

China is aging: More than 176 million seniors are concentrated in urban areas

In 2000 just 90 million people in China were over the age of 65, representing around 7% of the total

population. By 2020 EIU forecasts the total population above 65 to reach 176 million and to surpass 300

million by 2050 – roughly equivalent to the entire population of the United States and a staggering 22% of

China’s total population (see figure 2). This means that in densely populated urban areas there will be a

heavy strain for healthcare resources and thus the need for community level healthcare.

Figure 2: China’s aging cities (% of the population aged 65+)

Source: The Economist Intelligence Unit (EIU)

2020 2010



China is “getting sicker”: Rise of chronic diseases attributed to lifestyle changes and pollution

While rates of infectious diseases have declined dramatically, there are still outbreaks of respiratory

and gastro-diseases, while the incidence of blood-borne and sexually transmitted diseases is rising. What

is of more concern is that chronic diseases now account for more than 80% of the country’s 10.3 million

annual deaths. A study by the Institute for Health Metrics and Evaluation indicates that the leading risk

factors contributing to health conditions in China are dietary risks, high blood pressure, smoking and

pollution. With increased urbanization, these factors will continue contributing to increases in chronic

diseases. The change in disease profile is driving the demand for both pharmaceutical and medical

devices in therapeutic areas such as oncology, cardiovascular along with diabetes.

China, DALYS Both sexes, All ages, 2010

Area map shows relative proportion (based on box size) of global burden of disease (DALY) attributed to each condition. (X- and Y-exis have no meaning.) Diseases are organized into disease family clusters.

Source: Institute for Health Metrics and Evaluation

Figure 3: China’s burden of diseases profile



China is getting richer: Huge base of affluent households along with rise of super rich

The number of households that can afford more out of pocket spending on healthcare is increasing

and becoming significant. In 2014, there were 32.6 million urban households in China earning more than

the median US household. By 2018, this number will more than double to reach 75 million. In contrast,

there will only be 62 million such households in the US in 2018.

The rise of “high-net-worth” and “super-rich” individuals is also driving the adoption of high end

healthcare products and services in China. Hurun estimates that there are more than 1 million individuals

with a personal wealth of more than CNY 10 million (~USD 1.6 million), and close to 70,000 individuals

with more than CNY 100 million (~USD 16 million). What is significant is that the wealthy are willing to

spend on managing their health. Studies from Hurun have indicated that the wealthy eat healthy, exercise

regularly, and consume health & wellness products. 80% of these individuals go for annual health

checkups, while 15% go twice a year. On average these individuals spend RMB 3,500 annually, almost

double the typical amount on health checkups1.

With increased income comes increased affordability and willingness to pay for more high-end

products and services. It is thus no surprise that there is continuous interest to launch more expensive

products and services that are not necessarily lifesaving, but can improve lifestyles. For instance, higher

income patients are now more willing to spend on surgical treatments of conditions such as pain

management and urinary incontinence. There are also private hospitals entering the market in China,

intent on introducing high end services to retain high-net-worth individuals who may currently be seeking

care abroad.

More importantly, the government remains committed to further investments in healthcare

A major factor for strong growth in the healthcare sector is the fact that the government will continue

to invest in providing “safe, effective, accessible and affordable healthcare”. Annual expenditures on

healthcare are expected to grow by 9.5% per year between 2015 and 2019, largely driven by the

government’s public healthcare reforms. More efforts will be made to invest in rural areas to address

inequality of health services, although the bulk of healthcare spending between 2015 and 2019 will be

directed to cities.

1 Hurun Report 2014



The Chinese government will need to achieve a balance between various priorities. Aside from

increased investment in infrastructure and training, cost reforms will continue to ensure affordability of

care. The government has to balance the push towards innovation against the need to ensure social

stability. The recent opposition by dialysis patients in Chongqing highlighted the healthcare reform’s

complexity and possible consequences for affected patients. The abandonment of the “market price”

reform of healthcare services after only six days in Chongqing, is an indicator of the need and willingness

of governments to adjust policies as required.

China’s healthcare sector has strong prospects for the next five years, and will continue to be one of the fastest growing markets globally

Despite the economic slowdown in China, the growth prospects for the healthcare sector remain

strong. The new locomotive of economic growth is private and public consumption. Multiple factors such

as rising incomes, aging populations, urbanization and increase in chronic diseases are all in favor of an

increased demand for healthcare services. EIU analysis indicates a direct correlation between growth in

disposable income and growth in healthcare spending per capita. We estimate that the demand for

healthcare services will grow at 10.6% CAGR between 2015 and 2019.

China will remain a market that cannot be deprioritized. In terms of growth in health spending per

head relative to real GDP growth, China still continues to stand out from all major developed and

developing markets. For both the pharmaceutical and medical device industry, China will continue to

have the highest growth rate globally. In terms of absolute industry size, China will surpass Japan and be

second to only the US by 2020.



long with changes in the socio-demographic and economic environment, the healthcare market

in China is undergoing structural changes due to ongoing healthcare reforms, evolving market

dynamics and, most importantly, changing needs of patients in China. Clearstate shares five key

trends that will impact the healthcare market by 2020.

#1: Gradual emergence of new service providers, although public hospitals will remain the key provider of health services

The landscape of service providers is transforming, largely attributable to some key government

policies. Aside from allowing ownership of private hospitals, another key policy permits physicians and

even nurses to practice at multiple sites. Liberalization of the private insurance sector will encourage

demand for services beyond public hospitals. At the same time, public hospitals are also under pressure

to become more efficient, driven by changes in profit models.

Even today, public hospitals are forming alliances and partnerships along with consolidation, to realize

operational efficiency and cost savings. Shenkang is a group purchasing network that operates on behalf

of 23 Class 3 hospitals in Shanghai. Class 2 hospitals are also trying to find their positioning to gain

sustainable patient volume.

The recent country-wide reform of Class 2 hospitals aims to prevent unnecessary duplication of

resources and over-expansion. It advises that only two province-level hospitals are allowed per province,

while other existing province-level hospitals will need to change ownership and/or downgrade. It is thus

A

5 Key Trends in China’s Healthcare Market by 2020



not surprising that many Class 2 hospitals are now looking to differentiate themselves by offering either

more value added services such as minimally invasive surgeries (MIS) that are less complex and/or

provide for niche areas like rehabilitation.

In March 2015, the Ningbo Health & Family Planning Commission announced the launch of the

“Ningbo Cloud Hospital” the first government-led initiative intended to integrate virtual healthcare

delivery. Using a cloud network, the Cloud Hospital aims to integrate community health centers (CHCs),

hospitals, pharmacies, insurance companies and 3rd party diagnostic labs (see figure 4). The hospital has

run a pilot with diabetes patients and mostly CHCs, offering each resident access to their electronic

medical records (EMR) online. The eventual goal of the Cloud Hospital is to provide patients with online

teleconsultations to refill their prescriptions and, in the future, get access to health awareness and

education via live casts and talks.2

China is also seeing a proliferation of new service providers, capitalizing on new government policies.

Dr. Smile Medical Group is an example, which was set up by seven specialists from Top 3A hospitals.

These doctors are partnering with three premium private hospitals in Shanghai and Beijing, offering highly

specialized medical skillsets that are otherwise hard to recruit for in the private sector. Dr. Smile started

to seek a first round of financing in January 2015, and is already planning to establish the first day surgery

2 “Ningbo cloud hospital will restructure healthcare system thanks to internet”, Xinhua News Zhejiang Channel,

http://www.zj.xinhuanet.com/newscenter/focus/2015-03/13/c_1114625945.htm, Clearstate analysis

Figure 4: Ningbo Cloud Hospital

Source: Xinhua News, EIU – Clearstate analysis

Profile: • Co-founded by Ningbo Health and

Family Planning Commission and Neusoft Xikang in March, 2015

• Aims to integrate CHCs, hospitals, pharmacies, insurance companies, 3rd party diagnostic labs using a cloud network

Key elements: • Allows each resident to have EMR

online: Residents can seek care from relevant doctors based on physical conditions

• Hospital will make appointments based on “tiered referral” system

• Online consultation system for chronic diseases, pilot being run in diabetes care

• Online tele-imaging, etc. • Health awareness and education (talks,

live casts etc.>)

“We aim to provide drug delivery service and work on reimbursement by June, increase clinics in July and launch cloud hospitals standards in August.” - Head of Ningbo HFPC

• Remote consultation

• 3rd party lab testing • 3rd party imaging

• GP care

• Insurance • Pharmacy

http://www.zj.xinhuanet.com/newscenter/focus/2015-03/13/c_1114625945.htm



center in Hangzhou. Additionally, in January 2015, Jiangxi announced plans to establish the first 3rd party

medical imaging center. Started as a private enterprise, it will offer services such as x-ray, CT and MRI

scanning services. Its services extend beyond imaging as it intends to also provide nearby smaller

hospitals with tele-diagnostic capabilities. Smaller hospitals often have the equipment to run imaging

tests, but lack the staff with the skills to interpret and diagnose more complex conditions. Jiangxi Medical

Imaging Center will help alleviate this issue, while providing higher income patients with an option to seek

diagnostic imaging services in less crowded and more comfortable facilities.3

By 2020, Clearstate anticipates that public hospitals will remain the major provider of healthcare

services. However, the service provider landscape will become much more diversified and complex.

#2: Private health insurance will take off, driven by a demand from higher income individuals and enterprises

China’s private health insurance market is at a nascent stage of development, with much room for

growth. Health insurance accounts for only 8% of total insurance income in China, compared to 40% in

the US. Private insurance premiums account for 37% of the total healthcare expenditure in the US, and

for approximately 10% in developed countries like France, Canada, Australia etc., whilst in China the

figure is only 1.3%.4 The industry estimates the projected YTY growth rate to be 25-30% for the next five

3 “No need to go to hospitals for CT: the first private medical imaging center is approved in Jiangxi”, The China Daily, http://cnews.chinadaily.com.cn/2015-05/15/content_20727778.htm, Dr. Smile Medical Group Website, http://www.topdoctor100.com/ 4 Statistics of China Insurance Regulatory Commission, http://www.circ.gov.cn/web/site0/tab5179/

• GP Clinics • Health screening centers

• 3rd party diagnostic labs

• Surgery centers

• Specialized centers e.g. dialysis, cardiac

• Post-Discharge Clinic

• Surgery centers

• Confinement centers

• Rehab Center

• GP Clinics • Nursing

Homes

• High end retirement centers

Figure 5: Change in Service Landscape

Tod

ay

Prevention DiagnosisTreatment

(e.g. surgery)Post-Op

CareRehab

Management & Monitoring

Hospitals

Source: EIU – Clearstate analysis

Futu

re

Hospitals

CHCs

CHCs CHCs

CHCs

http://cnews.chinadaily.com.cn/2015-05/15/content_20727778.htm

http://www.topdoctor100.com/

http://www.circ.gov.cn/web/site0/tab5179/



years.5 In addition to a rising awareness for higher-end services from richer individuals, many companies

are also hoping that the inclusion of private health insurance will help to retain key talent in a highly

competitive market.

Supportive government policies will be the key determinant of growth. While there have always been

high-level policies to encourage the growth of private health insurance, the translation into concrete

details has been slow. The industry is hoping that the new pilot reform to offer personal income-tax

reductions, implemented after Premier Li Keqiang’s speech in the National People’s Congress, to “actively

develop commercial health insurance” in 2014, will have a more significant impact on growth. Similar

reform programs have been successful at increasing the coverage of medical insurance in countries like

the US and Australia.

Recognizing that obstacles are being resolved, Clearstate is optimistic on the future outlook of the

private health-insurance sector. Private insurance will alleviate the financial burden of governments, and

there is real demand from both consumers and companies.

#3: Strong government support for domestic players, but only selected “local stars” will flourish

The government’s intent to support domestic players in the healthcare industry has become more

apparent in the last few years. The 12th Five Year Plan, announced in 2011, identified the medical device

industry as a priority-industry with favorable procurement policies in place for domestic companies. The

government also hopes to cultivate a few strong domestic pharmaceutical companies. In the recent

“China Manufacturing 2025”, the focus on biological medicine and high-performance medical devices was

even more pronounced, as it was identified as one of nine priority areas.

One of the most apparent forms of support has been more favourable policies for domestic brands.

On the 1st of June 2015 the National Development and Reform Commission (NDRC) cancelled the

government-set pricing for most drugs. While this encourages market competition, cheaper domestic

brands will have an advantage. Many provinces have also adjusted their tendering or purchasing

processes to either give preference to cheaper domestic brands, or enact more complex processes for

hospitals to purchase international brands.

5 Estimate by People's Insurance Company of China, http://finance.ce.cn/rolling/201411/20/t20141120_3942186.shtml

http://finance.ce.cn/rolling/201411/20/t20141120_3942186.shtml



United Health Imaging is an example of a company that has benefited from government resources

and support. Founded in 2011, it has more than 1,700 employees and a sales volume of more than RMB

600 million in 2014, from eleven imaging products. Aligned with the government’s vision to move from

“Made in China” to “Created in China”, United Health Imaging intends to become a global industry leader

within 15 years. It has enjoyed a good start by focusing on provinces that have implemented favourable

procurement policies, while gaining access to top hospitals nationwide. There are three main areas that

benefit from government support, mainly in product development, market access and brand awareness.6

The reality is that government support alone is not enough for leading companies to flourish.

Companies such as United Health Imaging are able to enjoy such traction because it inherently has strong

quality products with solid development capabilities. A quick scan of the medical device sector to identify

other “local stars” include players such as Mindray, Leadman, BSBE, Neusoft, Microport, Shinva and

Wego. Similar to United Health Imaging, these players exhibit some key traits: They enjoy high market

share in China, even within the “premium” segment with high brand awareness and reputation among

customers. Most of them compete by offering “good value for money” through stable technology

products that are reasonably priced, particularly relative to multinational competitors. While they might

not conduct truly innovative R&D work, these companies are fast in finding unique needs in China’s

market and in quickly improving design or product features. In short, they all have strengths in

introducing “quality and value-priced” products quickly into the market. Some companies such as

Mindray and Microport are already having success in replicating this capability in international markets.

Despite government support, smaller “me too” domestic companies will face challenges to survive.

Hospitals today expect “good enough” quality along with lower pricing, as they are under pressure to be

more accountable while keeping costs down. Even the local stars will need to continually improve their

competitiveness, forming new partnerships to win not only in China but to achieve their ultimate goal of

entering international markets.

6 United Health company website, http://www.united-imaging.com/zh/, Clearstate analysis

Figure 6: Support and Strengthening of Local Stars - United Imaging Hospital

- Collaboration with leading research institutes to build R&D capability

- Gain access to top hospitals to establish as reference sites and to improve product development

Product development

- Enjoys favourable policies in certain regions e.g. quota system whereby public hospital need to apply for license to buy international brands

- NFHPC initiated catalogue of quality domestic branded medical devices

- Favored in certain hospitals for e.g military hospitals and government led procurement such as Shanghai Shenkang

Market Access

"Medical equipment is necessary to develop a modern healthcare industry. Now, some high-end medical devices are so expensive that the grassroots healthcare institute and ordinary people can hardly afford (them)." China will "accelerate the localization of high-end devices, lower the cost, and promote national brands,“ - President Xi Jin Ping (May 24, 2014…2 days before NHFPC’s announcements)

Brand Awareness

Source: United Imaging Website, EIU – Clearstate analysis

http://www.united-imaging.com/zh/



#4: Definition of “Health” extends beyond just treatment with more emphasis on wellness and health-management

Like their global peers, consumers in China today no longer see healthcare as merely treating

illnesses. Rather, it incorporates the prevention of illness in the maintenance of physical and mental

wellbeing. This change in mindset is being driven by factors such as the rise of mobile apps and the

convergence of diagnostics and therapeutics. Governments and manufacturers are also actively

promoting health prevention, such as screening programs for key chronic diseases. With higher income,

consumers are now shifting from critical to lifestyle treatments.

Philips is a company that has identified this as a key trend, and has combined its healthcare and

consumer-lifestyle business to form the new “healthtech” market. It intends to capitalize on the

convergence of professional healthcare and consumer end-markets across the health continuum,

targeting an addressable market of more than 100 billion Euros in revenue. The objective is to provide

end to end products and solutions from prevention to treatment to recovery to home care. Even in China

today, Philips has introduced products that integrate homecare with hospital care. Philips works with

physicians to allow patients to rent “Actiwatches” that can be worn at home. The watch collects data on

sleep patterns that can be used for screening and diagnosis purposes. For patients, that means that they

no longer have to stay in the hospital overnight and that they can reduce the need for manual sleep

logbooks. For hospitals, this solution increases efficiency and turnover, and also shortens waiting time for

hospital monitoring equipment. For Philips, the intent is to provide patients with solutions to be used at

home and also within the hospital. Clearstate anticipates that consumers and patients will be open to

more lifestyle and health-wellness products, spurring demand for higher-end products and services.



Figure 7: Extended View of Health – Case Study of Philips

In September 2014, Philips combined its healthcare and consumer lifestyle business to form “healthtech” market

• Capitalize on the convergence of professional healthcare and consumer end-markets across the health continuum

• Addressable market: >100 Billion Euros in Revenue • Reshape and optimize population health management by leveraging health data and

delivering care with cloud based digital health platforms

Benefits to patients

• Improves convenience: Reduce need for patients to keep sleep log books

• Improves user experience and comfort: No need to stay in hospital overnight, or undergo complex testing

Benefits to hospitals

• Increase hospitals turnover/efficiency

• Shorten waiting time for hospital monitoring equipment

• Effective utilization of medical resources

• Better clinical outcomes

Actiwatch

Philips works with physicians to allow patients to rent Actiwatches to be worn at home for 7-10 days, to collect data on sleep patterns, which can be used for screening purposes and as reference for diagnosis

Home care products

• Air purifier & humidifier for better sleeping/breathing environment

• SleepMapper – a mobile and web-based system to enhance therapy experience

• Asthma management product i.e. peak flow meters, mask

Hospital care products

• Sleep diagnostic systems • Sensors for airflow, limb movement, snore

etc.

• Sleep studies management software • Sleep recorder • Etc.

Healthy Living Prevention Diagnosis Treatment Recovery Home Care

Source: Philips Website, EIU – Clearstate analysis



#5: M-Health will proliferate with consumer-driven Apps accelerating faster than Hospital related Apps

The proliferation of m-health is a factor towards health & wellness. China is expected to become the

2nd largest m-health market globally, with a phenomenal growth of 59.6% between 2015 and 20187.

Some unique elements in China are at play: Lack of access to quality healthcare-services, tense physician-

patient relationships and concentration of resources have resulted in physicians’ limited ability to provide

sufficient time beyond treatment and diagnosis. Chinese consumers are hungry for reliable and credible

information about health-management and are extending the prevalent use of internet and mobile apps

to do so. Mobile health can also be used in more rural parts of China to help resolve accessibility

challenges.

Despite the optimistic outlook for m-health, there are still some challenges to overcome. The

prohibition of diagnosis and treatment via the internet and lack of reimbursement and coverage of online

services are two major issues. The majority of e-health players and mobile apps are likely to go through

extensive consolidation, due to a lack of differentiation, and also the general lack of management know-

how about launching and sustaining such apps. For instance, there are more than 500 apps on diabetes-

management in the market, offering highly similar services and features. There are also many apps that

link consumers with hospitals, such as booking of appointments or hospital payments. While these apps

are indeed of value, it has been a challenge to integrate them with hospitals’ financial and management

systems on a sufficient scale to be meaningful.

By 2020, Clearstate anticipates that Chinese consumers will be widely using mobile apps for a

multitude of functions. Solutions that provide consumers with the information to choose and find the

right diagnostic tools and treatment options and to assist them in managing individual or family

members’ health will be of particular value. Linkages to wearable devices will also become more common

and widespread.

7 China mHealth Market Research Report 2014 by Analysis International



In contrast, apps that require integration with hospitals will take longer to take off, limited by a lack of

hospital buy-in. Hospitals will be more willing to participate in programs that improve integration and

accessibility of care, e.g. use for teleconsultations between hospitals, use for improving rural healthcare,

etc.

Figure 8: Rise of m-Health

• Apps that are consumer driven will flourish, especially those that:

• Improve patient awareness via medical education and information

• Address information gaps to empower patients e.g. help choose doctors, hospitals, etc.

• Manage personal health e.g. chronic disease management

• Drug distribution

• Adoption of apps/websites that improve physician training and education especially in community level hospitals will grow

• Apps that improve patient/physician interaction via online communities will become popular

Consumers Physicians Hospitals

• Apps requiring extensive integration with hospital systems will take longer to succeed due to difficulties in hospital buy in

• Use of m-health likely driven by governments to improve rural health e.g. improve access of care, address inequality of care, public health

• Selective use of teleconsultations due to restrictions on diagnosis and treatment




ooking ahead, the healthcare sector is poised to undergo further dynamic changes. Despite a

generally optimistic outlook, the honest reality is that the market is also becoming much tougher

than before. Continual growth will be realized through unearthing whitespace opportunities and

responding to changing market conditions.

A common theme is to be prepared to engage with current stakeholders differently. Companies are

now forming more strategic public private partnerships with governments, be it at national or provincial

level, in order to provide expertise and value beyond just lower prices. The government and private

payers are also actively collaborating with healthcare companies and the various governments to find

new ways to improve clinical outcomes, while ensuring more effective use of current resources. With

diversity of service providers and how physicians practice, sales and marketing teams will be challenged

to execute differentiated sales approaches and marketing engagement techniques for sub-customer

segments. Pharmaceutical companies have always been at the forefront of engaging patients. With many

medical device companies also starting to consider how to engage patients, the real challenge is how to

engage them effectively in a differentiated way, with direct impact to either brand awareness and/or

product usage. Indeed, this has driven companies to involve broader industry players, with collaboration

between payers, pharma, medical device companies and even healthcare IT companies, to engage

patients and leverage analytics more effectively.

As we prepare for 2020, companies should consider how well they are prepared today to embrace the

changing environment.

L

Getting ready for 2020: Are you prepared



Are you prepared?

Industry players Partnerships to provide more integrated care e.g. use of analytics, etc.

Government Improve government relationships by providing value in products/services and support with key priorities

Service providers

Provide segmented solutions based on specific needs and priorities

Physicians New engagement methods for different roles and skillsets of doctors, especially

with multi-site care

Patients Understand when patient

engagement is required and how to provide new products &

services

Payers Consider partnerships to improve

access and/or improve compliance, patient management


Figure 9: New Ways of Engaging Stakeholders



About Clearstate

Clearstate (www.clearstate.com), a business of the Economist Intelligence Unit, is a research consultancy

specialising in the domains of healthcare and life sciences, advising on growth strategies in emerging

economies.

Clearstate is the go-to research consulting partner for clients seeking greenfield growth opportunities in

fast-expanding emerging economies. By leveraging The Economist Intelligence Unit’s depth of country

expertise, we offer visibility and credible forecasts on the direction of emerging economies’ opaque

healthcare environments.

We have a strong reputation among our clients for our depth of industry knowledge, our collaborative

approach and our innovative solutions. We are recognised for consistently listening and working in

partnership with our clients to deliver comprehensive and granular answers that go beyond the obvious.

About the Authors

Chee Hew is the Head of Greater China at Clearstate, and is an experienced consultant in the Healthcare

and Life Sciences sector in North America and Asia Pacific, with more than 15 years of experience in

business and operational strategy consulting, leveraging strong market research capabilities. She has

more than 15 years of healthcare consulting experience, specifically in China.

Lesley Shao Ying is an analyst at Clearstate Greater China, based in Shanghai. She has more than four

years of experience in conducting market research in the education and healthcare sectors.

The development of this whitepaper benefited significantly from the support provided by:

Cynthia Chen, Analyst, Clearstate Greater China

Chen Chen, Economist, Economist Intelligence Unit

Contact: Chee Hew, Head of Greater China

[email protected]

[email protected]

mailto:[email protected]

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