The U.S. isn't the only nation that's in the process of undergoing some sort of healthcare reform. A report commissioned by Scientia Advisors (Cambridge, Massachusetts), shows that healthcare spending in China is expected to reach $600 billion by 2015 – a threefold increase from 2000. It's a change that the company is saying will drastically alter the healthcare landscape for the country.
"We think the major driver behind this growth is that the Chinese government is becoming more aware that the current system just isn't [working]," Harry Glorikian, Managing Partner for Scientia, told Medical Device Daily. "In China's 3-year-reform plan, a portion outlined guidelines for improvements and changes to healthcare services, infrastructure and regulation. These changes include the increase in funding for public hospitals and medical insurance, the development of rural clinics and county level hospitals, and increased regulation and oversight on the healthcare providers, medical institutions and industry participants such as pharmaceutical companies."
Glorikian said that these updates to China's healthcare system will help solidify the nation's outdated system and have a tremendous impact on the economy.
He added that increased funding opportunities for medical insurance will decrease the burden of out-of-pocket spending, allowing patients to refocus spending on disease prevention and health improvement instead of saving for "backup get sick money."
This increasing awareness of health and wellness by patients will also increase demands for high quality care, currently only provided to a limited population, for areas such as women's health (ie. prenatal, natal care) and oncology (breast, prostate, stomach, liver cancer).
According to China's Ministry of Health, personal spending on medical services in China has increased from 21% in 1980 to 45% in 2007. The average urban savings rate has increased from 17% in 1995 to 28% in 2008.
The role of medical devices in this also can't be ignored, the report says.
The market for the sector already reaches $5 billion and can only grow according to the report.
The report said that medical devices will grow specifically because 75% of conventional medical equipment used in Chinese hospitals was outdated and that most of these devices were made in the 1980s or earlier.
Two other factors that will contribute to the growth of medical devices are the growing interest in patient monitoring equipment, which now represents 2% of the device market, and an initiative by China's government to cut drug prices and invest more in devices.
Glorikian also said that he sees biopharma and the medical device sector continuing to grow and that he doesn't foresee one outpacing the other.
"Both are likely to see growth," he told MDD. "Drug therapies will see growth due to increased access to these therapies by individuals previously without the right means of obtaining them, but this growth will be limited by increased government regulation of hospital prescriptions. Medical devices will see growth from the increase in capital equipment expenditures for new hospitals and updates of current equipment made possible by increased funding."
Major players in the industry such as GE Healthcare (Waukesha, Wisconsin) have already made what Scientia's report is calling "significant advancements" into China's medical device space. Glorikian said that the company was already funding research and development in China.
The emergence of a stronger Health Information Technology (HIT) sector is also expected to receive a boost.
According to the report, China's HIT sector is projected to reach $4.1 billion by 2013. Most of the spending for this sector was made possible because of a 2004 government mandate that 4% of hospital revenues be spent on HIT and a 2006 to 2010 health information plan.
As it stands now about 31% of hospitals have established health information systems. The report says that as many as 80% of the healthcare facilities in the region need upgrades, specifically for digital medical records and clinical support systems.
But perhaps the biggest growth will come from China's $1.18 billion IVD market. The area will see growth because of hospital's adoptions of advanced technologies, the emergence of private laboratories and the willingness of the middle class to pay for their own health screenings.
The report shows that double digit growth of the $100 million molecular diagnostics segment would be driven because of a rise in infectious diseases such as HIV, HBV and HPV, and in hospital acquired infections such as methicillin-resistant Staphylococcus aureus.
It also says that point-of-care diagnostics will benefit the most from the establishment of nearly 29,000 rural clinics and 2,000 county level hospitals.
But with all the increased spending in these sectors, companies seeking to play a bigger role in China's healthcare market won't be able to waltz right in, Glorikian said. There will be harsh competition from emerging China-based med-tech companies and there will be a whole different set of new rules and regulations to adhere to.
"There will be a lot of large opportunities, but med-tech companies have to understand that in realizing those opportunities they aren't in Kansas anymore," Glorikian said. "There are different rules, there's a different landscape."
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