Last week, we saw four different pieces of news that we believe reflect the improving quality of health-care delivery in China.

  1. More (and better paid) doctors
    On 4 January, China’s National Health and Family Planning Commission launched its ‘Talent Development Plan for the 14th Five-Year (2016-2020) Plan’, which aims to increase the number of medical professionals (from around two per thousand people to 2.5) and improve physician compensation (particularly for those in community hospitals).
  2. Use of commercial health insurance
    From the beginning of 2017, Shanghai employees are able to use their personal medical insurance account to purchase two commercial health insurance products. We see the growing use of commercial health insurance as a big enabler in emerging markets.
  3. Wholesaler drug distributor consolidation
    The Chinese government has announced plans to consolidate the currently highly fragmented wholesale drugs market over the next three years. This is no surprise; the government has already flexed its muscles in this area with the ‘two invoice system’ – a policy launched in 2014, which limits the number of invoices between medical manufacturers and hospitals to a maximum of two, with the aim of improving industry transparency, controlling costs, and consolidating supply chains.
  4. Chinese non-health-care company buys US-based drug business
    A Chinese privately owned conglomerate has purchased a cancer drug vaccine from a US-based pharmaceuticals company. While this is a small and specialised purchase, it points to an increasing interest in health-care businesses from other industry groups across China.

These are encouraging signs. We have seen China gradually improve both drug regulation and manufacturing quality over recent years, and there has also been a continued increase in health-care spending per capita. All this fits well with our ‘healthy demand’ theme, which highlights how changing lifestyles and expanding incomes in the emerging world provide a compelling growth opportunity in areas such as healthcare.

So, while the sole focus for many health-care investors is on President-elect Trump and US drug pricing, we continue to see signs that the quality of health-care delivery in emerging markets such as China continues to get better and better.     


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