Industry
Introduction
Challenges &
Opportunities
Industry Introduction
2673
2010 China’s Health Expenditure was 5.1% of the GDP
World’s average was 6.4%
1860
China’s Healthcare Expenditure per person:
12%-13% of increase in future 5 years
Developed Countries’ average was 8.1%
1643
1289
China ranked 149 in the world
394
11.45
78
01
02
03
04
05
06
07
08
09
10
11 12E 15E
Macro economy’s growth leads to income increase China’s Health Expenditure:
17.6% of average growth rate in 30 years
Urbanization and aged population growth
Changes of Disease Spectrum:
Death rate increase in: Malignant Tumor,
Cardiovascular and Cerebrovascular diseases,
Mental Disorders,
and Nutrition metabolism and endocrine
system diseases
Government investment increase
14000
35%
12000
25.70%
26.10%
10000
20.20%
16.80%
14.50%
19.50%
22.40%
20%
16.50%
18.00%
15.10%
15.30%
13.20%
13.50%
11.80%
25%
20.52%
16.70%
6000
4000
25.60%
22.80%
21.40%
8000
30%
27.80%
28.60%
10.90%
14.60%
13.30%
15.64%
15%
13.66%
13.10% 12.91%
10.00%
10%
9.60%
2000
5%
0
0%
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
Insurance
From WHO statistic yearbook and Tengwei 2013 semiannual summit
Manufacturers:
Chemicals: 3454
API: 1318
Chinese Medicine: 2577
Biotech: 202
VDR: 62
Chinese drug decoction pieces:1236
Sub
Industry
Output
（B RMB）
Yearonyear
%
API
298.5
15.80%
18.23%
Chemicals
455.2
24.30%
27.79%
Biotech
166.6
18.70%
10.17%
Devices
140.1
20.80%
8.55%
Materials
118.0
24.60%
7.20%
Chinese Med
369.2
21.50%
22.54%
Decoction
Pieces
90.2
26.60%
5.51%
Total Output
Growth Rate
27.2%
30%
25.8%
24.8%
25%
21.3%
24.2%
20.0%
20%
18.7%
15%
15707
16378
2011
2012'1-11
10%
12349
5%
0%
5340
GDP
6718
8381
9946
Healthcare Industry Total Output
2006
2007
2008
2009
2010
From WHO statistic yearbook and Tengwei 2013 semiannual summit
Total Revenue(B RMB)
Year-on-year growth rate
54.9%
35.4%
13.7%
32.6%
25.6%
23.2%
16.2%
84
40
62
106
140
158
157
Sub Industry
Revenue
（B RMB）
Yearonyear
%
API
183.3
0.02%
13.29%
Chemicals
434.2
26.11%
31.04%
Biotech
180.9
7.01%
12.37%
Devices
127.2
15.09%
9.23%
Materials
86.7
31.13%
6.30%
Chinese Med
324.4
16.97%
23.82%
Decoction
Pieces
53.7
16.69%
3.95%
From WHO statistic yearbook and Tengwei 2013 semiannual summit
From 2009-2013 China Healthcare market report and Industry analysis
From 2009-2013 China Healthcare market report and Industry analysis
Rank
Rank
Name
Name
Sales Income(10K RMB)
1
China Resources Medications Group Limited
1
China National Pharmaceutical Group Co.
Ltd.
12456339
2
Harbin Pharmaceutical Group Holding Co
2
Shanghai Pharmaceutical (Group) Co. Ltd.
4880000
3
Shanghai Pharmaceutical (Group) Co. Ltd.
3
China Resources Medications Group Limited
4122375
4
Shiyao Group Co. Ltd.
4
Jiuzhoutong Pharmaceutical Group Co. Ltd.
2479820
5
Yangtzejiang Pharmaceutical Group Co. Ltd.
5
Nanjing Pharmaceutical Group Co. Ltd.
2013727
Name
Manufacturer
%
1
Clopidogrel
Sanofi
0.70%
2
Alprostadil
Beijing Taide Pharmaceutical
Co., Ltd.
0.67%
3
Atorvastatin
Liaoning Dalian Pfizer Inc.
0.59%
4
Moxifloxacin
Bayer healthcare Co. Ltd. of
Beijing
0.56%
5
Actovegin
Liaoning Jinzhou Ahon
Pharmaceutical Co Ltd
0.51%
Name
Manufacturer
1
Kangai injection
Jilin Changbaishan
Pharmaceutical Group Co.
Ltd.
1.90%
2
Xiyanping injection
Jiangxi Qingfeng
Pharmaceutical Group Co.
Ltd.
1.81%
3
Shuxuetong
injection
Mudanjiang Youbo
Pharmaceutical Group Co.
Ltd.
1.76%
4
Danhong injection
Shandong Buchang
Pharmaceutical Group Co.
Ltd.
1.46%
5
Shenshifuzheng
injection
Guangdong Lizhu Group Limin
Inc.
1.42%
%
SDFA Southern Healthcare Industry Research Public
Percentage
China has 0.42 million retail drugstores.
Guangdong, Sichuan, Shandong, Jiangsu, and Hunan
possess 38.8% of the total.
Total Number of Drugstores and growth rate
2006
2007
2008
2009
2010
2011
SDFA Southern Healthcare Industry Research Public
Growth Rate of Local Community Use of Medicine (0.1Billion RMB)
34% of the total market
300
Growth Rate of Local Use of Medicine（0.1Billion RMB）
0. 5
44.6%
250
800
29.9%
0. 3
0. 25
88.7
0. 2
63.4
0. 15
1. 6
703
149.0%
700
9.5%
50
0. 1
0. 05
1. 4
0
600
535
500
1. 2
441
400
0
2007
2008
2009
2010
2011
2012
1
329
0. 8
254
300
200
0. 35
128.3
150
0. 45
0. 4
184
16830.9%
200
100
239
39.9%
Growth Rate of County Level Use of Medicine (0.1Billion RMB)
0. 6
0. 4
102
29.5%
100
34.0%
21.3%
31.4%
0
66% of the total market
0. 2
464
0
2007
2008
2009
2010
2011
2012
500
328.4%
3. 5
3
351
400
2. 5
273
300
2
165.3
200
200.7
1. 5
1
100
38.6
0. 5
21.4%
0
36.0%
28.6%
32.2%
0
2007
2008
2009
2010
2011
2012
SDFA Southern Healthcare Industry Research Public
In 2011, there were 3.8 billion visits to local health
institutions. It was 60.7% of the total visits.
Hospitalization was 37.75 million held 25% of the
total number.
Local Community Health Centre’s average charge
is 81.5 RMB
County Hospital’s average is 49.5 RMB
Local Health Institution Charges (RMB)
100
90
80
70
60
50
40
30
20
10
0
86.9
87.2
84
82.8
81.5
46.2
47.5
49.5
39.5
42.5
2007
Local Community Health Centre Visits
34740.4
2007年
2009
2010
2011
County Hospital Visits
40950
8.27
8.77
8.74
8.66
2008年
2009年
2010年
2011年
7.59
26080.2
12712.4
2008
17247.3
2008年
2009年
诊疗人次(万次)
Visits (10K)
2010年
2011年
2007年
诊疗人次(亿次)
Visits (0.1B)
SDFA Southern Healthcare Industry Research Public
Drugs Retailer
Terminals：
230 billion RMB，
21.4%
Local Healthcare
Terminals
70.3 billion RMB，
6.5%
420K stores
Local
community
Health
Centre,
239, 2.2%
County
Hospitals,
464, 4.3%
Hospital Terminals：
774.6 billion RMB，
72.1%
21979 Hospitals
2012 Drug
market cap：
1075 billion
Rural
1399，
13%
Urban
6347，
59.1%
RMB
SDFA Southern Healthcare Industry Research Public
Challenges and Opportunities
Recovery of macro economy
Government investment growth
Base propellant expansion and designated production
The improvement of bidding mechanism
Encourage innovation
Promotion of the new version of GMP implementation
Reformation of drug technology transfer examination
Patent protection
Supplements and devices development support
Shrink of external demand
Costs pressure
Control of hospital costs and 0 extra fees
Assessment of generic drugs quality’s consistency
Control of drug price
2009
2012
307
500
•First-tier health institutes are required to
equip with base propellant
•Second-tier hospitals’ base propellant usage
and sales should reach 40%-50%
•Third-tier hospitals’ base propellant usage
and sales should reach 25%-30%
SDFA Southern Healthcare Industry Research Public
Main Point
Changes
1. Improve drug quality evaluation
system, figure out an efficient way to
lower price.
2. Expand purchase area, put high
Platform
building
Innovation of
mechanism
Lower price
Quality and price
oriented
Drug bidding
Purchasing
contract and usage
quality and price materials into
purchasing list.
3. Centralize essential and nonessential drugs purchasing.
SDFA Southern Healthcare Industry Research Public
Priority of making price standard for first generic drug
The first 3 generic drugs
Make price standard
drugs have priority
can make price
Already on sales
 Innovation and generic
90% price of first
generic drug
 Based on level of
innovation, set the
price
After the first within
5 years,the 2nd and 3rd
drug
After 5 years
More than 4
manufacturers
90% and 80% of the
first generic drug
 First will have a higher
margin than the second
Government set the
price
Government set the
price
Market selection
Patent protection
SDFA Southern Healthcare Industry Research Public
New round of GMP
will bring more
M&A
Eliminated more than
2000 enterprises since
last round of GMP
New policies:
5071
5050
4682 4768
4881
4516 4553
4490
Encourage good enterprises produce more
pharmaceutical productions
4706
？
12
13
3731
Encourage enterprises get approved quickly
Limit registration of enterprises which
didn’t approve on time
Make approval of producing requirement more
strict
Let the leverage of price be exerted
adequately
Give bonus for Implementation of centralized
drug purchase
03
04
05
06
07
08
09
10
11
 There are 597 enterprises get approval of new
GMP
New GMP pass rate is about 15%
Support GMP project
SDFA Southern Healthcare Industry Research Public
Growth rate of visit fee and hospitalization fee shouldn’t be higher than local growth rate of GDP
(8%)
Results will be recorded into annually audit
Lower the purchasing costs
Prepay visit fee; hospitalization fee should based on insurance payment type
Growth Rate of
hospitalization Fee
Growth Rate of Visit Fee
12.6%
13.5%
10.7%
9.3%
9.5%
8.2%
6.2%
2008
2009
2010
2011
4.3%
2008
2009
2010
2011
SDFA Southern Healthcare Industry Research Public
Low
quality
Generics
Regular
Generics
High
quality
Generics
Better than
original drug
Same with the
Only about the
original drug
consistency with the
original drug
5 consistencies
Ingredients, type,
standard, safety,
efficiency
SDFA Southern Healthcare Industry Research Public
Set a ceiling for drugs profit margin
Cancel some foreign drugs’ individual price making policy
Supervise costs and finished goods price margin
Support high quality generics
300
250
200
31st
average↓15%
High price
drugs↓20%
150
100
50
0
97-99 2000年 2001年 02-03 04-05 2006年 2007年 2010年 2011'3 2011'8 2012'3 2012'9 2013'2
年
年
年
SDFA Southern Healthcare Industry Research Public
New medicines are focusing on prevention
Aging population forces to change the structure of healthcare market
Chronic diseases are becoming major factors
Huge potential of new rural cooperative medical system