What’s next for healthcare in China?

During the WSJ Health Forum, I had the opportunity to discuss with Jonathan Rockoff, a WSJ journalist, why healthcare companies should set their sights on China. The reasons extend beyond their status as the world’s second largest market.

China’s fast-growing market, technological entrepreneurship, leadership in digital adoption and efforts to lead in critical areas of medical research, are among the many reasons to focus there. The changes occurring in the healthcare industry are happening at the speed of light.

And there are more on the horizon:

• Demographic changes: The rapid aging of the population creates a higher demand on accessibility and quality healthcare services. It also means an increasing focus on medicines to combat chronic diseases of growing prevalence as diabetes and cardiovascular diseases. Education about lifestyle changes to better manage chronic diseases, which tend to be preventable, should be indeed part of the approach.
• Digital dominance: The trends in consumer markets and strong focus on digital to enhance experiences will continue to change and influence the healthcare industry. A new guideline on the “Internet plus Healthcare” has been published by the State Council in an effort to establish a comprehensive healthcare system empowered by the internet[1]. As digital and healthcare continue to merge, we can expect an uptake and adoption of digital by both clinicians and patients alike. Already 40% of all physicians in China have used mobile consultation[2] and 15.6 million people have used the most common online consultation platform[3]. Compare this to the U.S., where only .7 million have used an online consultation platform.
• Policy and regulatory environment: Major transformations have already occurred over the last three years in areas such as review acceleration, joining ICH (The International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use), and conducting multi-regional clinical trials to better reach the global market. There’s still room to grow for shaping market access policies to reward innovation.
• Emergence of biotech companies: Almost 2 billion USD have been raised on the Hong Kong stock exchange from Chinese biotech companies from August – October 2018[4]. Additionally, numerous listings were done on foreign exchanges such as NASDAQ as Chinese companies invest overseas. The emerging local and foreign biotechs are seeking opportunities to collaborate.

At Merck, we are developing a holistic strategy in order to approach this unique market. Alongside working in close partnership with Government and Regulatory bodies, we are localizing the production of critical medicines, developing new drugs adapted to local needs, and investing in our research and innovation hubs to integrate the advanced technologies and expertise of Merck and its partners. Additionally, we are collaborating with other relevant stakeholders such as Alibaba Health, focusing on providing Chinese patients better access to healthcare services and Tencent, focusing on intelligent digital health services. And, most importantly, we are promoting our local talent for leadership positions within China and globally.

These current actions will help us better prepare for the future and allow us to meet our commitment to improve the lives of 40 million patients in China by 2025.

1,2,3,4 Building Bridges to Innovation, McKinsey & Company, November 2018