Milling around the hotel lobby at the Sir Francis Drake hotel in downtown San Francisco are an eclectic group of investors, entrepreneurs and executives from established healthcare companies.
They have all come to learn more about China's healthcare market; how better to invest in, raise capital from, and sell into the country's exploding biotech, life-sciences, pharma and medical device sectors. Hosted by OneMedPlace, a New York-based research organization, Monday's China Forum shed new light on the rapidly changing healthcare landscape in China.
As Chinese society has advanced over the past two decades, some of the most compelling business opportunities have been those that address the most overwhelming needs of the country's people. No opportunity reflects this better than healthcare. Equally, no market space may better capture the unique challenges to successfully operating in China given the role of the Chinese government as the funder, organizer and distributor of healthcare services and its nascent efforts to build a higher quality healthcare system for its people.
For example, Beijing's efforts in the healthcare market have certainly not all been bad for Western multinationals. Huang noted on Monday that some "60% of China's healthcare stimulus money ended up going to non-Chinese multinationals". While the headwinds of expanding government-sponsored coverage for basic medical services and drugs remain a challenge, a recent JPMorgan report noted that AstraZeneca, Sanofi, Roche, GlaxoSmithKline, Novo Nordisk, Johnson & Johnson and Pfizer all realized over 30% growth from their China operations in the early part of 2011.
Beijing deserves credit not only for recognizing the pressing need to expand basic healthcare services across both its rural and urban populations, but also for its attempt to walk the fine line between more centrally driven Anhui-style reforms and tentative efforts towards hospital privatization, allowing the country's best doctors to work one day a week at a private hospital, and the expansion of private insurance.
China's ability to deliver expanded healthcare coverage may rank second only to the country's ability to deliver economic growth in terms of keeping the country stable and unified. For Beijing, its policies in this area must be more nuanced and sophisticated than perhaps any other industrial or political issue.
It must aggressively push for cost reductions given its limited wealth and seemingly unlimited number of healthcare needs. It must also develop domestic capabilities to research new, and produce existing drugs and devices for the healthcare needs of its people, two steps that will require Western technology. And, it must do all of this while reforming its insurance in such a way as to continue promoting consumption from a reluctant Chinese populace.
These overwhelming needs and the compelling opportunities they suggest may be the most interesting and compelling since the country's last round of major economic reforms in the late 1980s.