China’s healthcare market is projected by McKinsey & Co to grow at an unprecedented compound annual growth rate (CAGR) of around 12%, reaching $1 trillion by 2020 and almost tripling its size of $357 billion in 2011.
The country is investing heavily in local healthcare infrastructure and is looking to reform the healthcare system based on a number of economic and demographic trends in the next 15 years through the ‘Healthy China 2030’ initiative announced in 2016.
Some of the measures taken by the Chinese government such as improvements in infrastructure, broadening coverage of healthcare insurance, and strong support for innovations are beneficial not only to Chinese residents but also multinational companies. Although healthcare expenditures in China has jumped more than fourfold between 2006 and 2016 (from about $126.1 billion to $697.7 billion in 2016), healthcare spending per capita is only around 6% of its GDP, versus close to 18% in the U.S. in 2016. It suggests that there is enormous room for growth. These corporations can take advantages of the business opportunities by playing the roles as suppliers or business partners.
For example, China plans to establish approximately 700 key national laboratories across the country by 2020 to spur innovations in such fields as medical science, biology and chemistry, among others as revealed by guidelines posted online by the Ministry of Science and Technology (MOST) earlier in 2018. These laboratories are encouraged to conduct major basic as well as frontier scientific research, and cutting-edge fields like stem cells, synthetic biology and brain science will receive priority support. In March 2018, the Chinese government made it public that funding had been set aside for this purpose.
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