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2010-11-17 | All chapters

Healthcare market to top $600b by 2021
Global Times, 9th November 2010

As the nation moves forward with its universal healthcare coverage plan, the size of China's market could exceed $600 billion within 10 years, according to a report from management consulting firm, McKinsey & Company.

In that November report, McKinsey states that the healthcare market in China offers great potentials for foreign companies, yet challenges such as market pricing and consumer preferences pose challenges.

The healthcare market, currently estimated at $240 billion, is about 5 percent of the nation's GDP.

But McKinsey asserts that healthcare spending will rise faster than GDP growth, driven by better insurance coverage, improved access to high-quality care and rising demand from aging, urbanization and lifestyle shifts.

A few international providers, such as Singapore-based ParkwayHealth, have already established a presence in China and have plans to expand gradually, the report said, adding that several others are looking to tap into opportunities within the next few years.

Currently, rumors are apparently circulating that the government will open the market to 100 percent foreign ownership in private-healthcare facilities, but no official word has been given, the McKinsey report said. Foreign ventures are currently allowed to hold a 70 percent stake in such facilities.

Sector reforms, therefore, will affect many facets of healthcare delivery including insurance, primary care, hospital management, medications and public health.

But the government will continue to dominate the market, because the country's healthcare reforms' primary objective is to ensure broad access to basic health services.

McKinsey pointed out that opportunities do exist for private sector healthcare-service providers, such as insurance companies, private hospitals, and healthcare information technology providers.

With the market in China still in its infancy, national reforms targeting healthcare improvements in rural areas offer great opportunities for medical-device makers, said a senior official with the European Union Chamber of Commerce in China's Healthcare Equipment Working Group.

Since Chinese healthcare reforms favor the use of low-priced medical devices - and most foreign firms produce more high-end devices - these companies may have to change strategy to adapt, the European Chamber official said, requesting anonymity. Some firms have, including medical-device producers GE, Philips and Siemens, which seek to lower prices by producing locally.