Healthcare demand is increasing rapidly
This rapid growth and the sheer size of the 65+ demographic means more cases of age-associated conditions, such as mobility, vision, and hearing impairment, plus a greater number of chronic disease cases, such as diabetes and hypertension, according to the World Health Organization (2)
Taking diabetes as an example, 150.6 million Chinese are expected to have it by 2040, a 37% increase on 2015, and total expenditure on care and treatments will reach an estimated USD 71.8 billion, up from USD 51 billion in 2015, according to estimates by the International Diabetes Federation (3).
Public and private spending is growing
China's government is stepping up investment in healthcare services, with total spending increasing by a factor of five between 2004 and 2014 (4), according to World Health Organization (WHO) data (4), as it has built facilities and increased the supply of medical services.
A further source of demand for healthcare comes from Chinese citizens' increasing spending on medical services. As incomes rise and healthcare options increase, consumers are spending more on private healthcare, with total private spending growing an estimated 16.4% per year between 2005 and 2014, according to WHO data (4).
And while the rates of both public and private health expenditure are growing fast, there is still significant room for growth because actual healthcare spending levels in China remain low by international standards, with healthcare spending in estimated at 5.5% of GDP in 2014, compared with 10.2% in Japan, and 17.1% in the US, according to WHO data.
Chinese healthcare companies are innovating to compete
While underlying macro trends are positive for the healthcare sector as a whole, competition is fierce, and that means Chinese companies have to innovate to take a share of the market.
Indeed, because of the size of the opportunity, and competition for sales, Chinese companies are boosting their R&D investments to create innovative products.