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China Healthcare to Benefit from Healthcare Reforms: AIC Told
China’s medical companies are holding up well amid the current global financial crisis, and the healthcare system is poised to benefit from the Chinese government healthcare reforms, the Credit Suisse Asian Investment Conference heard.
Addressing a conference panel entitled ‘China Healthcare Stimulus and Reform: Capex vs Consumption’, Roberta Lipson, CEO of Chindex, talked down the impact of the current global financial crisis on her business. Chindex is a Western healthcare services provider and medical products distributer in China.
“Central government spending – the portion that we’re really sure of - is going to at least increase at least by 43% this year,” she said. “If that extra spending comes to pass it means that (total) healthcare spending by the government is going to increase something like 300% this year.”
“So I can’t say that we operate in a compromised environment, no matter how you look at it.” She said part of the reason her company was seeing growth in its medical equipment business was that hospitals had boosted confidence as a result of the focus the government was placing on healthcare. “On that side of our business we’re not seeing any macro negative impact.”
The Chinese government recently announced a RMB850 billion budget for healthcare reform, and declared universal medical insurance and hospital upgrades as top priorities.
“The government is promising increased investment, the government has said that they are going to build 2,000 new county level hospitals,” Ms. Lipson said. “I think there’s plenty of investment to go around. I haven’t seen any lack of confidence that’s affected the demand for our products.”
Ms. Lipson did note that some international employers had changed the level of health insurance for staff working in China, and that indeed some expatriates had been leaving China, but that in general wealthier Chinese people were not “trading down” their health insurance despite the global downturn.
She said the central government spending would go towards a range of things including grass roots medical centers, community health centers, medical co-ops, public hospitals, emergency aid and public health.
Frank Zhao, Chief Financial Officer of Simcere Pharmaceuticals Group, a manufacturer and supplier of branded generic pharmaceuticals and anti-cancer drugs, told the conference there was no evidence of a reduction in consumption of “high-end” drugs as a result of the current economic uncertainty.
“I don’t think this has a material impact,” he said. “The consumer of our products is impacted by the global economic conditions, but not to the (extent) that there is a decline.”
Meanwhile, Randy Hung, Executive Director of China Shineway Phramaceutical Group, which is the largest Chinese medicine injection and soft capsule manufacturer in the PRC, said the impact was even lower in this area, as their product had a lower price point.
“I usually tell investors that if you invest in Chinese medicine companies you should expect annual growth rate of at least 15% every year,” he noted.
Minghe Cheng, Executive Vice President of Strategic Development for Mindray Medical, a medical equipment company in China, said 60% of his company was export-focused, with 40% domestic.
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