Healthcare market in China is booming
Because of its size and development capability, China’s health care market is the most attractive in the world for foreign investors. China became the second largest healthcare market in China since 2013 and continued to grow at double digit rate. In fact, this is the fastest growing healthcare market in the emerging economies.
Recently in 2016, China’s Healthcare market reached 5,670.3 billion (US $ 853.7 billion), compared to 2015, local currency increased by 12%. In addition to the other, the medical device market increased by 20.1 percent, 370 billion ($ 37 billion)) in 2016, the sale of pharmaceuticals and health products reached $ 1,839 billion (US $ 277 billion), while 10.4 percent year.
However, China’s healthcare market is still inevitable. Although the healthcare costs in the country have increased more than four times – In 2006, the RMB from $ 1,096.6 billion (US $ 126.1 billion) in 2006 to US $ 4,534.5 billion (US $ 697.7 billion) – Exemption per health care is only 6% of its GDP.
It is 17% in the US, 10% in Japan and unfair in Europe and nine percent average in OECDD countries. By 2020, China’s healthcare costs are estimated that its GDP is calculated by 6.5 to 7 percent, which is around US $ 1 million. And by 2030, China’s Health Care Market has targeted targeting of 16,000 billion (US $ 2 million), as in October 2016, the State Council has released the Health Health China 2030. Every health sector – more than medicinal medical devices will have more opportunities.
While many market factors are positive, foreign investors will have to study the rapidly changing regulatory environment for this industry. Health care reform in China started in 2009 and is still continuing, with different goals every year. We summarize the 2017 fixes below.
Two invoice systems for distribution of medicines
“Two Invoice System” means that in the distribution process from the hospital to the hospital, only two tax invoices (or fuPovies) can be issued. Distributor is the first invoice distributor, while the Distributor Hospital or Medical Service Provider is facing another invoice. Unlike previous system where drug distribution chains consisted of manufacturers and multiple distributors usually, “two invoice systems” allow only one commissioner to distribute only purchases.
The first piloted program in the selected provinces in 2016, the pilot program was referred to in 2017, 11 provinces and 200 pilots. According to a circular government in January, the government wants to implement two invoice systems across the country in 2018; many people expect this program to be extended to the medical device sector too.
“Two Invoice System” is designed to promote pharmaceutical distribution channels, reduce pharmaceutical costs and prevent corruption, practically, manufacturers in the pharma industry (manufacturers), distributors, sales and sales systems. Compliance teams will turn on the way. From both a business and tax perspective.
To maintain compliance with this new system, the distribution channels of medicinal product channels must be converted into a flat from a rating structure.
Pharmaceutical companies also have to consider their pricing strategies, because the cost of hospital purchases and manufacturers (or importer) varieties in the pricing varieties are very high in the two invoice system.
If companies decide to increase the former factory price to decide to increase the factory price, leaving the distribution fee, it can influence the retail price, as a result of the manufacturer (eg) VAT is a result of payment. If companies do not decide to increase the former factory price, pricing information will be available to hospitals to modify the demand for potentially low-cost prices, and thus the manufacturer ( Import car) will be affected by the margin.
It is important for drug companies to evaluate and modify business models to promote health reform and “two invoice systems.” Negative measures to revise pricing and promotional activities tax transactions, such as pricing adjustments about former factory prices, and current arrangements with e-distribution.