COVID-19 and healthcare

When the Coronavirus outbreak wanes, we think China’s healthcare industry will change in several aspects:

1. Healthcare reform will speed up, especially in the following areas:

• Strengthening of the primary care system and integration with public health crisis management system
• Improvement on the sustainability and affordability of the social medical insurance funds: Cost control via national level procurement and negotiation on drugs, devices and high value consumables
• Public hospital reform to implement DRGs payment and management improvement on quality and efficiency
• Salary and compensation packages for medical staff to be increased in order to retain and attract best people in healthcare system

2. Internet healthcare will play a more important role.

• Increased awareness and acceptability of internet healthcare by general public. Private internet healthcare companies providing healthcare consultation/advice/monitoring, selling healthcare related products (drugs/devices/consumables) will experience further growth in China
• The government is likely to issue further policies to relax the social medical insurance payment reimbursement for internet healthcare services/products, especially in the areas of chronic diseases management 
• Public hospitals were slow in providing internet healthcare to patients prior to Covid-19 but this is likely to change going forward. With the potential policy to include internet healthcare services into the social medical insurance payment reimbursement and the future implementation of DRGs payment, public hospitals will have the incentives to provide more internet healthcare services to patients, creating collaboration opportunities between public hospitals and private internet companies. This will create new challenges as well as opportunities for pharmaceutical and devices companies on marketing and sales strategy  
• With individual data collected via healthcare APPs, healthcare data and analytics will create further opportunities for both government and private companies to create further value 

3. “Made in China” healthcare products will take a bigger share in global markets. During the Covid-19, many countries purchased related products like test kits, PPEs, ventilators from China. It is likely the government will further support, encourage and promote Chinese companies with high quality innovative products to expand global market share.

4. Healthcare insurance market will be further opened to foreign players and restrictions on innovative healthcare insurance products are likely to be gradually lifted.