Companies know a great deal about China today, but the key challenge is to make sense of potential opportunities and adapt business models accordingly – bearing in mind that the pace of change in China is blistering fast and the talent pool is strained due to a fiercely competitive jobs market.
With its immense size and scope, China is facing the wide-scale prevalence of many chronic diseases and conditions such as diabetes, hypertension, respiratory disease and cancer. These conditions are costly, have a significant impact on people’s quality of life, health outcomes and mortality, and have been reported by the Chinese government as the top 4 causes of death. To address this, the Chinese government is adopting a multi-faceted approach. One key action is to improve access to quality medicines at affordable prices.
China is accomplishing this by accelerating its approval process for innovative medicines through policy changes. This is evident with the introductions of medicines such as Tagrisso®, Entresto® and OFEV® – all launched in China within three years of their global market launches. The government also created a new regulatory body called the China National Drug Administration (CNDA), which will reform medical device evaluation and approval, expand regulations for medicines, medical devices and cosmetics, and crack down on the production and online sale of counterfeit medicines. And in parallel, we've seen substantial price cuts to innovative medicines from 2017 National Reimbursement Drug List (NDRL) negotiations, with discounts as steep as 70 percent for medicines such as Tarceva® and Herceptin®, and discounts averaging 45 percent in total.
In addition to accelerated medicine approvals and aggressive discounting, the Chinese government is also boosting the generic medicines industry through several means, including preferential tax rates to generic medicine manufacturers, as well as the passage of reforms to improve the reliability, efficacy and safety equivalence of generic medicines.
A Global Center of Innovation by 2030
China is among world leaders in digital innovation, technology advancements and the use of Big Data in healthcare. This is significantly impacting how healthcare is being delivered to, and consumed by, the Chinese patient. The government has clearly stated its intention to support and develop China as the global center for innovation by 2030. This includes the use of new technologies, such as artificial intelligence (AI) and smartphone apps, for patient management, which will help solve the current demand imbalance on medical resources and healthcare professionals' time. It also includes physician education, where Kantar recently found that almost 70 percent of physicians obtain their information through innovative digital channels, such as e-newsletters, virtual congresses, virtual ad boards, on demand virtual Medical Science Liaisons (MSLs), apps and online communities.
The impact of these developments is that we expect pharma and medical device makers to experience continued strong growth, local companies to grow with government reforms in this sector, and mHealth to develop significantly. The advancement of mHealth will facilitate greater access through telemedicine; better diagnostics and treatment through online diagnosis, cloud based health records and AI; and improved adherence facilitated by tools such as online medication dispensing and the use of facial recognition for dispensing.
The voice of the patient should NOT be under-estimated in China.
The potential implications for pharma and medical device companies in China are many. They include the need for a deeper customer understanding and the need to deliver compelling and strong value propositions to customers – BOTH physicians and patients. The voice of the patient should NOT be under-estimated in China. More than anywhere else in Asia, Chinese patients have greater influence and control of their health journey.
To succeed, companies will need a strong understanding of the regulatory environment and solid support in government affairs. Also, given the government’s emphasis on quality healthcare and affordability, demonstrating the best possible outcomes at the most affordable costs will be of strong value. An agile and innovative business model is essential to compete with very nimble local companies that are less burdened with heavy global compliance requirements. We are already seeing this in the Fast Moving Consumer Goods (FMCG) sector. Strong execution will rely on an understanding of digital platforms and innovation and how healthcare is delivered and consumed. This will result in strong multi- and omni-channel marketing and support programs for physicians and patients alike.
For more information, please be sure to check out Kantar's Edge of Insight report – Inside the Growth Markets, where we take an in-depth look at today's most attractive healthcare growth markets – China, Brazil, India, Korea, Taiwan, and Central and Eastern Europe – and details what steps you can take to achieve commercial success.
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