Business / Industries

Healthcare expenditure booms in China: report

By Liu Jie ( Updated: 2012-08-29 16:59

China's is expected to spend $1 trillion on healthcare in 2020, up from $357 last year, said a report conducted by the management-consulting firm McKinsey & Company Inc and released on Wednesday.

To sellers of pharmaceuticals, medical products, consumer health products and similar things, China remains one of the world's most attractive markets.

The country's expenditures on healthcare more than doubled from 2006 to 2011, going from $156 billion to $357 billion, and coming close to being equal to 5 percent of the country's gross domestic product.

A report titled Healthcare in China — Entering Uncharted Water attributed the fast increase in China's medical spending to the continuation of the nation's economic and demographic trends, healthcare reforms and the policies laid out in the government's 12th Five-Year Development Plan (2011-2015).

Some of these promise to benefit multinational companies, especially those that call for infrastructure improvements, the broadening of insurance coverage and giving significant support to innovation. Some of them, though, hold out the prospect of having the opposite effects.

The report also offers eight pieces of advice to multinational companies that are in China:

*Adopt a second-home market mindset

*Step up engagement with central and local governments to shape the environment

*Tailor business models to better meet diverse market needs

*Drive operational improvements to sustain an economic model

*Double down on the role of innovation

*Seek out bigger, bolder partnerships

*Invest in attracting and developing top talent, and build capabilities that are relevant to China

*Adopt a through-cycle mentality

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