Inside China's two health care markets

Inside China's two health care markets

See why two very different emerging markets present a unique testing ground and opportunity for developing health care solutions.

The world’s most populous country and the one with the largest aging population—300 million aged 65 or over by 2030—represents one of the most exciting markets for health care companies. However, two very different markets are emerging—a Western-style market in cities and a Third-World-style market in its villages—presenting a unique testing ground and opportunity for developing a range of health care solutions, says Lux Research.

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“China is bifurcated into two distinct health care and biopharmaceutical markets. The urban market is rapidly growing due to young people migrating to cities, and developing western-style illnesses such as obesity and diabetes. On the other hand, a large rural population primarily suffers from Third-World diseases with less access to health resources,” said Zhihao Yu, Lux research analyst and the lead author of the report titled, “China: One Country, Two Health Care Markets.”

Lux Research analysts built a model to assess the market based on the Chinese government’s plans.

Among their findings:

  • Rural hospital income set for leap. Rural health care spending has historically lagged investment in urban health care, but a new state effort to redress the imbalance will see rural health care doubling to 400 billion RMB ($64 billion) by 2015; the rural health care market is predicted to grow nearly twice as fast as the urban market—18 percent versus 10 percent.
  • Villages need low-cost solutions. Rural populations favor the application of medical devices—for instance, joint replacement versus long-time chronic pain management—due to limited incomes. China’s proposed insurance program for the rural populations, the vast majority of which has no coverage, offers new opportunities to health care companies.
  • Cities need Westernized models. Urban populations with a growingly Western lifestyle suffer from diseases and syndromes such as childhood obesity and diabetes, exceeding rates in the U.S. In addition, pollution is increasing the prevalence of respiratory disease, as the market cries out for Western-style models.
  • Dual development strategy. Solution providers with vision and healthy balance sheets have the opportunity to pursue a dual product/service development strategy that addresses both rural and urban health care needs. China represents a unique crucible where both incremental and disruptive innovations can be successfully absorbed by its two markets.

The report, titled “China: One Country, Two Health Care Markets,” is part of the Lux Research China BioPharma Intelligence service.


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