What are the changes of the health industry over the past decade?
date:2017-09-18
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What are the changes of the health industry over the past decade?
 
Wu Han, Sinohealth ,Director
 
First, the health industry growth rate saw a rational return; Retail industry market position rapidly increase.
Since the 17th CPC National Congress in 2007 has announced medical reform guidelines, new medical reform had been formally promoted and the industry has entered a new stage of development.Although the process has experienced global financial crisis, the industry's resilience still ensured a 15% compound growth rate, The size of the terminal market had grown from 483.5 billion in the beginning to 1490 billion , with not only the policy dividend-driven high growth of 20%, but also the 7-8% rational return at the end of the period.
The retail terminal market grew to ¥337.7 billion in 2016, rising as an important strength in the industry. Zhongkang CMH predicted that the growth rate of terminal drug use market will fall back to 5.8%.

Second, the Internet and big data are increasingly penetrating into the health industry.
The high-tech giants with internet technology and big data have began to enter the health industry and joined the battle for customers with the traditional industry service providers,leaving more uncertainties in the development path for the industry.

Third, compliance regulation,innovation and adaption to the new industry ecosystem will replace barbaric growth as the future way of survival for the industry.
 10 years of new medical reform has put the whole industry to a real roller coaster. The market was booming in the early stage with the initiative of grass-roots work strengthening and investment increase, with a growth of more than 17% in the drug use market for 5 years in succession, a 20% increase in 2010. As the medical reform entered a stage with the guideline of cost saving and efficiency increase, and waded into uncharted water in the past two years, the industry started feeling the impact of recession due to the new comprehensive policies and slowed continuously to a single-digit rate from 2015.
After China being a member of ICH and the practice of DRG, China's pharmaceutical companies will face greater challenges.
 
Fourth, structure of drug use changes and the industry expands.
On one hand, the structure of drug use in China has changed as a result of changes in the population structure and disease spectrum: anti-cancer drugs grew rapidly and gained followers from enterprises; cardiovascular and cerebrovascular drugs surpassed anti-infectious agents to become the new leader in the total amount of drug use; pregnancy,baby and children’s products recovered a momentum;the drug use level in counties and towns increased, closing the gap between urban and rural areas.
On the other hand, with an increasingly diversified and personalized health requirements,consumers are underserviced by either medicines or medical care. The health industry, expanding the limit of the industry,has become a precise name for this industry instead of the pharmaceutical industry. As the information became more transparent and the technology advanced, consumer awareness improved as well.

Fifth, capital has become a powerful thrust of the changing industrial landscape.
Along with the establishment of China’s multi-level capital market system, and the favour of capital on health industry, a large number of capital tools are used in the industry, optimizing the distribution of industry resources, improving industrial concentration, and promoting the industrial innovation as well as industrial structure change.

Five trends in the future health industry blueprint:

 [trend 1] the differentiation of industrial dominance and the gradual formation of "dual market" structure
With the change of the medical insurance payment methods, the growth of the commercial insurance, enhanced voice of doctors by multi-spot practice,growing proportion of the middle class ,greater information transparency and increasing impact of technology, dominant right of industries will come to
consumers,whose spokesmen of interest--commercial insurance institutions and related health services will be more of a say and become a dominant force.
This force will create a "binary market" structure: a basic market dominated by government,with relatively stable structure and broad coverage.An active consumer market which is represented by commercial insurance and health management institutions will meet the diversified needs of high and middle income people.The Zhongkang CMH analysis pointed out that market competition modes will be very different, and pharmaceutical enterprises need to combine their own characteristics to be well positioned.
 
 [trend 2] growth pole shift of health industry
The pharmaceutical market has been an important growth pole in the past due to the relatively monotonous demand and the policy of covering hospital expenses with medicine revenue.Along with the diversification of health demands,medical system reform, and the change of the payment methods, drug market will
maintain slow growth in a long time ahead,and enterprises who are lack of core competitiveness will be excluded from the market quickly;Medical and health services market will be a major contributor to the growth of the health industry and the industry growth pole will shift from product to service.
 
 [trend 3] supply chain structure changes of industrial service
With the development of technology, the change of demand patterns and the evolution of social organization form, a new supply chain structure will be formed,featured by continuing to shorten the distance with consumer,and specialized division of labor combining systematic service. This puts forward higher requirements for brand construction and accurate positioning of enterprises or various service agencies;At the same time, the market also has a strong demand for service providers with professional linking ability, so as to better coordinate the supply resources of various professional institutions and systematically meet the health needs of consumers.

[trend 4] data application ability will become the basic ability of enterprise development
Data will be more widely used in the health industry including business decisions, medical services, drug development and production, circulation and use, payment, etc.About data, meanwhile, an idea needs to change: data is energy, but Zhongkang CMH emphasized that data is not oil, it is the solar energy. It is not exclusive and its value exists only when being applied.The trend of data sharing and the break of information isolation is an inevitable trend.

[trend 5] the wide application of Internet technology and artificial intelligence
Internet is widely used in the medical process,and artificial intelligence will create value in the field of medical and health management.It will fully liberate the productivity of health service providers represented by the doctors, to satisfy more demands and become the impetus to expand the market with increased efficiency.
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