Embed Size (px)
Citation preview
Copyright © 2007 by Monitor Company Group, L.P.
No part of this publication may be reproduced— without the permission of Monitor Company Group, L.P.
This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion.
COMPANY CONFIDENTIAL
SAN FRANCISCO SÃO PAULO SEOUL SINGAPORE TOKYO TORONTO ZURICHSHANGHAI
BEIJING CHICAGO HONG KONGCAMBRIDGE DELHI DUBAI JOHANNESBURG
PARISLOS ANGELES MADRID MUMBAI MUNICH NEW YORKMOSCOWLONDON
Opportunities in the China Healthcare SectorApril 21st, 2007
John Gregg,Director, Monitor Company GroupBeijing
2Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX 2December 2008 |
Opportunities in the China Healthcare SectorExecutive Summary
China’s healthcare sector is rapidly developing
• Total Health expenditure in China grew at a CAGR of 15.1% from2002 to 2006, and reached USD 123 Bn in 2006
• Government spending on healthcare is increasing, and may increaseto as much as 73Bn by 2010, from 38 Bn in 2008
• The Public Health Insurance System is expected to cover ~ 90% ofthe population by 2010, from 8% in 2002
China has been identified as an attractive market for the pharmaceuticalsector
• Chinese pharmaceutical sales are expected to reach USD 28 Bn in2010
• China is expected to become the world’s 5th largest pharmaceuticalmarket in 2011, from #7 in 2007
• Consumer spending by urban residents is expected to grow at aCAGR of 9.6% from 2005 to 2025
Source: Ministry of Health, China; Ministry of Labor and Social Security, China; IMS Health; Monitor Health China Issue 7, 2007
3Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX
USD
Bn
USD
Bn
%
123
106
9279
70
0
50
100
150
2002 2003 2004 2005 2006
3The health expenditure for other countries is calculated by GDP and health expenditure as a percentage of GDP, and the total number of the countries is 176Source: National Bureau of Statistics, China; Ministry of Health, China; World Bank; IMF; Oanda; Press Release; Monitor Analysis
GDP and Growth Rate,China, 2001 – 20061
Major Changes are Underway in the Chinese Market, Including
Healthcare Expenditure
China has witnessed increased economic growth but healthcare spending has only kept pace
with the rest of the world over the last few years
Total Health Expenditure,China, 2002 – 20061,2
2,655
2,233
1,9291,639
1,452
0
6
12
9.1%10.0% 10.1% 10.4%
11.1% 11.4%
3,276
GDP
Growth Rate
4,000
20062002
Ranking & Contribution to World Health Expenditure3Ranking & Contribution to World GDP Growth Rate
20072002
World Ranking
4
6
Contribution
(2002-2006)
26.0%
World Ranking
8
8
Contribution
(2002-2006)
3.6%
2001 2002 2003 2005 20062004
2,000
4Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX
Source: WHO Statistics
However, China’s Healthcare Expenditure is Still Far Lower
than its Counterparts
Compared with developed nations and other BRIC countries, China’s healthcare expenditure
per capita and as a percent of GDP ranks low
US
D
%
inTotal Healthcare Expenditure as a % of GDP,Select Countries, 2006
39
369426
90
China
7,000
0
3,000
3,500
6,500
2,690
UK
3,361
US
6,714
Japan Brazil Russia India
Per Capita Total Expenditure onHealthcare in Select Countries, 2006
4.95.3
7.57.9
8.4
15.3
4.5
0
4
8
12
16
China US UK Japan Brazil Russia India
5Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX
Healthcare Reform inRural Areas Initiated
Coverage Expandedto “The Unemployed”
in Urban Area
1998 2002 2005 2006 2007Specialized Health
InsuranceCompanies were
Authorized
Note: 1Average exchange rate of Oct. 31st, 2007 s provided by Oanda, 1 USD=6.85 CNYSource: Ministry of Labor and Social Security, China; State Council, China; Oanda; Press Release
China is Undertaking Initiatives to Catch UpThe government is restructuring the health insurance system and increasing spending on
healthcare
2007
2010
USD 38Bn1
USD 58 – 73 Bn1
Healthcare Reform inUrban Areas Initiated
Fiscal Budget on Healthcare Reform
Reform Deepened,Regulations are
UndergoingRevision
Stimulus Package
China announced a USD 573 Bn1 stimuluspackage from now until the end of 2010
• USD 14 Bn1will be spent in Q4, 2007
• 13% of Q4 spending (USD 1.9 Bn) wasdesignated for healthcare, education, andculture sectors
6Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX
MM USD
Bn
10817
0
1%
1998
8%
20021
65%
856
2007
90%
1,19850%
2,000 100%
2010E
1,360
2020E
% of the Insured
Insured Population
0
1,000
Population Covered by Public Insurance,China, 1998 – 2020E
100%
18.0
4.9
0.60
5
10
15
20
25
1998 2002 2006
Claims Paid2by Public Insurance,China, 1998 – 2006
Note: 1In 2002, “New Cooperative Medical System” for rural area was introduced; 2Average exchange rate for each year is provided by OandaSource: Ministry of Labour and Social Security, China; State Council, China; National Bureau of Statistics, China; Nanjing Institute of Meteorology & NanjingUniversity of Economics; Oanda; Press Release; Monitor Analysis
Public Insurance has Expanded Significantly Since 1998Reform of the Public Insurance System has resulted in a steep increase in both the covered
population and insurance claims paid
7Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX
Note: 1Average exchange rate of Oct. 31st, 2006 is provided by Oanda, 1 USD=6.85 CNY; 2When accounting for purchasing-power parity, a household income of USD14.6K,buys a lifestyle in China similar to that of a household earning USD 40,000 in the United States;Source: Chinese Government’s Official Web Portal; “The Value of China's Emerging Middle Class”, June 2006, Monitor Global Institute; Chinese Academy of Social Sciences; Oanda; Monitor Analysis
USD
MM
Ho
use
ho
lds
2,461
6,000
0
3,000
2006 2010E 2020E
GDP Per Capita, China, 2006 – 2020E
6,000
1483665
2912
115
01
191
2005
280
59
139
2015E
222
74
Number of Urban Households by AnnualIncome Segment, China, 2005 – 2025E2
373
2025E
200 1824
400Global AffluentAffluent
Upper Middle Class
Lower Middle Class
Poor
167 158 150 138
157
112
1,793
1,200
10982
5344
0
1,000
500
1,500
2,000
3,000
2,500
452 1818
203 45
2005
868
246
368
2010E
707
313
1,360
2015E
275
1,966
197
252
2,802
336
308
2025E
Global Affluent(>29.2K USD)
Master Affluent(14.6-29.2K USD)
Upper Middle Class
(5.8-14.6K USD)
Lower Middle Class(3.6-5.8K USD)
Poor(<3.6K USD)
2020E
Urban Household Spending by Annual IncomeSegment, China, 2005 – 2025E1,2
The Spending Power of China’s Middle Class is on the Rise
China’s per capita GDP is expected to grow and the purchasing power of the Chinesepeople is also increasing
8Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX
USD
Bn
The Private Insurance Sector is Thriving and Playing a More
Important Role
As a supplement to the Public Health Insurance System, private health insurance has rapidly
grown, especially in metropolitan areas
Source: Ministry of Labour and Social Security, China; State Council, China; National Bureau of Statistics, China; Oanda; Press Release; Monitor Analysis
Number of HealthInsurance Companies
103
(Q1 2007)
Population1Covered byPrivate Insurance
150MM
(Q1 2007) 6.01.3
0
Claims Paid2by Private Insurance,China, 1999 – 2006
25
15.4
1999 2002 2006
PICC has expanded its customer base Shanghai and Beijing are our largest markets withfrom employer units, seniors and children steady and rapid growth. Not only is the population into rural residents; [rural residents’]purchasing power should not beunderestimated
awareness of the importance of health insurance- A Sales Manager from PICC Health Insurance Company
- A Sales Manager from PICC Health Insurance Company
Note: 1The figure is sales based; 2Average exchange rate for each year is provided by Oanda; 3The survey was conducted by China’s Development Research
Center of the State Council and the Insurance Institute of China in 50 cities in China
9Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX
“…(Sanofi-Aventis experienced) Highest growth ofmore than 36% in 2006 in China...”6
- Sanofi-Aventis Annual Review 2006
“…We are going to launch over 20 new products
in the next five years, and we aim to bring all ourblockbusters to China in the next two to threeyears …”
- Liam Condon, Managing DirectorBayer HealthCare China, 2007
“… launched five new products in China in 2007and plans to introduce an additional 15 newproducts and line extensions through the year2012…”
- Jorg Ostertag, President, Eli Lilly China, 2007
“China, accounted for around 50% of the region’s
sales growth in 2007…”
“… China is currently Novo Nordisk’s fifth-largest
market and is expected to be its second- or third-largest within the next five years…”
- Novo Nordisk Annual Report 2006
Source: Company Websites; Company Annual Reports; Company Conference Call Presentations
Global Pharmaceutical Companies have Taken Notice of
China’s Healthcare Market Opportunity
Global pharmaceutical manufacturers have experienced significant sales growth and have a
positive outlook on the Chinese market
“… Sales in China increased 25% in 2006…”
10Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX
USD
Bn
Note: 1It is calculated, based on the sales volume in 2006 and forecast growth rate in 2007; 2It is estimated in Global Pharma Perspective, 2004; 3
It is estimated in Global Pharma Perspective, 2005; 4It is estimated in Global Pharma Perspective, 2007Source: IMS Health; Monitor Analysis
2003 2005 2007 2009E3 2011E4
1
2
US
Japan
US
Japan
US
Japan
US
Japan
US
Japan
3 Germany Germany France Germany France
4 France France Germany France Germany
5
6
7
Italy
U.K.
Spain
Italy
U.K.
Spain
Italy
U.K.
Spain
U.K.
Italy
China
China
U.K.
Italy
8
9
10
Canada
Brazil
China
Canada
China
Turkey
Canada
China
Brazil
Spain
Canada
Turkey
Brazil
Canada
Spain
Pharmaceutical Market Rankings, 2003 – 2011E
28.0
16.813.411.7
9.3
0
20
40
20071 2010E2004 2005 2006
IMS Indentifies China as the Emerging Market with the
Greatest Growth Potential for the Pharmaceutical Sector (1/2)
China is expected to rise to the 5th largest pharmaceutical market in 2011
Pharmaceutical Sales Volume, China, 2004 – 2010E
Year
2009E
2007
China
12-16%
25.7%
US
1-2%
4.1%
Japan
4-5 %
3.6%
UK
1-2%
5.2%4
India
12-16%
13%
Brazil
12-16%
9.7%
Russia
12-16%
20.2%
2005 20.4% 5.1% 6.8% -2.2% 8.6% 9.5% 17.3%
Growth Rate of Pharmaceutical Sales Volume in SelectedCountries, 2005 – 2009E
11Copyright © 2007 Monitor Company Group, L.P. — Confidential — LAX
NumerousRules
MedicineRestriction
DiseaseRestriction
Local governments formulate their own regulations, which may differ from centralgovernment guidelines
Only drugs listed on the Basic Medical Catalogue are covered by the Public Health
Insurance System
Private Health Insurance companies may deviate from the Basic Medical
Catalogue
The government sets non-reimbursable and partly-reimbursable diseases for the
Public Insurance System
Private Insurance policies must cover a mandated set of illnesses
Source: Ministry of Labor and Social Security, China; National Development and Reform Commission, China; Insurance Regulatory Commission, China
To Take Advantage of the Opportunity, Global PharmaceuticalCompanies will Need to Navigate Chinese Market Complexities
“Big Government” and the economic imbalance between urban & rural, and coastal &
western areas of China have resulted in strict regulation of the Public and Private HealthInsurance Systems
For Example
The central government sets guidelines for the Public Health System
Thank YouQuestions?
John Gregg
Director,
Monitor Company Group
Copyright © 2009 Monitor Company Group, L.P. — Confidential — LAX
