China’s vaccination rollout reached a billion doses this June, and the country continues to advance toward its goal of achieving herd immunity by December. While volume-based purchasing continues to generate price pressures across an expanding scope of medical products, procurement and tax policies in selected provinces will put foreign medical-device companies operating in China’s healthcare industry at a further disadvantage. However, China remains dependent on foreign expertise and technology know-how to push forward its industrial policy. So, what should healthcare companies expect over the next several months?
Purchasing policies favoring domestic companies will continue to intensify across certain provinces
Apart from preference selection toward domestic companies in centralized procurement activities, the Chinese government has taken further steps to encourage local manufacturing and procurement, such as tax exemptions for domestic companies. The medical devices industry is a key industrial focus for the central government; however, drawing foreign technology know-how and capital will be key to sustaining long-term growth and becoming a key global player in this field.
Hospital pricing reforms will increase budgets for staff compensation to discourage collusion in procurement practices
The National Assembly laid out its 2021 healthcare reform agenda, with heavy emphasis on the experiences from a pilot reform in Sanming, a small city in southeastern China. Price reforms will become more intense to curb overspending and create more fiscal budget for increased staff compensation. Primary care will remain a key patient “gateway” for the healthcare system, and firms can expect stable public investment into build a tier-based healthcare system in China.
The Greater Bay Area will accelerate the entry of foreign innovative products into mainland China
Nine designated cities in the Canton province will be able to use medical products that have only been approved in Hong Kong or Macau. New med-tech regulations have also relaxed import rules for foreign devices, so new products can be now launched in China. Under a favorable policy environment, growing public and private investments will drive the region’s biotechnological industry.
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