2017 China Life Sciences and Healthcare Investment Promotion Report

The Report

2017 China Life Sciences and Healthcare Investment Promotion Report is an annual analysis report on the development of China’s life sciences and healthcare industry, initiated by Investment Promotion Agency of Ministry of Commerce (CIPA) and developed by Deloitte Research and Deloitte China Life Sciences and Healthcare Industry Team. Building upon in-depth investigation and suggestions from enterprises, this report provides a comprehensive analysis on opportunities and challenges of China life sciences and healthcare industry.

Viewpoints / key findings

This report examines the current state of life sciences and healthcare industry, explores the trends, policies, regulations, and issues that affect the industry, and proposes suggestions to industry stakeholders to undertake various opportunities and challenges. It also provides elaborate statistical analysis on inbound and outbound investment and such consolidation practices. Besides, this report also looks into the current investment status and innovation models from a capital market perspective. The main findings are as follows:

• Within 13th Five-Year Plan period, Life Sciences and Healthcare industry will remain medium-to-high speed growth. Thanks to individual wealth growth, consumption structure upgrading, aging population, urbanization, and expanding basic and private medical insurance, the healthcare consumption will boom and the medical market will probably achieve rapid development.
• Solving the high healthcare cost is the primary priority for decision-making departments. In the past few years, a series of policies have been introduced to improve the quality of medicines and control the cost of medical treatment. The profit rate of pharmaceutical and medical devices enterprises will be under pressure in the future due to policies of two-invoice system, zero mark-up of drugs, control of total medical insurance, control of drug occupation ratio, and increasingly severe centralized bidding and purchasing mechanism.
• Medical and health enterprises' foreign direct investment and inbound merger and acquisition scale declined as a whole. The pharmaceutical sector still accounts for the main part of the inbound M&A investment. Under the impact of multiple cost control policies, the growth of multinational pharmaceutical enterprises in China has declined.
• China's medical and health enterprises continue to accelerate their outbound direct investment and mergers and acquisitions scale, at where big orders occurring commonly. M&A mainly concentrated in areas of pharmaceutical and biotechnology sectors. Due to the control on exchange rate and other factors, the growth rate may decline in the future.
• With the acceleration of IPO progress, China's medical and healthcare capital market has increased rapidly. VC/PE's investment and exiting activities have also increased greatly compared with previous years. More and more capital is starting to pay more attention to hot sectors such as healthcare services, precision medicine, senior care industry, Internet medical services, etc.