China LSHC Industry Survey Result: 2023 State of Industry in China

Deloitte China Life Sciences & Health Care (LSHC) team conducted our 4th  annual “State of industry” survey for the LSHC market in China during 10th January to 23rd January 2023, to better understand pharmaceutical & healthcare players' situation in China with their 2022 final outcome and outlook for 2023.

We would like to thank all participants for providing insights covering a number of areas ranging from business performance, key elements impacting their business, their 2023 outlook as well as what changes will be impacting their business models, the usage of technologies and digitalization of their operations as a whole to cope with 'somewhat volatile internal and external environment'.

We have selected some few extracts from our report here below. We hope you'll be interested to know more, and you may download the full report. Of course, our team is available to individual and specific presentations where we can further elaborate on some of the details.

2022 Performance Review

How did your company perform (top line) in previous year? 

Insights

• Not surprising, 2022 has turned out to be worse than many had expected and planned for.
• Local player respondents (SOE & POE) : 22% indicate to have had a better performance than planned, probably more cautious by 2021 year-end already (quite a few of the POE respondents are Chinese Biotech’s still in pre-revenue mode).
• Foreign companies (WOFE) felt largest impact on 2022 very special business conditions in China, with 61% doing worse than expected.

Your 2022 business performance was mainly impacted by…

Insights

• The covid-management and its lockdown phases have been sighted as the most impactful factor from all, while ‘hospital visit changes’ has received more attentions among WOFEs compared to the prior year’s survey.
• The medical pricing reform (VBP, etc.) continues to take the lead among all other factors, this is particularly critical to POEs (71%), Large cos (69%), and Life Sciences cos (63%).
• Localizing (or widening) of the supply chain has elevated for ‘Large Co’s & WOFE’s’, in line with recent overarching guidance provided by China’s highest political organizations (and eventually benefiting from local-preferential policies) .

Considering China's pace to technology changes and digital patient engagement, has your organization… 

Insights

• Investment into the digital space, remains top in mind to all companies, SOE &POE indicate to allocate more for 2023 going forward. Foreign companies will be keeping allocating resources at similar levels (also for compliance purposes).
• For foreign companies, deployment local tools – different from global tools, is no longer a taboo.
• Talent model changes going forward for SOE & POE – similar to the allocated level of resources, it is looking more like a catch up with what others have been doing already.

2023 Future Outlook

How do you foresee your China business outlook 2023?

Insights

• Everyone remains rather optimistic – as >90% of all respondents are looking for growth in 2023.
• Nearly 50% are looking for growth higher than 10%, bullish after December 7, 2022. Interesting to note that domestic market players (SOE & POE) are having the brightest expectation with two-third have forecast a 2023 revenue growth over 10%.
• Larger & Foreign companies have a more balanced outlook across all growth ranges, with even 8% predicting for a decline. 

In your latest China market strategy, have you considered the following actions:

Insights

• The rank of ‘China-specific solutions’ has been raised from the second in last year to the top in this year – marking the ‘unique’ feature of the China LSHC market being further emphasized. This is especially important to WOFE (61%) and Life Science cos (58%).
• Local players (SOE & POE) are more focusing on the forming of partnerships while WOFE is more focusing on the leverage of the regional policy benefits to accelerate the market access.

^{Note: [1] Large cos: enterprise with revenue above RMB 1 billion; [2] SOE: State-owned Enterprise; [3] POE: Private-owned Enterprise; [4] WOFE: Wholly Foreign-owned Enterprise; [5] Life Science: Pharma & Medical Devices} 

China insight and outlook 2023

In Summary: China insight and outlook 2023: extracts from full survey report