New Outlook on the

Health Industry

Wang Rui

China CITIC Press

June 2021

68.00 （CNY）

Brief introduction：

This book analyzes the national policy environment， carries out research on the development trends of the health industry， passes judgement on the level of market competition and conducts a deep exploration on the direction of industrial reform mainly through literature review， questionnaires， expert interviews， statistical analysis and field visits. It centers on three major issues， namely “why should the health industry make reforms” （mainly analyzing the new social changes in the new era and the profound influence of new contradiction on health industry）， “who is leading the reform” （mainly explaining how changes the industry conditions， structure， mode and subject have taken place under the dual role of the government and the market）， and “which key areas need to reform” （mainly dissecting the medical services， health management， medical equipment， medicine and medical biology）， and puts forward its understanding of important issues on the development and reform of China’s health industry.

Wang Rui

Wang Rui is chairman of the Grand Health Industry Investment Branch of China Health Culture Association， an expert of equity investment plan and insurance private fund evaluation of the Insurance Asset Management Association of China. He obtained a master’s degree from the Social Medicine and Health Service Management department of the former Second Military Medical University. He also once worked in primary medical institutions， Grade-III Level-A hospitals， health administrative departments， insurance and financial institutions. He has participated in the earthquake relief work in Wenchuan and Yushu and medical rescue missions for Ebola in West Africa， and participated in the reform of the national medical and health system and the military medical security system.

Since the reform and opening-up， China’s GDP has grown by an annual average of 9.5% and doubled every eight years， 2.9% higher than the world’s economy during the same period. To a certain extent， this growth benefited from the two “demographic dividends”. The first is for people born during 1966 -1973 as a small number of the population benefited from the resumption of Gaokao （College Entrance Examination） in 1979， which helped improve the quality of the population; besides， the majority of the population benefited from the reform and opening-up policy， which played a role in the supply side of economic development. For the second demographic dividend， with the improvement of social medical security， the birth rate is higher than the mortality rate， so population size continues to increase. In addition， with the improvement of per capita income， every consumer plays a role in the demand side of economic development. In the new era， there is a low fertility rate， a low proportion of the working-age population relative to the whole population and a sudden increase in labor costs， the demographic dividend appears to come to a turning point. In fact， this was actually the third “demographic dividend” quietly approaching. This is mainly because the comprehensive strength of our country and the quality of national literacy education have been improved in an well-rounded way， the extensive model of economic growth driven solely by factor inputs can no longer be sustainable. China has moved to the stage of high-quality development.

“Demographic dividend” is evolving into “talent dividend”. Generally speaking， that means quantity-driven development is switching to quality-driven development.

Take the economically active city clusters in the Yangtze River Delta and the Pearl River Delta for example. Both two regions take the lead in China in promoting industrial upgrading by means of “vacating the cage to change the bird”， achieving the transformation from the original mode of “three-plus-one” trading-mix （custom manufacturing with materials， designs or samples supplied and compensation trade） to the new “three-plus-one” mode （creativity， innovation， creation and self-owned brand）. “Industry transforms with policy， and workforce flows among industries”. The success of industrial transformation and development cannot be achieved without good industrial policies， as well as excellent professionals. Relevant data shows that the total permanent resident population to the total population in the Yangtze River Delta and the Pearl River Delta city clusters from 2000 to 2019 increased from 13.9% to 16.4%. More than 60% of China’s talents migrate to the five major city clusters， namely the Yangtze River Delta， the Pearl River Delta， the Beijing-Tianjin-Hebei region， the Chengdu-Chongqing region， and the middle reaches of the Yangtze River， among which the net inflow of talents in the Yangtze River Delta and the Pearl River Delta accounted for 5.0% and 2.8% respectively， ranking the top two of the five city clusters.

With the inflow of talents， the health industry has flourished in the Yangtze River Delta and the Pearl River Delta， ranking the forefront of the country. Relevant data shows that the number of health industrial parks in city clusters of the Yangtze River Delta and the Pearl River Delta accounts for 60% of the total nationwide. In these parks， the proportion of companies whose major businesses are traditional APIs， generic drugs， low-end medical equipment production is decreasing year on year. While innovative companies have sprung up， including leading enterprises like Hengrui Medicine， Wuxi AppTec， BeiGene， BGI， United Imaging， MicroPort and Mindray.

With the agglomeration of the health industry and medical talents， the government， universities and enterprises have constantly deepened their cooperation. Industry， academia， research and application are also organically connected， bringing a series of positive changes in these circles. First， public resources can be shared there， such as laboratories， manufacturing workshops， logistics distribution systems and energy supply， which can effectively reduce the Ramp;D and production costs. Second， knowledge and technology can interact with each other， such as scientific research， the transformation of achievements， upstream-downstream integration， which can effectively improve enterprise innovation efficiency. Third， financing and investment can be better matched， such as government industrial fund guidance， VC/PE （venture capital/private equity investment）， fund investment， SMEs financing， which can effectively achieve an accurate match. If the local government can roll out targeted policies， achieve industrial agglomeration， attract talents and pool capital as well as offer full support in Ramp;D， declaration and registration， production， sales and financing for the enterprises， the whole region can better display its attractiveness. As the old saying goes，" “Where the water is deep， the fish have the utmost joy; where the woods are most leafy， the birds return.” In this way， the health industry will achieve a virtuous cycle， which will not only benefit their own growth， but also attract more enterprises to join to gradually form industrial clusters， thus achieving mutual integration， empowerment and promotion.