China: Business as UNusual - Pharmaceutical Executive

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China: Business as UNusual
If there is one market this year that requires a click on the refresh button, it's China. If the 'growth curve' key was pressed, it should be your first delete. Pharm Exec's local partner, General Biologic, logs on with a snapshot of what's ahead for Big Pharma in managing for long-term success


Pharmaceutical Executive


Reform's Impact on Physicians

Physicians, facing the prospect of losing departmental and pharmaceutical company incentives and likely mandatory service requirements at community clinics, will also be looking for ways to supplement their paltry government incomes. The MOH continues to slowly follow through on its promise to allow doctors to practice at multiple locations, with an announcement from the Beijing Health Bureau that, effective March 1, licensed physicians will be permitted to work simultaneously at a maximum of three hospitals. Under these circumstances, practitioners, especially those with experience and reputation, will inevitably establish part-time practices in private settings charging market prices. (This has always occurred at a certain level, with surgeons operating "weekend clinics" for paying patients, but it has been actively discouraged by the MOH.)

Window for the Private Sector

Coupled with the release last November of a multi-ministerial opinion suggesting that private medical facilities be allowed to participate in public insurance schemes, enjoy tax benefits, and, at long last, carry 100 percent foreign ownership (versus the previous 70 percent maximum), it seems that private healthcare may have a chance at a new life. Growth of private pay has been hampered by the inability of top physicians to leave public practice as well as the privatization of hospitals by real estate developers and speculators, rather than by experienced hospital management teams. The government has suggested that it will actively encourage a new round of (well-supervised) creation of private healthcare facilities and is also beginning to push commercial health insurance. As is the case with OTC medicine, this is a clear attempt to ease the rapidly growing burden on public health systems by providing alternatives for those who can afford them. The government will move slowly in this area, with multiple safeguards to prevent a major siphoning of quality to any upper-tier private system. Widespread public discontent over healthcare disparities is, after all, the prime reason for the healthcare reforms in the first place.

Interest in the private option is just another illustration of how profound the transition is in China's healthcare sector. It's an appropriate conclusion to this story to cite again the magnitude of what is being attempted: basic, blanket, pay-as-you-go health coverage for 1.3 billion people, or more than a sixth of the world's population spread out over 3 million square miles of rural and urban territory, with an aging population subject to vast extremes of income. Other countries with a similar demographic—most notably India—have not even attempted to make a start in doing this. With a challenge like this, it is no wonder there are so many avenues being explored to cut costs and distribute the burden of funding such a system. Over time, the US and other industrialized countries may find that China is the real innovator in health system reform—for better or worse.


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