Mobile technology, social media, and e-commerce seem to dominate the conversation when it comes to digital technology in China. The healthcare industry, which traditionally lags in digital innovation relative to its peers, ranks among the least innovative sectors. New technologies pose a significant challenge for the healthcare sector, but also represent a tremendous opportunity for innovation and individualization of treatment to suit patients’ needs. Progress in digital technology has already left a radical mark on Chinese consumer behaviors and lifestyles; the healthcare industry should follow suit by moving quickly to embrace digital innovations. Private digital investment in the health industry reached $1.4 billion for the first semester of 2016, surpassing total investment in 2015. With a revolution off the table for now, here’s how mobile medical healthcare can help with China’s increasing medical problems:
mHealth market
The mobile medical industry (mHealth) has already become a global focus, but in China, it might be one of the greatest healthcare breakthroughs of the year. In 2016, the Chinese mHealth market was valued at 7 billion RMB and is projected to exceed 10 billion RMB by 2017, with a forecasted growth rate of 74.5%. The Chinese mHealth applications market has ballooned in the last five years, drawing a crowd of start-ups and investors. So far, these mobile healthcare apps mainly provide basic functions. Self-diagnosis and medical examination make up only 8% of the market; information searches account for only 6%. Although the mobile healthcare applications market is still nascent, it is expected to soon play an important role in the Chinese healthcare market.
The marriage of digital technology and healthcare to improve individualized care is the biggest opportunity in mHealth.
Three Challenges:
QUALITY: The demand for efficient medical information sharing is increasingly significant. Electronic prescriptions can help reduce errors–such as duplicate medical tests–in healthcare processes and provide patients with the right prescriptions and treatment for their condition. If doctors can accurately prescribe medication electronically, patients could save money otherwise spent on unnecessary prescriptions and treatments.
ACCESS: In China, patients often find obtaining appropriate medical care a difficult process. mHealth has the potential to provide widely accessible services that can be individually tailored and easily adopted. Patients in isolated communities can receive medical attention in the form of early stage diagnosis and treatment through video chats, and conferences, a revolution in accessibility EY reports more than 50% of respondents saw as being important or very important. The most active consumer group in the healthcare market, patients between the ages of 25 and 34, responded overwhelmingly in favor of mobile healthcare.
COST: Mobile devices could make healthcare more affordable, especially for rural patients. Mobile healthcare apps are most widely used by citizens of low education and low income in major urban areas. Over 26 percent of mobile healthcare users earn less than 1999 RMB per month (equal to about $287). One possible motivation for consumers maybe the expected savings of self-diagnosis through apps like Kanchufang, and pre-research before consulting.
Trend 3: Digital insurance
China is the world’s second largest pharmaceutical market, and is forecasted to grow from $108 billion in 2015 to $167 billion by 2020, representing an annual growth rate of 9.1 percent. Pharmaceutical sales currently amount to 17 percent of total health expenditures, or $78 per person. In terms of the market breakdown, generics dominate with a hefty 64 percent of total sales. The pharmaceutical industry–whose wares include synthetic chemicals, Chinese medicines, medical devices and instruments, drugs, hygiene materials, packing materials and pharmaceutical machinery–is one of the leading industries in the People’s Republic of China. About 50.0% of industry revenue was generated through the sale of prescription drugs in 2016, a product whose consumers are mostly senior citizens. The majority of prescription drugs were only launched into the market within the past five years. They are generally more expensive than non-prescription drugs, which means higher profit margins. However, China’s OTC market is also growing quickly—around 17 percent per annum in recent years—according to the China OTC Association’s statistics, and faster than anywhere else in the Asia-Pacific region. At this rate, observers at Espicom expect China to become the world’s largest OTC market by 2020. Although OTC drugs only account for a minority of the Chinese pharmaceuticals market, an increase in OTC sales has already shifted their proportion of sales relative to prescription drugs. A survey conducted by IMS Health in 2010 revealed 53 percent of respondents preferred to self-treat using OTC drugs purchased at the pharmacy or supermarket. More people are choosing to treat themselves rather than go to the hospital for relatively mild symptoms, such as influenza and mild intestinal disorders, thereby raising demand for OTC drugs.
China’s population growth and increasing medical needs make it the world’s biggest producer and exporter of pharmaceutical ingredients. Covering 40% of global APIs production, huge opportunities for growth face the Chinese pharma market. With government’s progressive investment in healthcare and R&D, the Chinese industry is clear to innovate and collaborate with domestic and international pharmaceutical companies.
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