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For Immediate Release                                                   February 16, 2010

TRIPLING OF CHINA HEALTH CARE SPENDING PROMISES SIGNIFICANT OPPORTUNITIES IN MEDICAL DIAGNOSTICS, DEVICES AND HEALTH IT, SCIENTIA ADVISORS FINDS
Market success requires deep understanding of Chinese health care system & reform

Cambridge, MA, and San Francisco, CA-------With healthcare spending in China projected to reach $600B by 2015—a threefold increase over 2000 expenditures—global strategy firm Scientia Advisors foresees  rapid growth in diagnostics and major opportunities in medical devices and healthcare information technology (HIT).  Scientia released its 2010 review of healthcare in China, today.

To succeed in the Chinese marketplace, companies must understand the changing Chinese health care system  and how government reforms will impact growth, Scientia cautions.

“In recent years, the Chinese government has sought to expand access to care and cut costs,” said Harry Glorikian, managing partner of  Scientia Advisors.

Reforms will increase funding for public hospitals, decentralized care, infrastructure development and public medical insurance, according to the Scientia industry review. At the same time, the government will tighten the management and oversight of medical institutions, health insurers, pharmaceutical companies and retailers, and will more closely monitor the safety of water, food and the workplace.

“These changes, along with increasing incidence of diabetes, heart disease and various infectious diseases,  are opening opportunities for point-of-care, molecular diagnostics, food and water testing, and HIT in China,” Glorikian said. “But new regulations will lead to lower prices for certain products.”

REVIEW HIGHLIGHTS
In Vitro Diagnostics (IVD)
China’s $1.18B IVD market will see significant growth—due, in part, to hospital adoption of advanced technologies, the emergence of private laboratories and the willingness of the middle class to pay for medical procedures on their own.  

·         Molecular Diagnostics:  Double-digit growth of the $100M molecular diagnostics segment will be driven largely by a rise in infectious diseases such as HIV, HBV and HPV, and in certain hospital acquired infections.

·         Point of Care Diagnostics (POC): Rapid growth in China’s  $18M POC industry will be driven by  the establishment of some 29,000 rural clinics and 2,000 county-level hospitals; increasing sophistication of urban hospitals; the emergence of private laboratories in small and mid-sized markets; and greater incidence of heart disease and diabetes, which require frequent monitoring.

 

Healthcare Information Technology

·         With a compound annual growth rate (CAGR) of 25%, China’s HIT expenditures are projected to reach $4.1B by 2013—largely due to a 2004 government mandate that 4% of hospital revenues be spent on HIT and a 2006-2010 health informatization plan.

 

·         Currently, only 31%of hospitals have established health information systems. As many as 80% of hospitals need upgrades, especially for digital medical records, PACS and clinical support systems.

Medical Devices
The $5B Chinese medical device market is dominated by cardiovascular, medical imaging, surgical products and hospital supplies. Scientia foresees continued growth in these segments, due to expected upgrade of conventional medical equipment used in Chinese hospitals, 74% of which is circua 1980s or earlier.

·         Patient monitoring equipment currently represents only 2% of the device market, but is increasing at a CAGR of 20%.

 

·         Chinese initiatives to invest more in medical devices will benefit both domestic and international manufacturers.

 

The review, Healthcare Market in China, Opportunities and Barriers of a Developing Economy, is available for download at www.scientiaadv.com

Scientia Advisors, based in Cambridge, MA and San Francisco, CA, is a global management consulting firm specializing in growth strategies for major and emerging companies in health care, life sciences, biotechnology and nutrition.

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