Chinese Health Care Market Is Focus of U.S. Trade Mission
At a time when China is about to undertake major reforms to its health care system, 15 U.S. companies spent three days in Beijing this past April to meet with senior officials and to explore commercial opportunities.
by John Ward
On April 23–25, 2008, Christopher A. Padilla, under secretary of commerce for international trade, led 15 U.S. companies on a health care trade mission to Beijing, China. The participating companies represented a broad range of health care industries, including pharmaceuticals and medical devices, health insurance, and health services.
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|Christopher A. Padilla (right), Under Secretary of Commerce for International Trade, speaks with reporters in Beijing on April 25, 2008, at the conclusion of a three-day health care trade mission he led. (U.S. Department of Commerce photo)
“China is a fast-growing market for the U.S. health care industry, known for its world-class goods and services. U.S. industry has the potential to raise the standard of medical care in China,” said Padilla. “China’s pending health care reforms will affect many American companies doing business in that market—or seeking to do so. A clearer understanding of China’s policy environment will enable the U.S. health care industry to more easily compete in China, raising the quality and efficiency of medical treatment there.”
The participating U.S. companies included AdvaMed, Advanced Medical Optics, Aetna Inc., BlueCross BlueShield, Boston Scientific, Chindex International Inc., Humana Inc., Johnson & Johnson, Masimo, Medtronic Inc., Mesa Laboratories Inc., Merck, Pfizer Inc., RDPAC, and Stryker Corporation.
Health Care Reforms in China
China is currently considering significant changes to the financing, regulation, and management of its health care system. During the trade mission, participating U.S. companies discussed those pending health care reforms with key officials from China’s Ministry of Health, Ministry of Finance, State Food and Drug Administration, and other government bodies.
Improving access to health care is a priority for China’s 11th Five-Year Plan, which covers 2006 through 2010. The Chinese government’s stated goal is to improve the services provided by the country’s health care system, to increase the number of insured citizens, to reduce corruption, and to decrease the overall costs to the consumer. The reforms are expected to include a plan for universal health coverage, the institution of new health care delivery systems, and changes to hospital management and drug regulation regimes.
A Growing Export Market
China is already an important market for U.S. providers of health care goods and services. In 2007, the country spent $9 billion on health care. That figure is expected to grow in coming years.
The reform of the health care sector in China will present opportunities to U.S. companies in that field, and many of them have already enjoyed substantial growth in sales to China. For example, in 2006, the U.S. pharmaceutical industry exported approximately $346 million to China—a 54 percent increase over 2005 and a 305 percent increase over 2003. In 2007, according to industry sources, U.S. medical device exports to China were $870 million—a 29 percent increase over 2005 and a 71 percent increase over 2003.
Despite the enormity of the market, U.S. companies face significant challenges when entering the Chinese health care market. Barriers include onerous pricing and reimbursement policies on pharmaceuticals and medical devices, inadequate intellectual property protection, and bureaucratic delays in registering products for sale.
The recent events surrounding tainted medical products highlight the importance of improving China’s regulatory control of pharmaceutical ingredients.
Despite the challenges, there will be many opportunities for U.S. companies that are willing to expend needed resources to succeed in the Chinese health care market. In his speech to the American Chamber of Commerce in Beijing on April 25, Padilla noted, “We see in China’s health care reforms something that is not only good for Chinese citizens, but something that is a tremendous opportunity for U.S. companies.”
John Ward is a writer in the International Trade Administration’s Office of Public Affairs.
Online Resource Helps U.S. Companies Be “China-Ready”
The Commerce Department’s China Business Information Center (China BIC) is a ready resource for U.S. companies looking to enter the Chinese market or needing help to expand there. China BIC is an online resource that brings together valuable information on the Chinese market, including government contacts, regulatory information, trade leads, market research, and financial information. It also contains links to the in-country staff members of the U.S. and Foreign Commercial Service as well as to domestic staff members in the more than 100 U.S. Export Assistance Centers who are available to offer counseling to exporters. For more information on the China BIC, visit their Web site or call the Trade Information Center at 1-800-USA-TRAD(E) (1-800-872-8723).