How China Deals with Its Public Health Expenditure Amidst COVID-19 Pandemic?
Entering November 2022, in cities such as Shijiazhuang, Guiyang, and Yibin in China, the number of nucleic acid testing booths began to decrease. At the same time, people are only allowed to enter some public areas with a 72-hour negative PCR report. Hence, in the daily life of ordinary people, there will be an additional expense for nucleic acid testing. This also indicates that the government is further cutting spending on epidemic prevention.
The resources of China’s health expenditure mainly come from three parties, namely the government, society and individuals. The long-term expenditure on epidemic prevention and control, as well as the disputes arising from various parties, have brought a situation under spotlight that local finances have been fairly stretched. In the process, not only the country, but also ordinary people’s personal hygiene expenditure in the epidemic has also risen. The Chinese government’s mindset on the prevention and control of infectious diseases has changed, and more resources will be devoted to improving the construction of the public health system.
Multinational Pharma Firms are Adjusting Their Strategic Thinking to Compete in China’s Expanding Pharmaceutical Market
In the second half of 2022, some multinational pharma giants have launched a new round of global mergers and acquisitions, and the Chinese pharma industry is also a popular investment destination. Affected by the COVID-19 epidemic, the process of import of some drugs into China has become slower. With the addition of national centralized drug procurement, the profits of top pharma firms have been reduced. As a matter of fact, the foreign pharmaceutical companies have encountered many practical problems in China in the past two years.
Although it is quite difficult, the pace of investment of pharmaceutical companies in China has not stopped, and the investment has become more diversified. Overall, none of these companies wants to leave China. As for how to win their slices of the Chinese market, multinational pharma firms have their own considerations.
Biomedical Industrial Parks Fueling a Biotech Boom in China
The number of industrial parks in China is increasing. By the end of 2020, there have been more than 2,000 biomedical industrial parks or industrial parks partly providing services for biopharmaceutical industry. In some areas with rapid economic development, such industrial parks have gradually formed prosperous clusters. The changes in the biomedical parks also reflect the development approach of the entire industry. A typical R&D biopharmaceutical company can even set up branches in biomedical industrial parks located in different cities, and one of them may be set up overseas. Biomedical industrial parks, enterprises and their investments are developing into a new growth engine of China’s pharmaceutical industry.
In order to probe the future prospects, the biomedical industrial parks around the country are exploring their advantages while trying to break free from local limitations and stand out in the fierce competition.
New Pilot Program on Public Health Insurance Payments Kicking off
A new pilot policy of medical insurance funds paying directly to drug manufacturers and suppliers is extending to more provinces and areas. This means that the long-standing “triangular debt” relationship among medical insurance fund, hospitals, and pharmaceutical companies is changing. The hospitals tend to delay their payments, which in turn increases the operating costs and risks of the enterprises. The problem of “triangular debts” in the health insurance payments process needs to be solved urgently. Since August last year, more and more provinces have started pilot projects to promote direct settlement between health insurance funds and drug manufacturers.
In the “triangular debts” formed by medical insurance, hospitals, and pharmaceutical companies, the hospitals’ payment is the focus of the game. Hospitals delaying their payments has been an age-old problem. However, the hospitals as the buyers being unable to settle the payments, makes it uncertain whether this new policy can be successfully implemented on a larger scale.