Quality, Affordable and Accessible

THE CHINA OPPORTUNITY

Sinophi’s focus on hospital management and investment is driven by China’s demographics and by China’s national policies and priorities in healthcare.

Four attractive demographics are driving strong growth in China’s healthcare demand and rapid growth in healthcare spending:

1. Total healthcare spending: from $357 billion in 2011, it is forecast to grow at 15-20% per annum from 2012 to 2017. This is more than double the estimates of GDP growth of 6-7% per annum (Frost and Sullivan).
2. Urbanization: will increase China’s population in cities by over 300 million between 2010 and 2025 GDP and healthcare spend grow disproportionately faster in urban areas compared to rural areas (McKinsey & Co).
3. Growth of urban middle class: expected to grow from 120 million to 520 million by 2025, with disposable income to pay for private healthcare services (McKinsey & Co).
4. Ageing population: increasing overall healthcare demand as the number of over-50’s increases by 150 million by 2020 (McKinsey & Co).

Sinophi’s expertise in hospital management and investment is well aligned with China’s national policies and priorities in healthcare:

1. From 2000: up until the 1990’s, China’s policy priorities focused on economic development and moving towards a “market economy”. In 2000, the Government initiated reforms in healthcare leading to significant deregulation and liberalization towards a partial market based structure. Progress was rapid in the pharmaceutical and medical devices sectors and much slower in Sinophi’s areas of focus, healthcare services.
2. From 2009: new reforms commencing in 2009 started to change this, with the Chinese Government investing much needed capital (US$124 billion) between 2009 and 2011 in the healthcare system with a major focus on healthcare services.
3. 13th Five Year Plan: regulatory reforms resulting from the implementation of China 13th Five Year Plan (2016-2020) include official encouragement for the participation of private and foreign capital in the healthcare services sector.

These trends present three challenges to the Chinese healthcare system and opportunities for Sinophi. First, to develop more hospital capacity, ambulatory care capacity and alternatives for long-term care and home healthcare. Second, to upgrade and improve the management and the economics of hospitals. Third, to control the cost of healthcare to patients.