There is a huge space for the development of China's medical industry

1、 Large base

According to the data of the National Bureau of statistics, by the end of 2019, there were 1.014 million medical and health institutions in China, including 34000 hospitals, 12000 public hospitals and 22000 private hospitals; 960000 primary medical and health institutions, including 36000 township health centers, 35000 community health service centers (stations), 267000 outpatient departments (stations) and 621000 village clinics; There are 17000 professional public health institutions, including 3456 centers for Disease Control and prevention, and 3106 health supervision centers. By the end of the year, there were 10.1 million health technical personnel, including 3.82 million licensed doctors and licensed assistant doctors, and 4.43 million registered nurses. There are 8.92 million beds in medical and health institutions, including 6.97 million in hospitals and 1.38 million in township hospitals. A total of 8.52 billion people were treated and 270 million people were discharged.

2、 Development trend in 2020

(1) The demand of medical industry is increasing steadily

The upgrading of medical consumption and the aging population will stimulate the demand of the industry. At present, China's health care accounts for about 5% of GDP, compared with 17% in the United States, and the level of medical consumption in China is still in its infancy. With the continuous development of economy, China's per capita disposable income and health concept will continue to improve, medical and health consumption will usher in a long-term steady development stage. In addition, the prevalence of chronic diseases in China is rising, and the aging population will continue to promote the consumption of medical services. Since 2016, the examination and operation expenses of public hospitals in China have been faster than the drug expenses, and the industry demand has become more and more vigorous. The demand for medical consumables is gradually increasing.

(2) China's medical market has huge development space

      Over the past decade, China's per capita medical and health spending has grown at an average annual rate of more than 14%. The proportion of health expenditure in GDP has been increasing year by year, reaching 6.39% in 2018, but there is still a big gap compared with developed countries (accounting for more than 10%). With the increase of people's economic income, the aggravation of aging, the enhancement of the health awareness of the whole people, the update and development of medical technology, and the deepening reform of the medical and health system, the hospital medical service has ushered in a good opportunity for rapid development.

(3) China's medical demand has been growing

       In 2018, the total number of diagnosis and treatment in China was 8.31 billion, with a year-on-year increase of 1.6%; the number of hospital diagnosis and treatment was 3.58 billion, with a year-on-year increase of 4.1%. China's demand for medical services has been growing, which mainly comes from the aging of the population, the rise in the prevalence rate (health care awareness) and the improvement of medical insurance coverage.

(4) The medical service industry is expected to benefit from the optimization of medical insurance payment structure.

      Since December 2018, Shenzhen, Guangzhou, Beijing and other places have issued policies requiring public hospitals to completely cancel the addition of consumables and adjust the prices of medical services to compensate. The cost of pathological diagnosis projects has generally increased.

      In 2019, the industry support policies were issued intensively, and the private specialized fields developed vigorously. In recent 10 years, the compound growth rate of income of specialized hospitals in China has reached 19%, significantly higher than that of public hospitals. In addition, in 2019, the Health Commission, the national development and Reform Commission and other departments continue to issue policies to encourage social medical services and deepen the reform of medical service supply. We judge that private specialized tracks with high barriers and expansibility such as ophthalmology, physical examination and assisted reproduction are expected to benefit deeply.