China’s 14th Five-Year Plan: Broad Insights for the Healthcare and Pharmaceutical Industries

August 12, 2021
  • Lin Wang portrait

    Lin Wang

    Director, Transformation, BSR

  • Olivia Li portrait

    Olivia Li

    Manager, Transformation, BSR

  • Paris Zhang portrait

    Paris Zhang

    Associate, Shared Services, BSR

2021 is witnessing the beginning of China’s 14th Five-Year Plan (14th FYP), which charts the next five years of China’s journey to build a modern socialist country and achieve its second centennial goals. It provides a comprehensive framework for how the country’s society and economy will develop by 2026 and includes the strategy to build a “Healthy China,” which aims to improve overall social conditions, including healthcare.

As a country with a population of 1.4 billion, China faces many health challenges. These include high medical care costs and resource disparity between urban and rural areas, resulting in poverty due to illness, especially in rural areas (approximately 20 million people faced disease-causing poverty as of 2015). Other challenges include an increasingly aging population and rising rates of noncommunicable diseases (NCDs) linked to lifestyle factors like smoking.

So how does China’s 14th FYP impact the healthcare and pharmaceutical industries? Here are three ways these companies can help advance the “Healthy China” strategy.

1. Improving Affordability of Healthcare Services

Primary healthcare reform in China over the past decade has included extensive plans to broaden basic healthcare coverage and establish a national essential drug system. While “Healthy China” aims to improve overall health through healthy lifestyles and prevention approaches, there is an opportunity to enhance medical coverage for the entire population through better integrated rural and urban health insurance programs, to expand insurance schemes to allow more diversified commercial health insurance options, and to further cut down medical costs for patients.

Developments and reform in medical insurance, as well as drug pricing, will indisputably exert pricing pressure for pharmaceutical companies in China. However, experts believe that the policies will trigger convergence toward a developed-market profile for mature brands and will prompt multinationals to reevaluate their returns on investment and to transform business models to improve productivity and sustain profitability.

Moreover, there are enormous opportunities for pharmaceutical and insurance companies to collaborate on creative approaches to improve access to healthcare. For example, in 2015, Roche China started a partnership with the Shenzhen Reimbursement Authority and the leading Chinese insurance company Ping An to cover four of Roche’s targeted cancer therapies in the municipality’s health insurance program, which gave millions of people unprecedented access to innovative cancer treatments and diagnostics.

2. Strengthening Accessibility in Healthcare

The 14th FYP also covers recommendations to deepen reform of public hospitals and to provide equal access to basic public healthcare services, such as digital primary care, remote medical treatment, and rehabilitation services for seniors. The recommendations also support development of traditional Chinese medicine (TCM), which is significantly more accessible and affordable in China.

As China plans to significantly promote digitalization in healthcare, there is huge potential for the private sector to play a role in accelerating delivery of Internet-based healthcare services through artificial intelligence, machine learning for diagnostics and treatment, and augmented-reality surgeon training. Already, some Chinese companies are piloting related initiatives, such as Pingan Good Doctor, Tencent WeDoctor, AliHealth, and JDHealth.

We encourage companies to expedite the move online by deepening their understanding of new user behavior and providing support. Digitalization is becoming essential for customer and patient engagement: According to a Bain survey, 97 percent of Chinese respondents expressed interest in digital health services if the costs were covered by an insurance provider or employer, and 64 percent expected to use telemedicine within the next five years.

Companies could also play a role in supporting local governments to achieve their public health and environmental goals related to medical waste and supply chain management. Specifically, Shanghai aims to become one of the safest cities for public health by 2025, opening up opportunities to participate in a range of initiatives covering infrastructure, operational efficiencies, and new capabilities, all with the goal of building an intelligent platform for public health.  

3. Enhancing Cultural Focus on Well-Being

According to officials, objectives in the 14th FYP, compared to previous Plans, have shifted to have a greater focus on public health promotion and prevention, rather than on treatment. The healthcare and life sciences industries are promoting early warning and prevention of infectious diseases and NCDs, vaccine research and development, online medical services, and, perhaps most importantly, patient awareness raising that emphasizes healthy lifestyles and physical fitness.

Most multinational pharmaceutical companies already place emphasis on enhancing acceptability or delivery of healthcare and have piloted various sustainability and community programs in China dedicated to patient education and raising awareness—and more companies can follow suit.

Moreover, the preventive healthcare strategy calls for more innovative efforts to support public health awareness, which are cost-effective and ultimately improve overall health and quality of life. In this regard, companies have the opportunity to engage more in public education and facilitate effective patient engagement programs by building these activities into their sustainability strategies.

Learning from COVID-19

The fight against COVID-19 shows both weakness and resilience in China's healthcare system, as well as its ability to mobilize resources in both communities and in the private sector. 

Post-pandemic, we can expect greater attention on public health, prevention, and development of primary care at the central government level. At local levels, leaders will likely pay even more attention to healthcare as a leading indicator of their performance and draft ambitious blueprints for their local healthcare systems. Business and local communities can participate and play an active role in promoting a healthy life—BSR’s HERhealth program illustrates that businesses can support workers to improve their health awareness, achieving a positive impact in the workplace.

While the “Healthy China” strategy creates many possibilities for the healthcare sector, we can anticipate that wider healthcare coverage in China—as well as increasing local needs for healthcare services that are more accessible, affordable, and acceptable—might stimulate continuous ramp-up of local manufacturing and production.  

Supply chain management with a particular focus on environmental practices, such as proper water management and wastewater treatment, will need extra attention to ensure manufacturing practices are aligned with China’s national climate and environmental protection targets. Companies will also need to ensure proper control of medical waste and manage social protection—especially workers’ benefits—well.

What’s Next

BSR’s China team will continue to unpack business impacts of the national plan. Future blog posts will provide more details on industry impacts and how businesses should prepare through insights and dialogues with climate and energy experts and other important stakeholders across sectors. 

If you are interested in learning more about how BSR can help shape your China strategy, please reach out.

This blog is part of a series examining the business impacts of China’s 14th FYP, which has drawn great interest among the international community, from policymakers to business. To learn more, read our previous posts on what business can expect, China’s climate goals, and impacts for investors.


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