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1、China Life Sciences&Health Care TeamMarch 2023China LSHC IndustryChina LSHC IndustrySurvey Result:2023 State of Industry in China2China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Content Framework Results Questions&Deep-diveWhat happened in 2022What expected in 202
2、3 Concluding insights Appendix3China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 SOE:State-owned Enterprise;2 POE:Private-owned Enterprise;3 JV:Joint Venture;4 WOFE:Wholly Foreign-owned Enterprise LSHC Industry 2023 Outlook SurveyFramework3%32%9%56%SOEPOEJVWO
3、FE20%45%35%Chairman/CEOC-suit levelOther management level68%1%22%7%2%PharmaDistributor/RetailerMedical DevicesHealthcare ServicesOther sector15%20%22%43%Less than RMB 100 millionRMB 100 million-1 billionRMB 1 billion-5 billionMore than RMB 5 billionCompany Type56%37%7%Less than 5,0005,000 10,000More
4、 than 10,000Survey conducted between 10thto 23rdJanuary 2023Engaged China based Life Science&Healthcare(LSHC)sector operators and investors:115 respondents Respondents TypeBusiness SectorNo.of Employees2022 Revenue Size4China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte Ch
5、ina.What happened in 2022 5China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical
6、 Devices 2022 Performance Review Question#1 How did your company perform(top line)in previous year?13%41%46%33%48%19%Annual financial performanceis better than plannedAnnual financial performanceis in line with plansAnnual financial performanceis worse than plans11%37%52%30%45%25%ALLLarge cosSOE&POE
7、WOFELife Science22%44%34%36%57%7%8%32%61%31%49%21%14%42%45%29%52%19%Insights2022 Survey2023 Survey(%of selected times)Not surprising,2022 has turned out to be worse than many had expected and planned for Local player respondents(SOE&POE):22%indicate to have had a better performance than planned,prob
8、ably more cautious by 2021 year-end already(quite a few of the POE respondents are Chinese Biotechs still in pre-revenue mode)Foreign companies(WOFE)felt largest impact on 2022 very special business conditions in China,with 61%doing worse than expected6China LSHC Industry 2023 Survey Results 2023.Fo
9、r information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2022 Performance Review Question#2 Your 2022 business performance
10、 was mainly impacted by84%63%56%40%27%21%10%The widespread/intensive lockdown due to thepandemic control across provinces/citiesEffects from the VBP policies implementedChanges in Hospital visits during the yearAchieving new product launches or NRDL inclusionin ChinaPartnering with local/domestic or
11、ganizations toreach a faster market penetrationLocalizing your supply chain in ChinaIncreased direct patient engagementInsights(%of selected times)Similarly,the covid-management and its lockdown phases have been sighted as the most impactful factor from all The medical pricing reform(VBP,etc.)contin
12、ues to take the lead among all other factors,this is particularly critical to POEs(71%),Large cos(69%),and Life Sciences cos(63%).Localizing(or widening)of the supply chain has elevated for Large Cos&WOFEs,in line with recent overarching guidance provided by Chinas highest political organizations(an
13、d eventually benefiting from local-preferential policies)The impact of hospital visit changes has received more attentions among WOFEs compared to the prior years surveyLarge cosSOE&POEWOFELife ScienceC-levelALL7China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note
14、:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices2022 Performance Review Question#3.1 among those who said Yes to business performance been affected by Chin
15、a nation wide covid management issues,their revenue has been impacted with Insights(%of selected times)Nearly 80%of all respondents state that they had their revenues decrease due to the lockdown -36%having a 10%decrease Domestic companies(SOE&POE)have the highest no impact rate with 23%(10 out of 4
16、0)but also the highest decrease 10%portion Larger companies seem to have absorbed better the market moves,with 10bps more in the mid-range(38%versus 28%for all)Foreign companies(WOFE)experienced the largest negative growth,with just 11%respondents confirmed no impact from the lockdown15%14%13%19%17%
17、12%28%38%21%41%31%28%36%29%44%30%26%52%21%19%23%11%26%8%ALLLarge cosSOE&POEWOFEPharmaMedTechDecreased by less 5%Decreased by 5%-10%Decreased by more than 10%Not impacted8China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above
18、 RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2022 Performance Review Question#3.2 among those who said Yes to business performance been affected by China nation wide covid management issues,the
19、ir new patient onboarding has been impacted withInsights(%of selected times)The new patient onboarding was also heavily impacted by the lockdown with around 60%of respondents have said yes,resulting from the restrictions to visit offline medical institutions Over 45%of respondents confirmed to have
20、reduced more than 10%for all types of respondents,with the WOFE has the highestportion of 54%(64%for foreign companies CEO ie.2 out of 3!)The Life Science companies(exc.Distributors,retail&healthcare services)show somewhat less impacted with 38%with no14%18%10%19%14%15%46%49%49%54%52%46%40%33%41%27%
21、34%38%ALLLarge cosSOE&POEWOFEC-levelLife ScienceReducing less than 10%Reducing more than 10%Not impacted9China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned E
22、nterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2022 Performance Review Question#3.3 among those who said Yes to business performance been affected by China nation wide covid management issues,their clinical trial programs has been impacted withInsights(%of sel
23、ected times)On clinical trials,the survey shows that really 50%somehow an impact ie.slowing progress Larger companies and foreign companies answered having the most impact as 50%have delays 3 months and more.Focusing down to CEOs only(not shown above)64%of foreign companies a delays above 3 months o
24、r more.In contrast,local players are relatively less impacted on the clinical trial programs.Only 41%of POE C-level respondents mentioned that theres a slowed clinical trial program24%32%13%32%23%26%25%21%28%22%26%27%2%1%5%1%50%47%54%46%51%46%ALLLarge cosSOE&POEWOFEC-levelLife ScienceSlowed program
25、by less than 3 monthsSlowed program by 3 months-6 monthsSlowed by more than 6 monthsNot impacted10China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterpri
26、se;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2022 Performance Review Question#3.4 among those who said Yes to business performance been affected by China nation wide covid management issues,they have found harder access to hospitals/doctors for the use of prescript
27、ion drugsInsights(%of selected times)The lockdown has a direct impact to offline access to medical personnel and institutes over 70%of respondents have found Rx business been impacted with harder patient-doctor engagement The issue is more severe to large cos and WOFE,with both have over 80%responde
28、nts selected Yes.In contrast,local players are less impacted with only 69%respondents confirming impact.(foreign pharma cos usually rely more on the in-hospital channel for Rx distribution compared to local ones).72%81%69%81%74%75%28%19%31%19%26%25%ALLLarge cosSOE&POEWOFEC-levelLife ScienceYesNo11Ch
29、ina LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2022 Performance Rev
30、iew Question#3.5 among those who said Yes to business performance been affected by China nation wide covid management issues,their talent engagement has been impacted with increasing staff turnoverInsights(%of selected times)During these past 3 years,talent attrition has seen some stabilization,and
31、69%of the respondent stating having no higher turnover than before Foreign companies(WOFE)were less impacted in the talent management compared to local players(SOE&POE).Flexible work arrangements as well as higher emphasis on employee well-being in foreign cos has resulted in a better workforce stab
32、ility,compared to domestic companies.31%32%38%22%30%29%69%68%62%78%70%71%ALLLarge cosSOE&POEWOFEC-levelLife ScienceYesNo12China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 PO
33、E:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2022 Performance Review Question#4 Within your organizational&business model which are the key changes implemented in 2022?Insights(%of selected times)In line with our 2022 survey results:commerci
34、al team organization and and government affairs remain the top two factors to most of respondents.Important to note that the importance of government affairs and relations has raised to 1stposition compared coming 2ndin prior year.Supply chain arrangements have risen as corporate management themes,w
35、ith nearly 50%looking at existing set-up.9%26%42%49%53%56%83%83%Arranged shared services support from outside China locationsEnlarged the scope of your shared service center functions inside in ChinaEnhanced(created)and empowered a digital expert team based in ChinaSupply chain arrangement have been
36、 reviewed and trigger changes going forwardR&D activities in China have had new resources been allocatedMarketing and sales teams have been adjusted as a result of policies impact(VBP etc.)Marketing and sales teams have been adjusted to reflect new channelsGovernment affairs and relations have becom
37、e more important than beforeALLNew!Importance13China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 POE:Private-owned Enterprise;3 WOFE:Wholly Foreign-owned Enterprise2022 Performance Review Question#4 Deep
38、-diveInsights(%of selected times)Across all companies,government affairs have risen to be top in mind to be successful in China.Further,there is good alignment beyond all respondents with the CEO-suite only.POEs for many in a different stage of development,the main theme was how best to adjust and o
39、ptimize marketing&sales team Digital investments that had seen tremendous emphasis in 2021&2022,seem to have been tackled and managed by most,and are now business as usual in China 5%21%45%45%48%67%81%87%Arranged shared services support from outsideChina locationsEnlarged the scope of your shared se
40、rvicecenter functions inside in ChinaEnhanced(created)and empowered a digitalexpert team based in ChinaSupply chain arrangement have been reviewedand trigger changes going forwardR&D activities in China have had new resourcesbeen allocatedMarketing and sales teams have been adjustedas a result of po
41、licies impact(VBP etc.)Marketing and sales teams have been adjustedto reflect new channelsGovernment affairs and relations have becomemore important than beforeLarge cos7%18%50%57%64%50%79%75%13%13%42%45%50%63%82%92%13%26%52%39%52%57%74%87%POE(C-level)WOFECEO14China LSHC Industry 2023 Survey Results
42、 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2022 Performance Review Question#5 With the strengthen in
43、 the restriction in data privacy and export from China,has your organization been impacted?Insights(%of selected times)The impact of restriction in data privacy and cross border exchange,keeps stable from prior year(43%versus 42%this year)However,compared to our prior survey,the impact on WOFE has b
44、een reduced significantly from 89%to 45%indicating that foreign companies have adjusted(or are adjusting)to the new regulatory landscape in China and developed China-specific strategy to better fit in the market 42%51%29%45%39%58%49%71%55%61%ALLLarge coSOE&POEWOFEC-levelYesNo15China LSHC Industry 20
45、23 Survey Results 2023.For information,contact Deloitte China.63%66%33%65%66%17%11%17%18%17%58%53%83%47%55%ALLLarge cosSOE&POEWOFEC-levelALLLarge cosSOE&POEWOFEC-levelALLLarge cosSOE&POEWOFEC-levelImpacted as resulting in increased operating costs in ChinaImpacted as resulting in less R&D or trial a
46、ctivities being carriedout in ChinaImpacted as resulting in developing specific China only solutionsNote:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 20
47、22 Performance Review Question#5 Deep-dive among those who said Yes,on the data constraints-are impacted inInsights(%of selected times)Nearly 2 out 3 respondents sighted an increase in operating costs relating to the data management constraints(63%)while for SOE&POE that was felt by only 1 out 3 For
48、 foreign companies,just 18%state that their R&D or CT activities are impacted and just 47%have engaged in China specificsolutions.Naturally SOE&POE consider their China solutions as their basis(hence the 83%)Interestingly,64%of all respondent CEO(23)emphasized the need to find China specific solutio
49、ns to manage these constraints16China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.SOE&POENote:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Ph
50、arma&Medical Devices 2022 Performance Review Question#6 Considering Chinas pace to technology changes and digital patient engagement,has your organization InsightsInvestment into the digital space,remains top in mind to all companies,SOE&POE indicate to allocate more for 2023 going forward.Foreign c
51、ompanies will be keeping allocating resources at similar levels(also for compliance purposes).For foreign companies,deployment local tools different from global tools,is no longer a tabooTalent model changes going forward for SOE&POE similar to the allocated level of resources,it is looking more lik
52、e a catch up with what others have been doing already56%54%43%41%13%Allocated more resources to manage your IT&datacompliance frameworkAllocated more resources for 2023 to build more capabilitiesaround data&IT security for your China businessDeployed local IT&data solutions that are different from t
53、heglobal toolsChanged your talent model for digital competencies(moredata technology)Not applicable(%of selected times)Large coWOFECEOALL17China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owne
54、d Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2022 Performance Review Question#7 For new market channels beyond the traditional in-hospital channel,has your company increased investment on these new channels?Insights(%of sele
55、cted times)Consistent with prior years survey results the majority of respondents indicate that the investment into new channels will increase What differ from last year is that more local players(SOE&POE)have become much willing to increase the investment into new channels,grow from 47%to 68%in thi
56、s years survey result In contrast,large cos and WOFEs have lowered their investment focus from our 2022 survey slightly decreasing from 89%to 83%and 89%to 74%respectively compared to the prior year70%83%68%74%71%74%30%17%32%26%29%26%ALLLarge coSOE&POEWOFEC-levelLife ScienceYesNo18China LSHC Industry
57、 2023 Survey Results 2023.For information,contact Deloitte China.28%28%36%27%27%26%19%17%21%20%25%17%48%52%39%50%45%48%ALLLarge co SOE&POEWOFEC-levelLifeScienceALLLarge co SOE&POEWOFEC-levelLifeScienceALLLarge co SOE&POEWOFEC-levelLifeScienceThis investment be done through alliances with third parti
58、esBuild the online business channel through own capabilityA combination of the two aboveNote:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2022 Performan
59、ce Review Question#7 Deep-dive among those who said Yes,the investment has been increased in Insights(%of selected times)Respondents seem all aligned with 50%or so,all favoring a mix between in-house and external partnering solutions in order to embrace and use best Chinas unique digital&technology
60、eco-system SOE&POE have a slightly larger appetite to partner with third parties and form alliances(36%)versus foreign companies(just 27%)19China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.What expected in 2023 20China LSHC Industry 2023 Survey Results 2023.For inf
61、ormation,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2023 Future Outlook Question#8 How do you foresee your China business
62、outlook 2023?Insights(%of selected times)Everyone remains rather optimistic as 90%of all respondents are looking for growth in 2023 Nearly 50%are looking for growth higher than 10%,bullish after December 7,2022.Interesting to note that domestic market players(SOE&POE)are having the brightest expecta
63、tion with two-third have forecast a 2023 revenue growth over 10%.Larger&Foreign companies have a more balanced outlook across all growth ranges,with even 8%predicting for a decline.48%44%66%47%46%35%40%22%32%38%10%8%5%13%10%8%8%7%8%7%ALLLarge CoSOE&POEWOFELife ScienceTop line revenue plan 2023 consi
64、ders a growth of 10%Top line revenue plan 2023 considers a growth between 5-10%Top line revenue plan 2023 considers a single-digit growth 5%Top revenue plan 2023 is expected to decline21China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise wi
65、th revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2023 Future Outlook Question#9 How is your current overall business outlook for China(next 3-5 years)?Insights(%of selected times)Co
66、mpared to our last year survey,we are noting a slight decrease on Chinas market importance,reducing slightly from 47%to 42%Also,10%declare the investments are shifting to other addressable markets within their group,up from 2%in last year.Foreign companies,consistent with prior year,remain cautious
67、on the future opportunities in the China market,and 34%state that the market has become less readable&predictable.CEOs however remain very confident,as only 4%state of having the risk ofgetting less resources as the market attraction is reducing.42%34%33%10%9%Our outlook is better than before,so our
68、 China focus has beenfurther elevated within our GroupOur outlook remains the same as previously,also China has tocompete internally to obtain its required investment budgets forgrowthThe China outlook has become less clear and readable thus we arebecoming more cautious allocating investment to Chin
69、aWithin our Group,other markets have become more appealing thusfor our China business we are getting less resourcesDoing business in China is perceived are riskier with less reward thanbefore,thus we are getting less resources to develop our ChinabusinessALLLarge coSOE&POEWOFELife ScienceC-level22Ch
70、ina LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2023 Future Outlook
71、Question#10 With Chinas regulatory environment keep adjusting,do you think thatInsights(%of selected times)Innovation and new drugs remain the focus for all respondents(60%),except SOE&POE(50%)and CEO from Foreign companies that rank this as highest impact going forward(80%).SOE&POE remain very conf
72、ident that the market trend and environment will favor them in the longer term For Foreign companies,consensus is that the regulatory framework will have their supply chains to become more local,probably while widening the value chain domestically(71%of WOFEs and 63%from Large Cos).Further,Foreign c
73、ompanies are expecting(andplanning for)a higher regulatory scrutiny and will increase emphasis on compliance.22%45%55%57%59%62%Your imports are likely to attract higher duties or increased scrutinyon transfer pricing arrangementsChinas health administration will try to motivate you in licensing andp
74、artnering transactions to further localizeForeign companies will attract higher regulatory scrutiny,thusrequiring higher efforts on compliance mattersYour global supply chain organization might require an adjustment tofurther localize,increase domestic sourcing in your value chainNew drug registrati
75、ons will continue to accelerate and your marketaccess for innovative assets will further be facilitatedDomestic companies will gain a further preferential treatment in yourmarket segmentsALLLarge coSOE&POEWOFELife ScienceC-levelNEW!23China LSHC Industry 2023 Survey Results 2023.For information,conta
76、ct Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise;5 Life Science:Pharma&Medical Devices 2023 Future Outlook Question#11 What do you think are the most relevant consideratio
77、ns from your perspectives when introducing new products into China?Insights(Average score for ranking)The true market demand is the top consideration to all same as the survey result in the last year,particularly to WOFE and top management team(C-level)respondents The importance of development of Ch
78、ina-specific business model and supply chain arrangement has been raised over the past year,resulting from the rapid changes of the regulatory landscape in the China LSHC market The competition and medical pricing reform remain important yet the ranking have both degraded as the medical pricing refo
79、rmhas become the new-normal already and all types of companies are getting better in the pricing strategy resulted in the importance degraded 1.73 3.20 3.32 3.07 3.63 2.16 2.63 3.32 3.61 3.76 5.52 Specific patient support programs being prioritized and favoredby central/local governmentsGovernment i
80、ncentives including tax incentives and othergovernment supportsPotential price adjustments resulting from government driveninitiativesGlobal and local competition specific to the China marketRight business model and supply chain alignment with the globalbusiness including appropriate transfer pricin
81、g policiesMarket potential and patient population needs/demandALLRank change:increasedecreaseNo changeNEW!2022 Survey2023 SurveyLarge coSOE&POEWOFEC-level24China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion
82、;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise2023 Future Outlook Question#12 In your latest China market strategy,have/are you considering the following actions:Insights(%of selected times)The rank of China-specific solutions has been raised from
83、 the second in last year to the top in this year marking the unique feature of the China LSHC market being further emphasized.This is especially important to WOFE(61%)and Life Science cos(58%)Local players(SOE&POE)are more focusing on the forming of partnerships while WOFE is more focusing on the le
84、verage of theregional policy benefits to accelerate the market access 10%13%30%37%45%53%57%Consider raising local financial resources from third parties(debt),or evengoing public would capital market rules facilitate thisEstablishing a China ESG/Carbon emission reduction strategyLeverage specific me
85、asures and favorable policies in the Greater Bay Area orHainan provinceSearch for China market partnership and execute joint ventures with localcompaniesSearch for Chinese based assets for your product portfolio localizationambitionsAdjusting your product portfolio reflecting price constraints&risks
86、 generatedby VBP and NRDL or the general competitive environment in ChinaCreate China specific governance model that is differ from other marketsLarge coSOE&POEWOFELife ScienceALL25China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with re
87、venue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise2023 Future Outlook Question#13 Many pharma and medtech companies have created specific investment vehicles to participate into the Chinas innovation space as investors(direct/
88、indirect),do you have?Insights(%of selected times)Over two-third of all respondents answered No in creating China-specific investment vehicles this is mainly affected by the adjustment of the valuations of biotech cos in China throughout the 2022 For those who answered Yes,they indicate the investme
89、nt is going to be increased,particularly from local players(SOE&POE)Large cos and WOFEs are also relatively favor entering Chinas innovation space through a collaboration with/acquisition of local player(s)as this could help foreign companies to effectively reduce the regulatory risks In contrast,lo
90、cal players are less favor in enhance the innovation presence through acquisition and partnering.This is mainly due to local players are not that strong in cash flow as foreign players.53%50%62%46%50%24%19%31%23%30%24%31%8%31%20%ALLLarge coSOE&POEWOFECEOPlanning to increase our investment resourcesN
91、ot planning substantial changesStill identifying potential local acquisition/partnering targets in respect of entities or pipelinesNo,70%Yes,30%ALL26China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:
92、State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise2023 Future Outlook Question#14 Do you expect that your business strategy and investment for China market will change in response to the opening of China border in January 2023?Insights(%of selected times)Ove
93、rall,nearly half of respondents are likely to have business strategy and investment change for China after the border open,particularly for local players(SOE&POE)In contrast,over 60%of Large Cos and Foreign companies respondents indicate that there will be no immediate business strategy and investme
94、nt changes.We are already seeing a number of corporate HQ teams travelling to China,and if adjustment come,that will certainly become apparent only later this year or for 2024.46%36%56%39%47%44%54%64%44%61%53%56%ALLLarge coSOE&POEWOFEC-levelLife ScienceYesNo27China LSHC Industry 2023 Survey Results
95、2023.For information,contact Deloitte China.Note:1 Large cos:enterprise with revenue above RMB 1 billion;2 SOE:State-owned Enterprise;3 POE:Private-owned Enterprise;4 WOFE:Wholly Foreign-owned Enterprise2023 Future Outlook Question#14 Deep-dive among those who said Yes,the changes are likely to loca
96、ted inInsights(%of selected times)Accelerating market access,bringing new assets to market is the top key issue for Large cos(70%)and foreign cos.SOE&POEs are more focusing on the talent and management structure changes,which was the same trend found among top management team respondents(CEO respond
97、ents:67%)The localization is another key topic that large cos are majorly focusing on in order to leverage the policy benefits for homegrown products in China 38%43%47%55%57%60%Initiate or re-initiate domestic partnering discussion forChina market purposesEnlarge our China investment by increased lo
98、calization ofyour supply chainIncrease the R&D investment to support localized productdevelopmentReinitiate Chinese talent exchange programs for globalpositionsReview talent and management structures,thus increasinga multi-cultural approach to your China operationsAccelerate your market access progr
99、ams in ChinaALLLarge coSOE&POEWOFELife ScienceC-level28China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.In conclusion29China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.2023 China LSHC Industry Outlook SurveyLook back to 2022 predi
100、ctions More and more LSHC companies are formulating more and more China-specific business model and strategy The first outbound data transfer case after the issue of Measures for Security Assessment of Data Export Security was approved in 2022In 2022 NRDL update,the no.of newly listed drugs through
101、negotiation has reached a new high of 108 drugs.The new NRDL is expected to save over RMB 90 billion,tripled from the last updateThe total license-out deals value in 2022 reached a new high of 17 BlnUSD,increased by 23%.The number of deals also reached 48,6 more from 2021The new drugs R&D investment
102、 has increased from USD 8 billion in 2016 to USD 28 billion to 2022,showing the elevation of R&D capacity of Chinas medical industryThe no.of accepted registration applications has reached a new high of 12,244 applications(GR:5.8%)in 2022The influence power of government sectors is still increasing,
103、especially with the medical pricing reform and data protection regulation updatesThe pace of innovation growth has been accelerated as a result of the formulation of various partnerships and R&D investmentMNC players have strengthened the transformation from global imports to local incubation of inn
104、ovation assetsEstablished local incubators and accelerators to support the growth of local biotech cos Transferred/opened global innovation centers in ChinaPredictionsWhat happened30China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.2023 China LSHC Industry Outlook S
105、urveyWhat Deloitte foresees for China LSHC industry2020202120222023 Future of work is closer and will arrive faster New technologies will accelerate the move to a healthier China Partnering and building new business model will be key to capture markets Government and regulators speed up their Health
106、y 2030 plans and objectives Rapid development of online modes&channel is bringing B2C models to the industry,and increases emphasis on regulation in data security and compliances Chinas market will continue to grow faster than most mature markets and will be impossible to be ignored The influence po
107、wer of government sectors is still increasing,especially with the medical pricing reform and data protection regulation updates The pace of innovation growth has been accelerated as a result of the formulation of various partnerships and R&D investment More and more companies are formulating more an
108、d more China-specific business model and strategy For 2023,we predict that 31China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.2023 China LSHC Industry Outlook SurveyIn Summary:China insight and outlook in 2023Supply chain localization has become more important espe
109、cially for high volume products and increased domestic competition.With a favorable momentum,now is the time to review all options.The battle for global talent will re-start in 2023 and the speed of innovation in China will rise and accelerate once again.New product launch will become the key growth
110、 driver.Digitalization and building a China-fit eco-system has been the emphasis for many players during these covid-years.This trend will continue.Chinas innovation landscape has many players with unique and niche capabilities.Localization ambitions will allow for some to emerge as core market expa
111、nsion solutions to foreign players.Business compliance activities during these covid-years have been neglected or reduced.We shall see more emphasis of those going forward as regulators increase their activities.32China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Bu
112、siness compliance activities during these covid-years have been neglected or reduced.We shall see more emphasis of those going forward as regulators increase their activities.The battle for global talent will re-start in 2023 and the speed of innovation in China will rise and accelerate once again.N
113、ew product launch will become the key growth driver.2023 China LSHC Industry Outlook SurveyChina insight and outlook in 2023Key InsightsDigitalization and building a China-fit eco-system has been the emphasis for many players during these covid-years.This trend will continue.The release of 10 New Me
114、asures has brought a new look to the LSHC market as well as more uncertainties that examine the resilience capability of LSHC companies in ChinaHow to adjust the business model and strategy timely to keep up with the policy and regulatory changes is one of the key challenges to allDigitalization of
115、operations,investment in technologies and talent have become more than ever critical to be successful in China With the re-opening of borders,many market participants are looking forward to re-build their multi-cultural teams,thus fostering exchange and generating innovation.In addition,with the inn
116、ovation pace to be accelerated once again,the new product launch strategy will become more critical for future growth onwards.Most market players expect that market regulators will continue to strengthen their supervision through a number of lenses and activities,now that the pandemic-times are over
117、.While data and cross-border transfer is the immediate urgency that many are coping with,new technologies and new ways of operating business compliance activities will emerge.33China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.With more homegrown preferential polici
118、es been introduced in the recent years,the pace of production and supply chain localization is expected to further accelerate for foreign players in China.Further,initiatives across the globe reviewing the key and core dependencies on key ingredients,pressures arising from sustainability and carbon
119、reduction programs(reducing logistics paths),will provide grounds for enlarging the value chain locally.2023 China LSHC Industry Outlook SurveyChina insight and outlook in 2023Key InsightsSurvey results show that a larger number of industry players have seen their speed to market decelerate,with pat
120、ient onboarding and clinical trials being delayed,but not disrupted.As part of a wider localization strategy,the search for local assets,certainly encouraged by a more favorable environment to locally rooted products,will more than likely lead to wider cooperation arrangements and or partnering mode
121、ls.Chinas innovation landscape has many players with unique and niche capabilities.Localization ambitions will allow for some to emerge as core market expansion solutions to foreign players.Supply chain localization has become more important especially for high volume products and increased domestic
122、 competition.With a favorable momentum,now is the time to review all options.34China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Deloitte China Life Sciences&Health Care Team ContactsJens EwertIndustry LeaderChina Life Sciences&Health Care Survey&Authors Additional
123、contactsBill YangFinancial Advisory LeaderChina Life Sciences&Health Care Tony LinDeloitte Research Assistant ManagerChina Life Sciences&Health Care Carrier XiaoConsulting LeaderChina Life Sciences&Health CScott SunConsulting Deputy LeaderChina Life Sciences&Health Care Travis ZhuRisk Advisory Leade
124、rChina Life Sciences&Health Care James ZhaoTax Advisory LeaderChina Life Sciences&Health Care David YuAssurance&Audit Leader China Life Sciences&Health Care Linda PuProgram ManagerChina Life Sciences&Health Care China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.Appe
125、ndix36China LSHC Industry 2023 Survey Results 2023.For information,contact Deloitte China.38%53%9%Less than 5,0005,000 10,000More than 10,00015%48%37%Chairman/CEOC-suit levelOther management level71%2%23%3%1%PharmaDistributor/RetailerMedical DevicesHealthcare ServicesOthers4%20%11%65%State owned ent
126、erprisePrivate enterpriseJoint ventureWholly foreign owned enterpriseLarge companies population compositionAppendix Large companies(75/115)composition:companies with revenue above 1 Bln RMB CompanyTypeRespondents TypeBusiness SectorNo.of Employees37China LSHC Industry 2023 Survey Results 2023.For in
127、formation,contact Deloitte China.Calculation model for question#11Appendix The average score was calculated based on the weight of its rank in each answerThe weight for each rank is different and is descending from rank 1 to rank 6Rank 1=6 score;rank 2=5 score;rank 3=4 score;rank 4=3 score;rank 5=2
128、score;rank 6=1 scoreThe average weight score calculation formula:(rank 1#)*6+(rank 2#)*5+(rank 3#)*4+(rank 4#)*3+(rank 5#)*2+(rank 6#)*1)/(total respondent#)For example,the option A was selected for 13 times:rank 1 for three times;rank 2 for four times;rank 3 for twice;rank 4 for twice;rank 5 for on
129、ce;rank 6 for oncethe average weight score of option A will be:(3*6)+(4*5)+(2*4)+(2*3)+(1*2)+(1*1)/13=4.23The average weight score of option A will be 4.23A higher average weight score represent a higher importance degree of the subject to respondentsAbout DeloitteDeloitte China provides integrated
130、professional services,with our long-term commitment to be a leading contributor to Chinas reform,opening-up and economic development.We are a globally connected firm with deep roots locally,owned by our partners in China.With over 20,000 professionals across 30 Chinese cities,we provide our clients
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137、ormation only,and none of Deloitte Touche Tohmatsu Limited(“DTTL”),its global network of member firms or their related entities(collectively,the“Deloitte organization”)is,by means of this communication,rendering professional advice or services.Before making any decision or taking any action that may
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