Healthcare and Drug Price Reform: Anticipated Impact on Pharmaceutical Industry Growth and Profits

2019-09-03 17:43

The emergence of medical insurance fee control began in2010. Since 2011, some areas such as Shanghai Medical Insurance have changed from increasing income to reducing expenditure. In 2013, the income growth rate of the medical insurance fund was lower than the expenditure growth rate, facing a narrowing surplus and even a deficit. By 2015, the growth rate of income and expenditure of the medical insurance fund dropped to 15.55% and 14.48% respectively. At the same time, bidding price cuts and medical insurance cost control have become the norm in the industry.

"Cost control measures in medical insurance can lead to a slowdown in revenue growth for the pharmaceutical industry," explained Zhao Bing. Since 2009, the main achievement of healthcare reform has been the government's increased expenditure, driving growth in the pharmaceutical industry and establishing comprehensive coverage of affordable medical expenses.

The new contradiction lies in the increasing investment pressure on the pharmaceutical industry after the decline in the GDP growth rate. Zhao Bing believes that "in the situation where the growth rate of medical insurance expenditure is higher than the growth rate of financing, in order to maintain the balance of medical insurance funds, cost control will become the core of medical insurance reform in the long term. Currently, the pharmaceutical industry and medical insurance reform essentially control the growth of medical expenses through demand-side structural adjustment

"From 2011 to 2015, the revenue of the pharmaceutical industry achieved a compound annual growth rate of 15%. However, we expect that the revenue growth rate of the pharmaceutical industry will slow down to 10% in the next three years."