Roche Group

Executive Summary

Since the 18th National Congress of the Communist Party of China, China’s health sector has achieved significant progress, further enhancing the health rights and interests of its people. By 2023, the average life expectancy in China has increased to 78.6 years. The five-year survival rate for cancer has also continued to the rise, from 40.5% in 2015 to 43.7% in 2022. The sustained improvement in public health is underpinned by continuous investment in health sector and the deepening reforms in healthcare, pharmaceuticals, and medical insurance by the Chinese government.

Thanks to the development of the health industry and the increasing accessibility of innovative drugs, these drugs have consistently served as “high-performance health investments” in China. Innovative drugs effectively restore labor supply, facilitate patients’ return to work, and significantly reduce family burdens. High-quality innovative drugs can expand the health consumption market, optimize consumption structures, and boost domestic demand. Therefore, beyond reducing the burden of disease, innovative drugs can drive economic growth from both labor supply and consumption demand perspectives.

The social impact of pharmaceuticals measures the macroeconomic benefits brought by the restoration of patients’ ability to participate in paid and unpaid work after receiving treatment. Taking Roche’s innovative drugs as an example: In HER2-positive breast cancer, Roche’s innovative drugs have revolutionized the diagnosis and treatment paradigm for breast cancer. Compared to the previous generation of standard therapies, Roche’s innovative drugs generated 9.5 billion yuan in social benefits for China from 2019 to 2023 and is expected to continue creating 23.7 billion yuan in social benefits from 2024 to 2032. A study by Fudan University found that seven HER2-positive breast cancer targeted drugs included in the national medical insurance catalog will cover 1.57 million patients from 2023 to 2032. Compared to the previous generation of standard therapies, these targeted drugs will generate 89,000 quality-adjusted life years (QALYs) in health benefits and 32 billion yuan in social benefits. For retinal diseases represented by age-related macular degeneration and diabetic macular edema, the use of Roche’s innovative drugs is expected to create 4.6 billion yuan in social benefits for China from 2023 to 2032. One of Roche’s innovative influenza drug can effectively block virus transmission, reduce influenza cases, lower medical costs caused by influenza, and minimize productivity losses.

While fully recognizing the significant progress made in China’s health sector, it is also necessary to see that China still faces multidimensional disease challenges. The combined burden of disease, aging population pressures, insufficient domestic demand, and external challenges have placed higher demands on China’s health investment and the opening-up of its health industry. In 2021, the number of deaths from diseases in China was 11.64 million cases, with diseases causing 402 million disability-adjusted life years (DALYs) of disease burden. The accelerated aging process in China will reduce labor supply, increase the demand for chronic disease and major disease treatment, and continue to put pressure on the medical system and medical insurance funds. Insufficient domestic demand has become a challenge for China’s economy, and boosting domestic demand, especially consumer demand, also requires increased investment in health and other livelihood areas to expand the domestic health market. Externally, trade frictions and other changes have put pressure on China’s economy, which also requires China to continue to open up the health market and strengthen international cooperation in the health sector, encouraging and supporting foreign investment in the pharmaceutical industry. Therefore, whether from the perspective of alleviating the loss of labor caused by diseases and aging or solving China’s internal and external economic challenges, it is necessary for the Chinese government to continue to increase health investment, pay attention to the pharmaceutical industry as a representative of the health industry, and make it one of the key fulcrums for solving systemic problems, activating domestic demand potential, and breaking through external pressures.

It is worth noting that while China’s pharmaceutical industry has made remarkable progress, its immense potential in promoting national health and economic growth remains to be fully tapped. In 2023, the size of China’s pharmaceutical market reached 1.63 trillion yuan, ranking second globally. However, innovative drugs accounted for only 28% of the market, significantly lower than the level in developed countries (>50%). Even in some developing countries, such as Turkey, Saudi Arabia, Mexico, and South Africa, the proportion of innovative drugs in the pharmaceutical market is higher than in China. Among the 460 new drugs launched globally between 2012 and 2021, only 24% were approved in China, and merely 15% were included in the national medical insurance drug list. The proportion of national negotiation-based innovative drugs in total healthcare insurance expenditures over the years has also remained at just 2.8%, far below international levels. Challenges persist in the “last mile” of hospital access for innovative drugs. Obstacles include conflicts between payment mechanisms and cost-control policies, hospital performance evaluation systems and drug usage policies that crowd out innovative drugs, outdated hospital management and admission processes, as well as insufficient availability of innovative drugs in primary healthcare institutions—all of which hinder patient access to these medications. Additionally, efforts in early screening and diagnosis of key diseases, as well as the prevention and control of infectious diseases such as influenza, need further strengthening. Therefore, China must continue to advance and promote improvements across multiple dimensions, including healthcare investment, insurance coverage, drug accessibility, and industrial development. Enhancing patient access to innovative drugs should be regarded as a long-term and essential task, while fully leveraging the pharmaceutical industry—particularly the innovative drug sector—as a key driver of the macroeconomy.

To support the sustained development of China’s health sector, more effectively address the burden of disease, reduce the negative impact of diseases on China’s economic development, and fully utilize the role of the health industry, particularly the pharmaceutical sector, in addressing China’s internal and external challenges, this report proposes the following policy recommendations:

● Further increase government investment in health initiatives, raise the proportion of health expenditures in fiscal spending, and provide more resources to address the burden of disease and improve public health.

● Improve the multi-tiered protection mechanism for innovative drugs to fully leverage their role as “high-efficiency health investments”.

● Continuously enhance patient access to innovative drugs from the healthcare service side, meeting public health demands with high-quality medical products.

● Enhancing the openness of the pharmaceutical industry to the global market, promoting international coordination of regulatory policies, and providing a supportive policy environment for foreign enterprises to enter the Chinese market will help leverage the full potential of the international pharmaceutical industry in advancing China’s health sector.

Download the full report：Understanding the Social and Economic Value of Deepening High-Quality Development in Innovative Pharmaceuticals and Contributing China’s Socio-economic Connotative Development