China Healthcare 2025: Policy-Driven Growth, Reform Risk, and the Investment Outlook

The Doctor Will See You Now — If the NDRC Approves the Invoice

Good Afternoon,

It’s Healthcare time! WE’re dedicating the next 2 weeks to discussing the China Healthcare space in detail. It is undergoing one of the most far-reaching transformations in the country’s modern economic history. Against the backdrop of an ageing population, rising healthcare demand, pricing reforms, and geopolitical friction, Beijing is remaking the sector from the ground up: from drug tenders to data governance.

For investors, this presents a rare opportunity: structural growth supported by policy, but deeply shaped (and at times constrained) by the state’s dual priorities of control and affordability. The winners will be companies that align with national goals while maintaining margin resilience and capital discipline.

We are splitting up our coverage the space in to 4 articles:

Policy-Driven Transformation (This Article):A macro and regulatory overview anchored in key reforms, demographics, and system design. We discuss the beneficiaries and losers of the policy framework . We touch on some companies on this report but without doing detailed valuations or multiples based arguments. (This article)

Innovation & Global Competition (coming later this week): Examining biotech pipelines, cross-border licensing, AI integration, and China’s push into global medtech and health exports.

Innovation Leaders vs. Traditional Players (Coming next week): A comparative look at company models, with a focus on SOE vs POE dynamics, capital efficiency, and market structure.

Sub-Sector Deep Dives (Coming at the end of Next week): A bottom-up view of the major healthcare verticals: hospitals, diagnostics & devices, pharma & biotech, digital health platforms, and insurance/payment.

Together, these articles aim to provide a grounded, investable framework for understanding where long-term opportunities that lie within China’s $1.3 trillion healthcare economy. We believe this will be a very interesting set of articles for our premium subscribers, as it’s been by far the most requested sector to add to our coverage universe. We are happy to oblige, but for now this entire section will be paywalled to a significant degree. Do join up if you are interested in the space.

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Right now, we’re working with clients on China’s consumer landscape, the 2Q25 macro outlook, and yes robotics.

See what we offer here, and connect with us today or message us directly.

Nothing in this Substack is Investment Advice. This information is provided for informational purposes only and does not constitute financial, investment, or other advice. Any examples used are for illustrative purposes only and do not reflect actual recommendations. Please consult a licensed financial advisor or conduct your own research before making any investment decisions. The authors, publishers, and affiliates of this content do not guarantee the accuracy, completeness, or suitability of the information and are not responsible for any losses, damages, or actions taken based on this information. Past performance is not indicative of future results.

China will have more people over 60 than the entire population of the United States by 2035 — and its healthcare system is being remade from the ground up. This demographic tsunami, combined with the most comprehensive healthcare policy coordination in China's modern history, is creating investment opportunities worth trillions of yuan while fundamentally reshaping competitive dynamics across every healthcare sub-sector.

The numbers are staggering. Healthcare expenditure has surged from RMB 6.6 trillion in 2020 to RMB 9.1 trillion in 2024, yet still represents only 6.6% of GDP compared to the OECD average of 9.7%. Government projections target RMB 205 trillion in total healthcare market value by 2030 a 22-fold increase that encompasses everything from AI-powered diagnostics to commercial insurance products that barely existed five years ago.

But this isn't just a growth story. The "Three Medical Reform" initiative, that coordinates medical treatment, reimbursement, and medicine access, represents the most systematic healthcare transformation attempted by any major economy. Unlike market-led evolution in Western countries, China's policy-driven approach creates clear winners and losers, with government procurement preferences, pricing mechanisms, and regulatory frameworks determining which companies capture value from this historic expansion.

For investors, the implications are profound. Domestic healthcare companies have increased market share from 35% to 55% in medical devices over the past decade, while biotech licensing deals have exploded from 2billionto2billionto18.3 billion year-to-date in 2025. Yet regulatory risks remain substantial, with Volume-Based Procurement (VBP, a government-mandated tendering system that trades massive volumes for sharp price cuts) forcing 50-80% price cuts on included products and platform regulation creating uncertainty for digital health leaders. Understanding these policy dynamics isn't optional — it's essential for investment success in the world's second-largest healthcare market.