Hanwha Asset Management, "Chinese Healthcare Companies Expand Investment Opportunities Due to Aging Population and Income Growth"

March Launch of 'China Select Healthcare Fund'

[Asia Economy Reporter Eunmo Koo] Attention should be paid to the growth potential of stocks of leading Chinese healthcare companies listed on the Chinese and U.S. stock markets. This is because China's aging population is progressing rapidly, and medical expenses are steadily increasing.

At a briefing held on the 25th at the Korea Financial Investment Association in Yeouido, Seoul, ahead of the launch of the 'China Select Healthcare Fund,' Gau Jeongji (高正姬), head of the China Equity Team at Hanwha Asset Management, said, "Considering the rapid aging of China and the increase in disposable income, investment opportunities in the healthcare industry are expected to expand."

Gau emphasized that attention should first be paid to the increase in medical expenses as incomes rise in China. He said, "Medical expenses are highly correlated with income levels," and predicted, "China's medical market will continue to grow alongside income increases." As of 2018, China's medical insurance expenditure was 1.78 trillion yuan, maintaining an annual growth rate of 15-20% over the past 15 years.

Currently, the market capitalization of Chinese healthcare listed companies is about 20% of that of U.S. healthcare listed companies, indicating significant expansion potential. Gau explained, "Mainland-listed healthcare companies have shown an average annual net profit growth of 13% over the past three years, and sub-sectors with low localization rates such as medical devices and biotechnology maintain high growth rates above 15% and favorable profitability." There are a total of 439 Chinese healthcare companies listed on the Chinese mainland, Hong Kong, and the U.S.

He also pointed out that policy-wise, the healthcare industry is being encouraged and the industrial structure is being reorganized toward efficiency, which is positive. Gau said, "Industrial restructuring is underway through drug approval systems, hospital system reforms, and improvements in drug procurement systems," adding, "This has led to strengthened research and development (R&D), increased localization rates, and expanded market share of leading companies within the Chinese healthcare industry." He also noted that the return of talented professionals with overseas experience is enhancing the technological competitiveness of Chinese companies.

The COVID-19 pandemic posed significant challenges to China's medical system but is expected to help the healthcare industry advance to the next level. Gau predicted, "Following this crisis, the number of new subscribers to China's leading online medical consultation services has increased tenfold, serving as a catalyst to accelerate upgrades in medical services and medical equipment."

This content was produced with the assistance of AI translation services.