Medical tourism starts gaining traction

China should be an important player in this as well.



From BusinessWeek:

Yes, just like manufacturing facilities and call centers, health care is moving offshore. "All of the largest U.S. insurers are starting to educate themselves or are putting [offshore] programs in place," says Jonathan Edelheit, president of the Medical Tourism Assn., an industry group formed just last year. Companies that self-insure are also bombarding Edelheit's group with requests for information.



Getting covered employees to leave the U.S. won't be that hard, says Edelheit. An insurance company could waive all deductibles and co-pays, offer to cover travel costs for the patient and family members, even throw in a cash incentive, and still save tens of thousands of dollars. After all, a heart procedure that costs $100,000 in the U.S. runs only $10,000 to $20,000 at some of the best private hospitals in Asia. And the quality of care? Foreign hospitals in such arrangements are typically approved by Joint Commission International, part of the same nonprofit organization that accredits American hospitals.



Blue Cross took the lead in medical offshoring when it formed its first partnership, with Bumrungrad Hospital, in February. Since then the insurer has signed similar pacts with the Parkway Group Healthcare, owner of three hospitals in Singapore, and hospitals in Turkey, Ireland, and Costa Rica. Three members of India's Apollo Hospitals Group are also joining the network. And another large Indian chain, Wockhardt Hospitals, is talking with U.S. insurers as well. "Americans haven't come to grips with having their heart surgery in Thailand," says Curtis Schroeder, the American CEO of Bumrungrad. "But that will change."

PRC Pharma R&D group makes US acquisition

Another example of the consummation of Chinese ambitions to acquire both technical expertise and market access, this time in pharma.

WuXi PharmaTech (NYSE: WX), China's premier provider of pharmaceutical R&D outsourcing services has signed a definitive agreement to acquire US-based AppTec Laboratory Services, Inc. (AppTec).



The acquisition of AppTec allows WuXi PharmaTech to immediately obtain biologics capabilities and expertise, gain a significant U.S. operational footprint, and expand its customer base and addressable market size.



The combined business operations of WuXiPharmaTech and AppTec in both the U.S. and China will enable WuXi PharmaTech to provide a full service suite of outsourced chemistry and biology services to global pharmaceutical, biotechnology and medical device clients.



The transaction consideration totals approximately $151 million and the assumption of debt held by AppTec totaling approximately $11.7 million.

Cancer immunotherapy trials in China?

It's unclear whether there's any substance behind this. The company seems a bit sketchy but, as his bio below shows, Dr. Daopei Lu is certainly a distinguished member of the medical community.

Generex Biotechnology Corporation (GNBT) announced it would stage the Phase I trial of its cancer immunotherapy in China. The trial will be performed in collaboration with Dr. Daopei Lu and the Beijing Daopei Hospital in Beijing, China. Dr. Lu, a hematologist-oncologist, has conducted many clinical trials and authored over 200 articles in peer-review journals.




Dr. Lu simultanously acts as a vice president of the Chinese Medical Association, chairman of the Society of Hematological Malignancies, Chinese Anti-Cancer Association and a member of the Advisory Committee of international Bone Marrow Transplantation Registry. In addition, he is also editor in chief, deputy editor in chief or editor for eight domestic medical journals and an editorial member of two international journals.

Wen Jiabao turns to health care and other social services

As the except below from the FT explains, Premier Wen Jiabao's (sometimes referred to as "Grandfather Wen" for his empathetic manner towards the common people or laobaixing) focus on domestic issues is a response to very real problems in China as well as a way to distinguish the current regime from the previous one. Because of these two powerful incentives, this policy orientation should be durable and will benefit businesses in health care and education, especially those with products or services suitable for the less well off.

Mr Wen has spurned the bright lights of the "new China" and the heavily publicised meetings with foreign business leaders that were a feature of the administration of Jiang Zemin and Zhu Rongji. Instead, he has played empathiser-in-chief, sharing meals with migrant workers, hugging Aids sufferers and heading underground for photo opportunities with black-faced coal miners.





Part of his approach is Politics 101 for any incoming government, which needs to distinguish itself from its predecessor before striking out on its own. And part is because foreigners, by and large, do not need cultivating any more. They are already here, or on their way. But most of all, Mr Wen's approach is an acknowledgement of the deep fissures left by China's rush for growth and the collapse of education, health and social services for the poor in cities and the countryside in the past decade.

Government spending on health care to increase 7x by 2016

With the country on a relatively sound fiscal footing, the PRC government is turning to major domestic issues like health care. According to the WSJ, government spending on health care will reach US$170 billion in 8 years.



This should be especially beneficial for domestic medical device companies like Mindray.

Liu Yanming, an analyst with Galaxy Securities, expects government funding for health care to soar to about 1.2 trillion yuan (roughly $170 billion) in 2016 from about 170 billion yuan in 2006.



Du Jinsong, an analyst based in Hong Kong for Credit Suisse, says some medical-device companies will benefit from this increased spending. Mr. Du estimates that revenue in China's medical-device market will grow an average of 20% a year between 2007 and 2010.

Shenzhen med device company buys sales network in US for $202 million

As I've said elsewhere, companies with established sales (and distribution) networks in the U.S. will become increasing attractive acquisition candidates for Chinese firms looking to access what is still, by far, the biggest market in the world.



From 3/11/2008 WSJ:

Mindray Medical International Ltd., one of China's top medical-device makers, will acquire Datascope Corp.'s patient-monitoring business for $202 million, Mindray said, securing a foothold in the U.S. market as the company strives to become an international competitor.



The deal between Mindray, of Shenzhen, and Datascope, of Montvale, N.J., comes as Chinese health care companies increasingly look to overseas markets to build on profits made on low-cost manufacturing at home.



The purchase of the Datascope business, which had revenue of $161.3 million last year, will give Mindray access to Datascope's network of sales and service representatives, some 90 people who peddle the company's products to hospitals and surgery centers across the U.S. Building that kind of network from scratch would have been a challenge, said Joyce Hsu, Mindray's chief financial officer, who confirmed the deal.

Gates Foundation tackles HIV in China

Another example of how Seattle is assuming a role of strategic importance for US-China relations.



From 11/14/2007 WSJ:

With an initial foundation grant of $50 million and China's chipping in funds of its own, the partnership will push prevention in 12 major cities, including Beijing, Shanghai and Guangzhou, and the island province of Hainan. The aim will be to find people at high risk of AIDS and refer them to voluntary counseling and testing centers, which will offer education and tools to avoid the deadly virus. For people with HIV, the program will stress not passing it on.



The $35 billion Gates Foundation, which was created to tackle problems affecting global health, education and family issues, usually prefers to design its own programs and to put them into practice by teaming with nonprofits. But Beijing's centralized control made it necessary to collaborate with health, security and Communist Party agencies; indeed, it took four years of diplomacy by Mr. Gates before Beijing would permit his organization to register as a foreign foundation.



The Gates-funded AIDS Media Project has produced television spots showing Houston Rockets basketball star Yao Ming and former Los Angeles Laker Magic Johnson -- who is HIV positive -- shooting hoops and sharing takeout food to emphasize that casual contact with infected people is safe.