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The Healthcare Industry in the Guangdong-Hong Kong-Macao Greater Bay Area: A Growing Opportunity for Foreign Investors

The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) in China, which includes Hong Kong SAR, Macau SAR, and nine cities in Guangdong province, has a rapidly growing healthcare industry with significant potential. The region has a permanent population of nearly 80 million people with a growing middle class with higher disposable incomes. This demographic shift in the GBA and an increasingly ageing population as well as pandemic influences in China are driving huge demand for high-quality healthcare services.

The region also has a thriving biotech industry, which is supported by government policies and initiatives such as tax breaks and grants, with several biotech parks and research centres, and has attracted significant investment from both domestic and international investors.

Photo by Edward Jenner:

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Healthcare industry scale in the GBA

The Chinese government has recognized the potential of the healthcare industry in the GBA and has announced plans to invest heavily in the sector. These investments will focus on improving healthcare infrastructure, expanding access to healthcare services, and promoting innovation in healthcare technology.

According to statistics, the market value of China’s newly listed biopharmaceutical innovation enterprises soared from $3 billion in 2016 to more than $380 billion in mid-2021. During the 13th FYP (2016-2020), Guangdong’s bio-pharmaceutical output value grew at an average annual rate of 13.7%, much higher than the compound annual growth rate of the province’s GDP. Guangdong has around 2,000 pharmaceutical production or wholesale enterprises, ranking at the forefront of the country; a total of over 4,000 medical device manufacturing enterprises, which accounts for about 15% of the national total, ranking first in the PRC; nearly 150,000 medical device business enterprises, accounting for about 17% of the national total. The total industrial output value of the medical device ranks first in the PRC.

Hong Kong SAR is strategically designated as the MedTech development hub in the GBA. The “Hong Kong and Macao Medicine and Equipment Connect” policy enables drugs and medical equipment that are already on the Hong Kong market to be used by designated medical institutions in the GBA after approval. In addition, the authorities of Guangdong and Hongkong SAR signed the MoU on Collaboration in the Supervision of the Safety of Medicines and Medical Instruments in the GBA. The local authorities are promoting mutual benefit, joint development and deeper integration of the healthcare industry in the GBA, as well as accelerating the standardisation and internationalisation of the regional healthcare industry.

In accordance with the “20+8” industry cluster layout strategy, Shenzhen takes the two industry clusters, which include high-end medical devices and biomedicine as the core engine, and the big health industry cluster to structure the application scenario, focusing on the layout of synthetic biology, cells and genes, brain science and brain-like intelligence and other future industries.

Business opportunities for different sectors

There are several business sectors that pose opportunities for foreign investors in the healthcare industry in GBA. Some of these opportunities include:

  1. Healthcare Services: There is a significant demand for high-quality healthcare services in the GBA, particularly in areas such as elder care, chronic disease management, and mental health. Foreign investors can explore opportunities to invest in healthcare facilities, such as hospitals and clinics, or partner with local healthcare providers to offer specialized services.
  1. Biotech Industry: The GBA has a rapidly growing biotech industry, driven by government policies and incentives. Foreign investors can explore opportunities to invest in biotech startups or partner with local companies to develop and commercialize new products and technologies.
  2. Medical Equipment and Technology: The GBA has world-class healthcare facilities, including hospitals, research centres, and Universities with prominent medical specialities such as the University of Hong Kong, the Chinese University of Hong Kong, and the Guangzhou Medical University. In addition, the region is investing heavily in healthcare technology, including the development of a “smart healthcare” system that leverages technology to improve healthcare outcomes. Foreign investors can explore opportunities to invest in medical equipment and technology companies or partner with local startups to develop and commercialize new technologies.
  1. Healthcare Tourism: The GBA is promoting healthcare tourism, which involves attracting patients from overseas countries to receive medical treatment in the region. Foreign investors can explore opportunities to invest in healthcare facilities that cater to international patients or partner with local healthcare providers to develop specialized services for international patients.
Challenges for foreign investors

While there are several opportunities for foreign investors in the GBA’s healthcare industry, there are also several challenges that they may face. Some of these challenges include:

  1. Regulatory Environment: The regulatory environment in China can be complex and challenging for foreign investors to navigate, especially in highly regulated industries such as healthcare. Foreign investors must ensure that they comply with all relevant regulations and obtain the necessary licenses and permits to operate in the region.
  2. Cultural Differences: The GBA has a unique cultural and business environment, which can be challenging for foreign investors to navigate. Foreign investors must understand the local culture and business practices to build successful relationships with local partners and customers.
  3. Intellectual Property Protection: The protection of intellectual property rights in China can be a challenge for foreign investors. It is important for foreign investors to take steps to protect their intellectual property, such as registering patents and trademarks, and implementing effective strategies to prevent infringement.
  4. Talent Acquisition: The GBA has a highly competitive talent market, with a shortage of skilled healthcare professionals. Foreign investors must develop effective talent acquisition strategies to attract and retain the best talent, such as building relationships with universities, offering competitive compensation packages, providing career development opportunities, recruiting internationally, and leveraging technology to streamline the recruitment process.
Success stories of larger foreign investors in healthcare industry in GBA

There are several success stories of foreign investors in the healthcare industry in the GBA. Here are a few examples:

AstraZeneca: The UK-based drug company AstraZeneca is a global science-led pharmaceutical company which ranks among the largest drug companies in the world. Their main therapy areas are oncology, biopharmaceuticals, cardiovascular, renal and metabolism, respiratory & immunology, vaccines and immune therapies, and rare diseases. Its China Southern Headquarters is located in Bio Island of Guangzhou Huangpu Development Zone, responsible for marketing, innovation, incubation, and technical support of the GBA and southern China.

Merck: A leading science and technology company in Germany specializing in three business sectors: Healthcare, Life Science and Electronics. In China, Merck innovation center has been launched in Bio Island of Guangzhou Huangpu Development Zone in 2019. On 2 March 2021, Merck signed a Memorandum of Understanding (MoU) to begin strategic collaboration with Guangzhou Pharmaceutical Holdings Limited, China’s leading pharmaceutical company, to explore new business model innovation in light of the unique development opportunities for the biopharma industry in GBA.

Sanofi: Beginning as a local French enterprise, Sanofi is now positioned as a leading innovative global healthcare company focusing on developing breakthrough medicines and vaccines. In 2019, Sanofi and the Shenzhen government signed a MoU regarding a strategic cooperation in vaccine innovation. On 4 April 2023, Sanofi signed a partnership agreement with the Pingshan district government in Shenzhen to accelerate the introduction of innovative vaccines to the Chinese market. Thomas Triomphe, executive vice-president, head of vaccines, Sanofi, said the company’s growth in China is largely due to the open, international business environment in Shenzhen city and Pingshan district.

Success stories of SMEs in healthcare industry in GBA

While larger multinational companies have significant resources and established relationships in the region, Small and Medium-sized Enterprises (SMEs) can leverage their agility and innovation to carve out a niche in the market. Here are a few examples of successful SMEs in the GBA’s healthcare industry:

EDDA Technology: it is a medical imaging company based in Hong Kong SAR, with a focus on developing innovative solutions for medical imaging analysis. Its products are used in hospitals and clinics around the world.

Health View Bioanalytic: it is a medical diagnostic company based in Hongkong, with a focus on developing innovative solutions for cancer diagnosis and treatment monitoring. Its products are used in hospitals and clinics throughout China.

IMEX Dental Group: founded in 1995 in Germany, it is one of the largest providers of dental lab work and unique services in the German dental market. Its subsidiary in Shenzhen is for dental equipment and apparatus manufacturing. 

What can CW do for you?

The healthcare industry in the Greater Bay Area offers significant potential for growth and development, driven by a large and expanding market, favourable government policies, and a strong focus on innovation and technology. For foreign investors interested in this sector, CW CPA can provide valuable assistance in several ways.

Firstly, we can provide investors with up-to-date information about the healthcare sector in the GBA, including trends, regulations, and investment opportunities.

Secondly, we have a robust network of contacts in the GBA and can help investors to identify potential partners and collaborators to make their investment a success.

Thirdly, we can help investors navigate the complex bureaucracy of doing business in China. With over 30 years of experience, CW CPA is a professional advisory firm strategically located in the heart of the GBA, with offices in Hong Kong, Shenzhen, Guangzhou, and Shanghai. We can provide tailored and total solutions to help investors set up their business, enter the market and grow their business in the GBA.

If you are ready to explore the abundant opportunities that the GBA has to offer in the healthcare sector, contact us today to discuss how we can assist you in starting your China business in the GBA.