China's healthcare reform plan will create a huge potential market for health-services providers, pharmaceutical companies and insurers.
"There are still more than 200 million people not covered by basic medical insurance. That will be the priority of the government over the next three years," Hu Xiaoyi, deputy minister of Human Resources and Social Security, said Wednesday.
The 850-billion-yuan (US$124.3-billion) reform plan encourages the government to purchase medical insurance services and explore ways to involve qualified commercial insurers to provide medical care services.
Li Yongquan, president of PICC Health Insurance Co Ltd, said the new policy will boost professional medical insurance services.
"It is necessary to encourage and support professional health insurance in order to improve the healthcare system," Li said.
The new health plan also calls for limiting the mark-up that hospitals and drug distributors can charge, and tries to regulate the price difference between patent and generic drugs.
Feng Haifeng, clinical trial manager of Cihna Otsuica Pharmaceutical Corporation, said: "The price of generic drugs is much cheaper than the price of patented drugs. For instance, the patented Japanese high blood pressure drug DONAR costs a patient 30 yuan a day, while the same generic drug just costs 8 yuan."
"I think the government's policy is aimed at encouraging domestic pharmaceutical factories to produce more generic drugs," he said.
Peng Sen, vice-director of the National Development and Reform Commission, said: "We will gradually cut the profit margin of drugs sold at medical institutions ... and implement zero profit margin for drugs sold at public clinics."
Howard Sui, managing director of pharmaceutical giant Merck Serono China, said the action plan will prompt "more residents to buy medicine since they will be covered by medical insurance".
The reform calls for the central government to fork out 330 billion yuan, or 40 percent of the cost of the program, through 2011, up from 23 percent in the past three years.
The shift in priorities to treatment and prevention means substantial demand for ultrasound and electrocardiogram machines, according to Frost & Sullivan's research.
As well, the new investment in health reform will generate at least US$1.5 billion in spending on safe ware, said Matt Wang, vice-president of IBM China, as 1,000 hospitals spend at least US$1.5 million each to set up electronic medical record and history cards.