CEC Capital Releases 2025 China Healthcare Industry White Paper

CEC Capital, China's leading boutique investment bank, recently released the 2025 China Healthcare Industry White Paper, offering an in-depth analysis of industry trends and future investment opportunities driven by three key drivers: policy initiatives, demographic shifts, and technological innovation. The white paper projected that China’s healthcare industry would reach RMB 11.5–12.0 trillion in 2024, reflecting 9%–10% year-on-year growth, largely driven by the expansion of medical services, digital health, and adjacent healthcare sectors.

Amid broader macroeconomic restructuring, five key investment themes have emerged: the elderly care economy, intelligent healthcare, global IP commercialization, bio-manufacturing, and industry consoidation. These themes not only define the industry’s evolution over the next five to ten years, but also serve as forward-looking investment roadmaps for capital markets.

I. Elderly Care Economy Enters Explosive Growth Phase: Parallel Advances in Technology and Increasing Consumer Spending

China is undergoing the world’s largest and fastest population aging process. By 2024, the population aged 60 and above will reach 310 million, accounting for 22% of the total population; this figure is projected to exceed 400 million by 2035, ushering in a phase of rapid aging. This demographic shift is fueling surging demand across sectors such as medical nutrition, chronic disease management, rehabilitation care, and disability services, driving the formation of a trillion-yuan elderly care economy.

The medical food sector, a segment of tailored nutrition intervention, has reached a market size of RMB 23.4 billion in 2024, with a 30% CAGR. The sector’s rapid evolution—from clinical settings toward mainstream consumer markets—is being propelled by faster regulatory approvals, expanded medical insurance coverage, and corporate innovation in synthetic biology and AI-driven personalized nutrition.

Chronic disease management is undergoing a fundamental shift from reactive treatment to proactive and predictive care through AI integration. AI-powered dynamic risk prediction systems can now enable six-month early warnings for disease complications, while personalized behavioral intervention tools are transforming care delivery across both in-hospital and out-of-hospital settings.

The rehabilitation medical sector also exhibits strong, inelastic demand growth. Currently, China has just 823 rehabilitation hospitals, creating a significant supply-demand gap. In response, policymakers are promoting private chain expansion, while emerging technologies—such as exoskeleton robotics and VR-based rehabilitation systems—are being progressively deployed to enhance patient outcomes.

In the disability care segment, there is an estimated shortage of 6 million beds. The government is accelerating the rollout of integrated medical and elderly care policies, with intelligent, chain-based care models expected to become the dominant approach.

Simultaneously, the integration of AI with wearables, companion robots, and brain-computer interfaces (BCI) is enabling safer, more intelligent home-based elderly care solutions. For example, BCI technologies are showing promising potential in early Alzheimer’s screening and motor function restoration, with the global BCI market projected to reach $6.5 billion by 2030.

II. AI and Robotics Drive Intelligent Leap in Healthcare, Transforming the Entire Diagnostic-to-Treatment Value Chain

The rapid rise of generative AI and robotics is propelling China’s healthcare system from isolated instrumental intelligence toward fully integrated systemic collaboration. The white paper highlights that this new wave of innovation is driving deep transformation across the entire diagnostic-to-treatment continuum, spanning diagnostic assistance, drug discovery, and rehabilitation care.

In medical imaging diagnosis and surgical assistance, AI is dramatically enhancing capabilities within China’s primary healthcare system. In county-level hospitals, the role of AI-assisted diagnostic systems has evolved from basic tools to decision-support platforms. On the technology front, multimodal data integration—combining imaging, pathology, and genetic data—has begun to overcome the inherent limitations of traditional single-point optimization in healthcare delivery.

Generative AI is also revolutionizing drug discovery. For example, Insilico Medicine’s AI platform has reduced drug development cycles to 18 months at roughly one-third the traditional cost. China now hosts more than 300 AI-driven drug pipelines, achieving a 43% innovation rate in novel drug target discovery.

Home healthcare is emerging as a key frontier for AI and robotics adoption. Recent expansions in long-term care insurance now cover certain smart devices, accelerating the market entry of rehabilitation robots and related products through innovative "hardware + service + insurance" business models. Data indicates that a 1 percentage point increase in smart equipment penetration can reduce nursing costs by over 20%.

However, scaling these technologies still faces key challenges. AI algorithms in healthcare remain heavily reliant on overseas open-source models, while data silos, ethical considerations, and reimbursement delays continue to hinder widespread adoption. The white paper recommends building a collaborative framework that integrates technology, institutional support, and humanistic care, enabling the distributed transformation of healthcare resources—from high-end concentration to grassroots accessibility.

III. Globalization of IP Accelerates: NewCo Model Reshapes Overseas Expansion for Chinese Pharma and MedTech Companies

As China evolves from a manufacturing hub into a leader in intellectual property (IP) exports, its global R&D footprint continues to expand. By 2025, China’s share of the global drug development pipeline is projected to reach 29.5%, while the country maintains its position as the world’s top patent filer for the 11th consecutive year.

The globalization of innovative drugs has become a defining trend, with the NewCo transaction model gaining rapid traction. This model facilitates the international commercialization of Chinese IP through a combination of product licensing and equity investment, typically establishing a new overseas company backed by foreign capital. A notable example is Hengrui Pharmaceuticals, which licensed its GLP-1 product to a U.S. company via a NewCo structure, securing a transaction value exceeding $6 billion, while retaining 19.9% equity to share in long-term value creation.

The medical device sector is also actively adopting the NewCo model, particularly for high-technology products with strong international demand—such as femtosecond laser equipment—where domestic import substitution needs and global market validation are driving parallel growth trajectories.

At the same time, pricing pressures from China’s national volume-based procurement (VBP) policies are compelling companies to accelerate technology exports as an alternative value creation pathway. The white paper notes that companies equipped with overseas compliance capabilities and robust cross-border transaction frameworks will enjoy a first-mover advantage in the increasingly competitive global market.

V. M&A Enters Rational Integration Cycle, Driven by Dual Forces of Localization and Globalization

China’s healthcare M&A market is entering a new phase defined by “substance over form.” In 2024, total healthcare M&A transaction value reached RMB 75 billion, approaching historical highs—reflecting the sector’s shift from capital-driven deals to transactions focused on industrial synergy.

A-share listed companies are at the forefront of this trend, with their M&A strategies evolving from “market capitalization management” to a focus on resource integration and technological positioning. At the same time, the ongoing capital winter has brought valuations back to rational levels, pushing high-quality assets with core technologies and industrial capabilities into sharper focus.

Transaction structures are becoming more flexible and adaptive. Common deal arrangements now include equity payments, asset swaps, and participation by local state-owned entities. This emerging M&A paradigm places new emphasis on companies’ ability to deliver both industrial synergy and cross-border resource integration. Moreover, in response to geopolitical pressures, many companies are pursuing a dual-track strategy of “domestic self-sufficiency + technology export.”

The white paper notes that going forward, enterprises with sophisticated integration capabilities and cross-market operational expertise will lead the next wave of M&A activity in China’s healthcare industry.

IV. Bio-Manufacturing Advances Toward Trillion-Yuan Platform Industry, Reshaping Multiple Foundational Sectors

Bio-manufacturing is rapidly emerging as a platform industry, fundamentally reshaping sectors such as pharmaceuticals, food, and agriculture through its critical role as new industrial infrastructure. In 2024, China’s bio-manufacturing market reached ¥476.2 billion, achieving year-on-year growth of over 15%. Looking ahead, the market is projected to surpass ¥1.8 trillion by 2030, with a compound annual growth rate (CAGR) of 21%.

On the production capacity front, China now accounts for 70% of global fermentation capacity, underscoring significant scale advantages. On the technology front, numerous segments—ranging from bio-based polymers to human milk oligosaccharide (HMO) fermentation—are beginning to displace conventional manufacturing processes. For example, bio-based materials are expected to replace 85% of traditional plastic demand by 2030.

Globally, China and the U.S. are forming a dynamic relationship of “coopetition”: while the U.S. retains leadership in foundational technologies such as synthetic biology and gene editing, China is demonstrating strengths in application-layer development and industrialization efficiency, driven by its large domestic demand market and strong policy support.

The white paper identifies bio-manufacturing as one of the most promising sectors for applying the NewCo model. Beyond serving China’s 1.4 billion-person domestic market, Chinese companies are aggressively expanding into the global high-value markets serving a population of 8 billion. In doing so, they are establishing global technology collaboration networks and driving commercial transformation at scale.