Developments in China's Healthcare Industry

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Oct 27, 2017, 10:20 ET

NEW YORK, October 27, 2017 /PRNewswire/ --

China's healthcare market is projected to grow at an unprecedented CAGR of about 12% to reach $1 trillion by 2020, up from $357 billion in 2011, as estimated in a recent report from McKinsey & Co. The government in China has decided to take major steps to improve the local healthcare infrastructure. According to a report by the Health Industry Summit, last October the Chinese government approved a blueprint called "Healthy China 2030", pledging to build a healthy China in the next 15 years. By 2030, the size of the healthcare market is expected to reach $2.3 trillion. From pharmaceuticals to medical products to consumer health, China is one of the most attractive markets in the health industry, and is fastest-growing of all the large emerging markets. Shineco Inc (NASDAQ: TYHT), JD.com (NASDAQ: JD), Hutchison China MediTech Ltd (NASDAQ: HCM), iKang Healthcare Group Inc (NASDAQ: KANG), Beigene Ltd (NASDAQ: BGNE)

A research by McKinsey & Co. points out the significant affect healthcare reforms had on the system in China, "Three themes will shape China's health-care market: the continuation of economic and demographic trends, further health-care reform, and the policies articulated in the government's 12th five-year plan. Some of these forces - such as improvements in infrastructure, the broadening of insurance coverage, and significant support for innovation - will have positive implications for multinational companies… Health-care expenditures have more than doubled - from $156 billion in 2006 to $357 billion in 2011 - inching closer to 5 percent of the country's GDP. From pharmaceuticals to medical devices to traditional Chinese medicine, almost every health sector has benefited."

Shineco Inc (NASDAQ: TYHT) announced breaking news that the company, "a producer and distributor of Chinese herbal medicines, organic agricultural products, specialized textiles, and other health and well-being focused plant-based products in China, today announced that the Company, through its subsidiary Tianjin Tajit E-Commerce Ltd., has obtained contractual rights to distribute branded products of Daiso Industries Co., Ltd.("Daiso"), a large franchise of 100-yen shops founded in Japan, via JD.com (NASDAQ: JD), the largest e-commerce company and largest retailer in China.

Pursuant to the contractual arrangement, Shineco is authorized to distribute Daiso's branded products and utilize its brand names in connection therewith in China through Tianjin Tajit E-Commerce Ltd. The cooperation between Shineco and JD includes many business initiatives, covering a broad spectrum of online retail. It allows the Company to access JD's significant online customer base to advance Shineco's business pursuit in China. JD will leverage Shineco's business expertise, and Shineco will serve as JD's authorized vendor for providing its customers with access to a wide range of products of Daiso.

JD and Shineco is expected to join forces on promoting innovation of online retail business model, which is expected to improve Shineco's brand awareness and might result in enhanced marketing and continued growth.

Mr. Yuying Zhang, Chairman and Chief Executive Officer of Shineco, stated, "We are excited about teaming up with China's e-commerce giant JD and Japan's retail giant Daiso, and the potential market that new relationship can bring to our business. JD's vast online retail channel will enable us to distribute Daiso's products in a more efficient and economical manner to meet the growing consumer demand in China, which further drives the Company's fast expansion in e-commerce, enhances the influence of the Company and builds up the brand awareness of Shineco."

Mr. Zhang continued, "As the market globalization and digital transformation continues to challenge traditional business concept, we need to develop the business faster and in a more flexible way. Distributing Daiso branded products via JD would be an exciting leap in this transformation and allows us to move forward with an even greater focus on innovation and development to meet changing customer needs in China. Given the fact that Daiso can now benefit over 20 million Chinese families, this part of our business is expected to achieve an annual growth rate of 20%. We look forward to offering customers a tremendous number of Daiso's quality products not previously widely available across China through JD."

Hutchison China MediTech Ltd (NASDAQ: HCM) on October 16th reported preliminary clinical activity, safety, and tolerability data of fruquintinib, an investigational selective inhibitor of vascular endothelial growth factor ("VEGF") receptor given in combination with Iressa. Preliminary data from this Phase II proof-of-concept trial, the first study assessing combining fruquintinib with another tyrosine kinase inhibitor, demonstrated promising efficacy and an acceptable safety profile. "Having proven efficacy as a monotherapy in colorectal cancer, fruquintinib is now demonstrating its tolerability and efficacy in innovative combinations which are made possible because of its high kinase selectivity, negligible off-target toxicity, and clean drug-drug interaction profile," said Mr. Christian Hogg, Chief Executive Officer of Chi-Med.

iKang Healthcare Group Inc (NASDAQ: KANG) is one of the largest providers in China's fast-growing private preventive healthcare space through its nationwide healthcare services network. Earlier in July announced its strategic partnership with BAHEAL Intelligent Technology to introduce IBM Watson for Oncology cognitive computing solutions into iKang service platform and jointly establish IBM Watson for Oncology Centers in China. This partnership is part of the recently launched iKangCare+ and iKangPartners+ initiatives. Both companies will collaborate to build the IBM Watson for Oncology Center within existing 108 and future iKang medical centers.

Beigene Ltd (NASDAQ: BGNE) is a commercial-stage biopharmaceutical company focused on developing and commercializing innovative molecularly targeted and immuno-oncology drugs for the treatment of cancer. presented preliminary data from the dose-verification portion of the ongoing Phase 1/2 trial of its investigational anti-PD-1 antibody BGB-A317 in Chinese patients with advanced solid tumors. BeiGene and Celgene Corporation have a global strategic collaboration for BGB-A317 for solid tumors; BeiGene retains exclusive rights to BGB-A317 in China. "BGB-A317 was generally well tolerated and showed preliminary activity in a heavily pretreated study population with advanced solid tumors. At the time of the data cut-off, no dose-limiting toxicities were observed. The pharmacokinetic profile in Chinese patients was consistent with that reported in global trials of BGB-A317 at the registrational dose," commented Professor Lin Shen of the Peking University Cancer Hospital and Beijing Institute for Cancer Research, Beijing, China.

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