Now that the vast majority — roughly 80% — of hospitals in China are moving to make improving clinical outcomes their top priority, some 60% of them say what they need most from pharmaceutical companies are innovative drugs. Ideally those drugs are made locally and are purchased using a centralized procurement department. 

That’s according to the annual analysis of APAC hospital priorities — which engaged 120 hospital executives across public and private providers in China — that L.E.K. Consulting sponsored for 2022.

The analysis focused on four key themes: priorities and preferences; volume-based procurement (VBP) and the country’s National Reimbursement Drug List (NRDL); digitalization and customer engagement; and financial outlook.

Close to 40% of drugs on the country’s NRDL are now listed there automatically vs. just 25% in 2021, while roughly half of them face prescription limits in public hospitals, down from some 70% last year. Meanwhile, spending on drugs through VBP in public hospitals continues to climb, hitting 50% in China’s Tier 1 cities even as sales efforts have increased in private hospitals. Notably, some of those NRDL and VBP products are shifting to the retail pharmacy channel, largely due to two things: the cap on drug spending share in hospitals, and the dual-channel policy, which was put in place in May of 2021. Also notable is how, in light of VBP and NRDL negotiations, hospitals don’t appear to be as price-sensitive as they were in 2021. 

Nearly a third of hospitals in China have adopted digital tools, up from just 23% in 2021, while the other two-thirds are either exploring or outright trialing the use of such tools. This is a favorable trend for pharma companies, as sales rep access to hospitals — and to physicians themselves — remains restricted, and digital tools can be used to support rep outreach. But while comfort around digital solutions is increasing along with evidence of their value, so are concerns related to patient privacy. 

In the meantime, between 75% and 90% of hospitals in the country have achieved a balanced budget or positive EBITDA margin. Public hospitals in particular have seen their economic conditions improve significantly since 2020.  

In light of the latest findings, pharma companies that sell into hospitals in China should be asking themselves the following questions:

  • How do we position our portfolio to demonstrate the ways in which we support the needs of hospitals?

  • How do we balance hospitals’ desire to have innovative drugs with their equally strong desire to lower their costs?

  • What can we do to rapidly expand the NRDL listing and prescription process? 

  • How can we optimize our sales and marketing resources in the face of the rising impact of VBP?

  • Is there a way we can support digitalization in hospitals? If so, how would it benefit us? 

  • Where does commercial outreach play a role in hospital digitalization?

  • What sorts of capabilities and organizational changes are needed to support hospitals’ adoption of digital solutions?

  • Does the financial outlook of hospitals in China impact our business and if so, how?

To learn more about what hospitals in China are prioritizing in 2022 and the strategic implications for pharma companies, please download our analysis.


Calvin Wijaya, Principal

Webster Guo, Senior Manager

David Ding, Senior Manager

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