Recently, the 18th Frost & Sullivan China Growth, Innovation and Leadership Summit 2024, co-hosted by Frost & Sullivan and LeadLeo, was successfully held at the Jing'an Ruiji Hotel in Shanghai. The theme of this year's Frost & Sullivan New Investment Conference is 'Gather Strengths to Win the Future with Quality'. It brings together the wisdom and efforts of the global industry, academia, and investment community to jointly explore new growth points, new markets, and new tracks for the Chinese economy in the new era.
Professor Wang Yu, President of the China Hepatitis Prevention and Control Foundation and former Director of the Chinese Center for Disease Control and Prevention
At the opening ceremony of the conference, Professor Wang Yu, President of the China Hepatitis Prevention and Control Foundation and former Director of the Chinese Center for Disease Control and Prevention, delivered a speech as a special guest. He emphasized the importance of investing in life sciences, believing that it is timely to discuss this in the context of a complex and changing economic environment. He proposed that economics manages wealth, while health management is related to life extension, which is the management of the most basic resource for people. Professor Wang Yu pointed out that when more and more people realize the need to pay attention to managing life resources, health consumption and healthcare expenditures will inevitably increase significantly. The development of the medical and health market has no substitute. It is hoped that this forum will adapt to the situation, open up new prospects, enhance confidence, and embrace growth.
*The following is the main content of Professor Wang Yu's speech, organized by Frost & Sullivan.
First of all, I would like to express my gratitude to Frost & Sullivan for their kind invitation. It is a great honor for me to participate in the 'Frost & Sullivan New Investment Conference'.
The guests present mainly come from enterprises with backgrounds in investment and life sciences, which also interprets the theme of the forum: Life Sciences and Investment. How can we thoroughly understand this topic? There is currently no good answer, and it depends on everyone's discussion together. Especially against the backdrop of the current complex and volatile global economy and politics, discussing how to invest in life sciences is timely.
The scarcity of resources gave rise to economics. Among the many definitions of economics, the most accessible one for the public is: economics studies how society manages its scarce resources. For humanity, scarce resources consist of two parts: wealth and life. Traditionally, economics only managed wealth resources.
Wealth management, including the acquisition, use, and possession of wealth, has a long history, dating back to the same era as private ownership. If Adam Smith is considered a milestone, it has been 250 years since then. Health management refers to the unrestricted enjoyment of a healthy lifespan. From the concept's inception until now, health has been the most important indicator of a happy life, emphasizing the relationship between '1' and '0', which has been less than 50 years old. Both wealth management and health management deal with scarce resources. The basic principle of economics is to pursue profit maximization without limits. The basic principle of health management is the indefinite extension of a healthy life.
For us individuals, there is a principle to keep in mind: wealth should not be managed by oneself while health is left to others or given priority over wealth management. Health management should span the entire life cycle, not just from birth to death, but even before birth.
The direct cost of health management is healthcare expenditure. The degree of economic and social development and prosperity of humanity is measured by the Engel coefficient as an indicator of consumption structure; in fact, the proportion of food, clothing, and other expenses in total consumption is getting lower and lower. The cost of health is measured by the proportion of healthcare expenditure in GDP. Over the past 20 years, the global proportion of healthcare expenditure in GDP has increased by 3%. Under the condition of rapid GDP growth, China's proportion of healthcare expenditure in GDP has miraculously increased by 10 times. Japan has long struggled to keep it below 10%, but still broke through this mark in 2010. It has increased by 3.8% over the past 20 years and reached a high of 10.82% in 2020. Therefore, except for a few countries, the indicators of all countries around the world are increasing and will surely continue to grow.
A famous American economist, William J. Baumol, pointed out in his writings that by the beginning of the next century, health expenditures in the United States will account for a major share of total spending, increasing from the current 16% to 60%, while other consumption will only account for 40%. This represents a view that 'medical and education costs will continue to increase while manufacturing costs will continue to decrease.' That is why computers are getting cheaper, while healthcare is the opposite.
Not only is there an overall growth, but there are also differences in consumption levels. The per capita health expenditure varies by 300 times between countries, with the largest difference between provinces and cities in China being 3.7 times, ranging from a maximum of 13,800 yuan per year to a minimum of 3,700 yuan per year. On average, China's per capita expenditure is 17 times lower than that of the United States.
The in-depth research in life sciences and the continuous emergence of pharmaceutical innovations provide strong support for the maintenance and management of life resources. As more and more people begin to attach importance to and manage their own life resources seriously, the growth of health consumption and healthcare expenditure will become an inevitable trend.
In summary, there is never a question of whether capital should invest in health; only whether the investment is appropriate. The development of the healthcare market cannot be replaced. It is hoped that this forum will 'respond to the current situation, open up new prospects, enhance confidence, and embrace growth'.
The above are just my humble understandings and experiences. If there are any inappropriate points, please feel free to criticize and correct me. Thank you!
