Health sovereignty in the digital age: China shows more urgency
23 février 2022
The infamous « mask crisis », at the beginning of the pandemic, during which developed countries were fighting over shipments right up to the tarmac of Chinese airports, triggered an awakening on the issue of healthcare sovereignty in Europe and the United States. Meanwhile, China decided to remedy its own dependence on developed economies in the more strategic field of advanced medical equipment. This issue will be at the heart of the global technology race, just like electronics, as digitalization through the use of consumer devices starts to revolutionize the medical sector.
Diabetes and Cardiovascular Diseases Are the True Battlegrounds of Health Sovereignty
The urgency does not arise so much from the Covid pandemic as from the more pernicious wave of cardiovascular diseases and type 2 diabetes (the one that appears, in principle, in adulthood). These diseases have long been seen as the preserve of rich countries. The crisis is now affecting developing countries, with the rapid change in lifestyles and the invasion of sugar and ultra-processed food in diets.
It is often – rightly – mentioned that the Chinese population is aging, but more importantly, its general health is deteriorating even faster… 10.6% of Chinese adults (age-adjusted) have diabetes, up from hardly-measurable levels thirty years ago (7% today in Europe, 10.7% in the U.S.), more than half suffer from metabolic syndrome (combining the major aspects of diabetes and cardiovascular disorders), more than half are now overweight. Last but not least, more than half of Chinese men smoke… so much so that, according to the WHO, one out of three cigarettes in the world is smoked in China.
The « Made in China 2025 » Strategy Is Shaking Up the Medical Market
The medical sector is now experiencing a major shift due to the trade and technology war. However, this is not so much due to the developed countries’ awareness of their vulnerability, for basic products and active principles of drugs (mostly coming from China), as to Chinese measures aiming at gaining autonomy from American and European companies, as part of its « Made in China 2025 » objectives. This policy has already helped transform China’s trade deficit in the medical technology sector from €1.3 billion in 2019 to a surplus of €5.2 billion in 2020, according to a study by the ECIPE institute.
This sectoral performance might seem insignificant, as its overall trade surplus culminated at $676 billion last year. In fact, this development has far-reaching consequences. Medical technologies are about to be upended by personal electronics, another focal point of the Chinese economy, from smartphones and smartwatches to the proliferation of modular sensors for widespread medical monitoring. What is at stake today is not a simple matter of trade rebalancing, but rather a race for technological leadership among major powers, faced with the combined effects of aging and deteriorating lifestyles.
The Chinese authorities are redefining the market through centralized, monumental orders. From imaging equipment to surgery, resuscitation and medical robotics, this approach aims at lowering prices and favoring its producers. Many pieces of equipment have seen their price cut by more than half, up to 90% in the case of stents. In addition to these orders, the usual toolkit of subsidies, tax incentives and direct financing helps Chinese players to capture the domestic market, rapidly develop their exports to other emerging economies, before challenging developed countries on their own markets, with slashed prices.
Europe Can Be at The Forefront of Digital Health
The emergence of this strategy requires a new approach in Europe, which has over 30,000 medical technology companies, most of them SMEs. It is legitimate for China to seek to limit its dependence, but the many examples of sectors in which the rules of competition have been turned upside down already necessitate consolidating Europe’s position, primarily in terms of intellectual property, market access reciprocity, anti-dumping policy, but also support for innovation. As illustrated by the reorientation of a giant like Philips almost exclusively on health technology and the success of the French company Withings, Europe has tremendous potential in digital health, provided that policymakers apply the lessons of recent industrial history.
This piece was originally published as an op-ed by Les Echos.