Best future business ideas for healthcare Analysis of ESG performance and future sustainable development trends of the medical and health industry Industry development overview and market characteristics
Analysis of ESG performance and future sustainable development trends of the medical and health industry
On June 1, 2020, the “Basic Medical Care and Health Promotion Law of the People’s Republic of USA” officially came into effect. This law is my country’s first basic and comprehensive law in the field of health. It not only provides a basis for improving the construction of the public health legal system after the epidemic, but also further promotes the reform of the medical and health system. Article 8 clearly states, “Promote the integrated development of medical and health care and information technology, promote appropriate medical and health technologies, and improve the quality of medical and health services.” This article will provide an in-depth analysis of the environmental, social and corporate governance performance of listed companies in my country’s medical and health industry from an ESG perspective, while looking forward to the future development trends of the industry for reference.
Key contents of the medical and health industry from the perspective of ESG
(1) Industry development overview and market characteristics
On May 22, 2020, Premier Li Keqiang pointed out in the “Government Work Report” that my country’s current basic pension, medical, subsistence allowance and other security levels have improved, but in the prevention and control of this new crown epidemic, my country’s public health emergency management Many weak links have been exposed in other aspects, and there are certain shortcomings in the development of the medical and health industry. Next, we need to further strengthen the construction of the public health system. As shown in the figure below, in terms of financial investment, in 2018, my country’s government spent 1.6 trillion yuan on health expenses, accounting for only 7.1% of the public finances, and accounted for less than 30% of the total social health expenses, and has declined in the past two years. There is a certain gap between China and developed countries.
In addition, in recent years, indicators to measure sustainable social development and human welfare have been set up to promote the transformation of development concepts and then guide the update of value goals, which have shown a vigorous development trend around the world. The World Bank released the Sovereign ESG Data Portal in October 2019, setting some of the main indicators involved in measuring the development level of the national medical and health system in the sovereign ESG indicator system. According to World Bank data, in 2017, 72.08% of people in my country received safely managed health services, which is far behind developed countries such as the United States (89.97%) and the United Kingdom (97.75%).
In the capital market, the main driving forces behind medical and health-themed concept stocks include the aging of the population, the gradual shift in lifestyles to the direction of paying more attention to personal health, and the wealth effect in emerging markets, which prompts more and more high-net-worth individuals to choose health. Continuous innovation in the consumer and healthcare markets and various driving factors have given the market performance of listed companies in this industry considerable development potential and strong growth momentum. In addition, when market investment risks rise, medical and health-themed concept stocks can also help investors achieve downside protection and have strong investment protection; in addition, when the economy is in a downturn, the market performance of this sector is often better than The market as a whole is one of the important choices for avoiding risks and achieving returns.
(2) Analysis of ESG focus of the industry
According to the definition of sustainable development first proposed by Norwegian Prime Minister Brundtland in “Our Common Future” released in 1987, sustainable development involves the coordination and unity of three aspects: sustainable economy, sustainable ecology and sustainable society. Its essence should include improving the quality of human life, improving human health, and creating a social environment that guarantees people’s equality, freedom, education, human rights, and freedom from violence. In the human sustainable development system, economic sustainability is the foundation, ecological sustainability is the condition, and social sustainability is the goal. It can be seen that the importance of the medical and health industry in the sustainable development chain is beyond doubt.
For medical and health enterprises, because their business activities have dual attributes of economic and social attributes, the scope of activities involved is very wide, the management process is relatively complex, and there are many social and government-related departments involved in daily operations, and the services More difficult. In addition, the income of these enterprises has external characteristics. The short-term income is low, but they have long-term growth potential. This characteristic also makes them face higher risks in production and operation activities and restricts financing channels. How such medical and health companies can integrate ESG concepts and improve social benefits while meeting economic benefits is the key to achieving sustainable development.
Improved ESG performance brings economic benefits to the medical and health industry
A number of academic research results show that companies with good ESG performance also have outstanding financial performance, which can improve the company’s reputation and bring them excess market returns. From the perspective of the market performance of listed companies in the medical and health industry, compare the market performance of the listed companies in the medical and health industry with the industry benchmark index in the past year for the top five ESG performance scores in the 2020 evaluation within the sample space, as shown in the figure below , the market performance of the top 5 portfolios weighted by A-share market capitalization is generally better than the benchmark industry index of CSI Pharmaceuticals, and there is a certain excess return. It can be seen that medical and health companies with outstanding ESG performance also have better market performance and can bring certain economic benefits.
The social benefits of the medical and health industry are consistent with the ESG concept
In social welfare theory, the meaning of welfare includes basic life security, that is, at any time, all aspects of material life such as food, clothing, housing, and medical care can be guaranteed and satisfied for the majority of members of society. At the United Nations General Assembly in September 2000, the United Nations Millennium Declaration signed by 189 national leaders proposed to achieve eight “Millennium Development Goals” (MDGs). These eight goals include reducing child mortality, and Actions involving the health sector such as the fight against HIV, malaria and other diseases. Subsequently, based on the sustainable development goals and specific goals proposed in the United Nations 2030 Agenda for Sustainable Development, the third goal is to “enable all people of all ages to live healthy lives and promote their well-being.” It can be seen that the medical and health industry itself has certain social benefits and is consistent with the concept of sustainable development.
Internationally, the most common understanding of corporate social responsibility is that companies should be responsible for all “stakeholders”, from employees, creditors and consumers, to communities, the environment and society. Anyone with interests should be included, individually. Separating any part is not conducive to the healthy development of society. Regarding the social benefits generated by medical and health enterprises, the stakeholders involved in their business can be divided according to their functions and responsibilities into medical and health service providers, public safety organizations, environmental protection, labor protection and food safety agencies, culture, Educational and sports institutions, civil affairs and charity organizations, community organizations, as well as enterprises and individuals participating in the basic operation of society are public and extensive. Therefore, the process of these medical and health enterprises implementing social responsibilities is a process that is consistent with the ESG concept. It is also a process of improving the cooperation mechanism between enterprises, society and stakeholders, which can effectively promote the construction of social welfare mechanisms and thereby promote the economy. Sustainable development of society.
Current ESG performance of the medical and health industry
(1) The overall ESG performance of the medical and health industry needs to be improved
Judging from the comparison of ESG performance among industries, as shown in the table below, according to the ESG evaluation system independently developed by the Green Finance International Research Institute of the Central University of Finance and Economics, under the classification standards of CSI’s first-level industries, 401 companies in Shanghai in 2020 Among the constituent stocks in the Shenzhen 300 stock adjustment sample space, the average ESG score and the average score of each sub-category of listed companies in the medical and health industry are significantly lower than the overall average level. On the one hand, this performance reflects the limited disclosure of ESG information in the medical and health industry at this stage. On the other hand, it shows that listed companies in this industry need to further integrate ESG concepts into their management systems to improve their sustainable development capabilities.
In addition, judging from the changes in the average ESG score performance of listed companies in the medical and health industry in the CSI 300 in the past three years, the overall ESG performance of listed companies in this industry has not seen a significant improvement from 2018 to 2020. At the level of each sub-score, the average score of environmental indicators has a slight upward trend, and the average scores of social responsibility indicators and corporate governance indicators fluctuate to a certain extent. Among them, the average score of corporate governance indicators fluctuates greatly and dropped significantly in 2019. It can be seen that the overall ESG performance of the medical and health industry still needs to be improved.
(2) There are gaps in ESG performance within the medical and healthcare subsectors
Since there is a certain gap between the production and operation model and the main business scope of the medical and health industry, under the classification of the first-level industries of the China Securities Regulatory Commission, this article further subdivides the medical and health industry into There are seven categories: pharmaceutical manufacturing, health, retail, professional equipment manufacturing, wholesale, software and information technology services, and research and experimental development. As shown in the table below, in terms of average ESG scores, listed companies mainly engaged in pharmaceutical product wholesale have the best sustainable development performance; in terms of environmental scores, listed companies mainly engaged in medical technology development and software production pay more attention to environmental information disclosure and Protection of the environment during the service process; in terms of social responsibility scores and corporate governance scores, listed companies mainly engaged in the manufacturing and development of medical equipment are more proactive in assuming social responsibilities, focusing on taking certain measures to respond to the concerns of stakeholders, and actively safeguarding the rights and interests of shareholders , attaching great importance to the construction of the company’s organizational structure and investor relations management.
Future sustainable development trends of medical and health enterprises
First, adhere to the combination of economic benefits and social benefits and strengthen ESG risk management. Since the production and operation activities in the medical and health industry have dual attributes of economic and social attributes, which are directly related to the health and life safety of the general public, investors are more sensitive to negative risk events in such enterprises. Once negative information appears , it may lead to the risk of stock price crash. Not only will a single stock be seriously affected, but also due to the public’s widespread attention to negative events, investors’ confidence in the overall performance of the pharmaceutical industry will decline, which will lead to the entire pharmaceutical sector index, and even Abnormal fluctuations in market indices. However, in recent years, medical and health-themed concept stocks have frequently exploded in the market. As recently as June this year, Kangmei Pharmaceutical was publicly condemned by the Exchange Association, suspended its debt financing instrument-related business and ordered it to make rectifications within a time limit. Immortals was involved in the “toxic vaccine” incident. This series of negative events has put forward new requirements for the future ESG risk management of medical and health companies. In the future, companies in this industry need to insist on combining economic benefits with social benefits, pay attention to safeguarding the life, health and safety of the general public, and strengthen ESG risk management.
Second, actively integrate the concept of sustainable development and proactively disclose ESG information and data
Second, actively integrate the concept of sustainable development and proactively disclose ESG information and data. In terms of industry characteristics, the pharmaceutical industry is a highly polluting industry. Environmental protection regulatory authorities require listed companies in such industries to regularly disclose environmental information. Listed companies should make temporary announcements for sudden environmental incidents. However, according to the latest data analysis results, the current environmental responsibility information disclosure quality of medical and health enterprises is lower than the average level of listed companies; in addition, the medical and health industry has social attributes, and the ethical level of its management directly bears the burden of human life, health and safety, so we should have and assume a higher level of social responsibility. However, judging from the current overall situation of ESG information disclosure in the medical and health industry, the quality and level of social responsibility information disclosure by listed companies in this industry is generally not high, resulting in the inability to effectively disclose the social responsibility performance of pharmaceutical companies. Therefore, companies in this industry should actively integrate the concept of sustainable development and proactively disclose ESG information data to provide investors with the necessary reference for making investment decisions.
Integrate digital healthcare solutions to better serve and protect consumers
Driven by national policies, the medical and health industry is accelerating innovation and reshaping to adapt to the growing and diverse medical and health needs of the Chinese people.
After more than 20 years of medical insurance reform, my country’s social medical security coverage rate exceeds 95%, achievin
After more than 20 years of medical insurance reform, my country’s social medical security coverage rate exceeds 95%, achieving high coverage of basic medical security for the entire nation. With the growth of GDP, China’s household wealth and disposable income are increasing day by day, and consumers have put forward higher demands for medical services and protection, especially high-net-worth individuals and the emerging new middle class. However, compared with the high-net-worth group, the market has just begun to pay attention to the new middle-class group. The current level of medical and health services and protection for the new middle-class group is relatively low.
Under the guidance of the “Healthy China 2030” strategy that “prioritizes the development of people’s health”, the government has promulgated guidance programs such as the “Healthy China Action (2019-2030)” and “Opinions on Deepening the Reform of the Medical Security System” to accelerate Establish a multi-level medical security system and an integrated medical and health service system. By integrating different participants such as medical care, medicine, and medical insurance, we can solve the mismatch problem between medical and health demand and supply and provide the people with cost-effective medical and health services. Driven by national policies, the medical and health industry is accelerating innovation and reshaping to adapt to the growing and diverse medical and health needs of the Chinese people.
Combining Deloitte’s industry experience and understanding of the characteristics of China’s healthcare industry, Deloitte believes that there are five major trends that will have a significant impact on China’s healthcare industry in the future and play a driving role, including integrated healthcare service systems, consumer empowerment, new The rise of payment solutions, smart healthcare and innovative product portfolios.
Integrated medical and health service system.
Integrated medical and health service system. With the intensification of aging, changes in living habits and living environment and other factors, the evolution of social disease maps has been promoted, and the number of chronic disease patients in China has increased year by year. How to better utilize and allocate medical resources and serve and manage consumers’ medical and health management needs is the most important issue before us. By improving and perfecting the hierarchical diagnosis and treatment system, we will strengthen “disease prevention and control” capabilities, accelerate decentralization, and develop full-life cycle medical services that “cover from birth to death.”
Empower consumers. With the improvement of living standards and national quality, consumers are paying more and more attention to their own health, and the impact of living habits on health is becoming more and more widely recognized. At the same time, there is an increasing need for risk assessment and early intervention for infectious diseases, genetic diseases, cancer and other diseases. Mental health problems have increasingly become a social issue that cannot be ignored.
The rise of new payment methods. Under the influence of factors such as the growth of the patient population and medical inflation, medical and health expenditures are increasing day by day and have become a burden that cannot be ignored. This aspect requires the government to take the lead, through the exploration of policies such as “zero price difference on drugs” and “volume-based purchasing”, to “payment with DRGs” and “payment based on therapeutic effects”, and through different means of medical insurance cost control to achieve lower medical costs. cost effect. At the same time, it is also necessary to promote the rapid and orderly development of commercial health and meet the diverse health protection needs of consumers.
Smart medical health
Smart medical health. With the rapid development of science and technology, technologies such as wearable devices, artificial intelligence, robots, 5G and blockchain are widely used in the medical and health field, which not only brings about new diagnosis and treatment models, but also accelerates the development of genetic, diagnosis and treatment, consumption, behavioral and other medical treatments. Collection and integration of health data.
Innovative product portfolio. In terms of innovative product portfolios, insurance companies, pharmaceutical companies, doctor groups, and technology companies are all actively exploring. The collection of breakthroughs and innovations in medical and health care is also very important to the development of my country’s medical and health industry.
Promote digital product and service innovation and continuously improve consumers’ medical journey service experience
In response to Chinese consumers’ preferences for medical and health needs, Deloitte conducted relevant surveys in the form of questionnaires, mainly covering consumer groups aged 20-50 in first-tier, new first-tier and second-tier cities. The specific survey results are as follows:
Offline public general hospitals are still the first choice for medical treatment, and online symptom self-examination and family doctors are gradually accepted by consumers.
The survey found that when minor symptoms occur (such as mild abdominal pain, migraine), Chinese consumers, especially new middle-class consumers, have a strong demand for self-examination of symptoms, and they hope to have credible channels to do so. Self-examination of symptoms online, purchasing medicines and taking them by yourself reduces the need for medical treatment; at the same time, if there is a need for offline medical treatment, Chinese consumers at this stage still tend to choose public general hospitals for medical treatment due to issues such as medical habits and medical credibility. diagnosis and treatment; however, with the popularity of “online expert consultation”, many consumers have said that they have tried online consultation and obtained expert disease diagnosis and medication suggestions from tertiary hospitals.
The emergence of digital medical services such as “online consultation
The emergence of digital medical services such as “online consultation” and “online consultation” aims to meet consumers’ needs for medical consultation. However, these single-point digital medical services cannot provide consumers with a good online service experience due to the lack of understanding of the patient’s health status, past medical history, drug allergies, etc. “Online family doctor”, as a one-to-one general practitioner contracted by consumers, has a comprehensive understanding of consumers’ health conditions and provides patients with efficient online consultation, diagnosis, medication and other services. For consumers, especially new middle-class consumers who pursue efficiency and quality, online home medical services are a good choice for family health gatekeepers.
New middle-class consumer groups are more receptive to digital medical services
It is worth mentioning that our research found that the new middle-class consumer group has a higher acceptance of digital medical services than both high-end consumer groups and mass consumer groups. In addition to digital medical services such as “online consultation”, mass consumers expressed that they are willing to try digital examination solutions, such as home medical testing equipment (glucose meters, home electrocardiographs, etc.) for home testing if the technology matures; new While middle-class consumers are already using home medical testing equipment, they are also willing to use third-party testing ordering services (thyroid, metabolism, etc.) in the future; in contrast, people with chronic diseases have higher requirements for testing expertise. You can go to nearby medical examination stations or mobile testing vehicles to complete the examination.
Online drug purchase, insurance direct payment and online medication consultation are the main needs of consumers in digital pharmaceutical services
In recent years, digital pharmaceutical services have developed to a certain extent, and survey data show that consumers have a relatively high degree of use of digital pharmaceutical services. Most consumers have used online channels to conveniently purchase over-the-counter drugs. At the same time, they also use “electronic prescriptions” to purchase common prescription drugs. Some consumers even search for and purchase specialty and rare drugs online based on their specific medication needs. Medicine etc. While purchasing medicines online, more than half of consumers require direct payment from medical insurance or commercial insurance. Therefore, digital drug solutions that integrate payment and medicine will be more favored by consumers. In addition to purchasing medicines, consumers use online medication consultation services to supervise and guide medication dosage and precautions while ensuring the right medication; as the technology matures, intelligent medication management services based on “electronic prescriptions” will be able to provide Provide consumers with more convenient and secure services. The outbreak of the COVID-19 epidemic has further deepened consumers’ acceptance of online medication consultation and online drug purchase services. In the post-epidemic era, such medical consumption habits will continue.
Among digital health management services, health guidance and data tracking are most commonly used
Solving the difficulties consumers encounter in seeking medical advice is only a temporary solution, while the fundamental solution is to do a good job in health management and disease prevention to make people healthier. In recent years, the concept of healthy living has been widely accepted in China, especially among middle- and high-end people. Developing the habit of self-discipline in diet, daily life and regular exercise has become a trend. In order to better overcome their own inertia and promote the formation of habits, consumers are willing to try guidance and tracking services, and their acceptance of digital products in this area is also relatively high. Among the many digital solutions for health management, products and services related to fitness and exercise guidance have the highest usage rate, with more than 60% of respondents saying they have used such solutions; this is due to the “urban marathon” “The promotion of a series of national fitness concepts such as “On the other hand, it benefits from the company’s popular online sports products that increase customer stickiness. Secondly, consumers are relatively more interested in products that track health data (number of steps, weight, etc.). Among them, the usage rate of mid- to high-end consumers is higher than that of mass consumers. This aspect is related to the level of consumption. On the other hand, middle- and high-end people pay more attention to health. Thirdly, the usage rate of digital products related to diet management is not high among the mass consumer group, because the use experience of digital products for diet management is inferior to the first two categories and the user experience is not good; however, consumers with chronic diseases are not interested in using digital products. Digital products related to diet management are significantly higher than those of other consumers. Finally, the customized health management solutions launched by enterprises (mainly focusing on family doctors, online consultation and other services) are not very popular among consumers; insurance companies’ early attempts in this field were mainly focused on high-net-worth consumers. , there is still room for development among new middle-class consumers.
The main demands for digital family doctors are health consultation, basic diagnosis and report interpretation and other health care services.
With the support of various health management and disease prevention and control services, most Chinese consumers take on the role of health gatekeepers themselves and seek solutions spontaneously; while abroad, the role of health gatekeepers is usually performed by those with general practitioner licenses. family doctor to take charge. In recent years, family doctors (community doctors) have gradually developed in China, committed to taking root in the community, serving community medical care, and assuming the responsibility of guarding residents’ family health. At the same time, some companies have launched online “family doctor” services, aiming to provide customers with better value-added services. Looking at the existing “family doctor” services, the main family doctor services used by consumers are “consultation on health and disease issues”, “diagnosis and prescription of common diseases” and “interpretation of physical examination reports and health advice”. Consumers hope that family doctors can provide a wider range of services and cover more health management, disease prevention and recovery stages in addition to disease diagnosis and treatment, such as the establishment and management of health records, health plan customization, and emergency handling advice. As well as regular follow-up for rehabilitation or chronic diseases, etc. Among them, for emergency handling advice, new middle-class consumers and high-net-worth individuals prefer this service more than mass consumers. It can be seen from this that consumers’ demand for family doctor services is integrated home health services covering the entire end-to-end medical and health journey.
At present, some insurance companies have launched health and medical service platforms with “family doctors” as the core. First of all, it can not only help customers pay medical expenses after they become ill and get out of danger, but also provide customers with a series of disease management services to improve customer experience while controlling compensation; secondly, before customers suffer from diseases, through the “family doctor” For the entrance, we provide customers with services such as health management, disease prevention and intervention, so that customers can live healthier lives, reduce the occurrence of diseases, and achieve cost control. Adhering to the concept of transforming from a payer to a health service provider, AXA Tianping also recently launched the “AXA Health Manager” platform, aiming to provide better insurance protection and medical and health services for new middle-class families.
Overall
, various digital solutions have appeared on the market to meet the various demands and pain points of consumers in the medical and health journey and help them improve their medical service experience; however, the quality of products and services still requires market and consumption. will be tested by time. On the road to digitally promoting product and service innovation, more exploration and attempts are needed to truly be people-centered and serve people’s health!
