Policy changes in China could bode well for healthcare investors

China remains at the center of broad healthcare policy changes in Asia in 2016. The country is home to the world's largest population, abandoned the one-child policy last year and still boasts impressive rates of economic growth that have helped nurture healthcare companies and biotechs that catch investor attention.

In the coming year, it also has a chance to build on closely watched moves to reform the way it regulates clinical trials and research, buys essential drugs and gets more of its citizens access to basic health through insurance and targeting chronic diseases.

To be sure, there are plenty of pitfalls for companies foreign and domestic in the Middle Kingdom to watch out for. But calendar year 2016 and the Chinese Year of the Monkey could see some bold policy strokes made in the past year bear fruit.

One area to watch is precision medicine, with a policy initiative slated for March built on tapping genomic data and no shortage of companies in the fray, from WuXi AppTech to BGI.

In the discovery space, at least two biotechs--Beijing-based BeiGene and Hong Kong-based Hutchison China MediTech (Chi-Med), a unit of Hutchison MediPharma--are looking to raise cash in initial public offerings on the Nasdaq in the $100 million range.

At the same time, Samantha Du-led ZAI Lab has raised $100 million-plus in Series B funding.

What's more, moves to cement good manufacturing practices (GMP) as the building block of China FDA regulations holds the prospect of weeding out small firms that do not have the resources or commitment to quality--with dozens of firms seeing their mandatory GMP certificates revoked last year for failing to pass muster.

This comes on top of a widely noted effort to clean up clinical data called a "cancer" on the industry by no less than CFDA director Bi Jingquan.

One way to assess how these changes may play out on the bottom line is to look at GlaxoSmithKline ($GSK) and its comments on China in the upcoming fourth quarter earnings call.

GSK has rolled out a new sales model in China that seeks to move away from a "more, more, more" approach--as the company's China head Hervé Gisserot told the FT last year--to one that seeks to roll with policy pushes for lower cost drugs and partnerships in pressing disease areas.

That was borne out in a decision to allow HIV therapy Tivicay to be made in China by Shanghai-based Desano Pharmaceuticals under a deal with the British drugmaker's ViiV Healthcare arm.

Finally, policy moves to expand access to basic healthcare insurance in a country quickly growing old, prompting it to end a controversial and decades-old one-child policy last year, means a bigger market potentially for vaccines and other child-related care.

How that pans out though is a subject of intense interest, with many analysts saying the move to end the one-child policy, now allowing two children, may be too little too late. 

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