Health care companies in China are anticipating a more negative outlook on pricing in 2016. China’s medical reimbursement fund continues to experience strains from increased health care expenditure and, as a result, the government is attempting to lower prices across the board to ease the burden. However, the Fund’s health care holdings have held up relatively well. Sinopharm (HKSE:01099) is China’s largest drug distributor and has managed to consistently outpace industry growth through increased industry consolidation. Sinopharm’s strong market position has also resulted in good bargaining power which has allowed them to maintain stable margins despite lower drug prices.
Matthews China Fund (Trades, Portfolio) first quarter 2016 commentary.
