China’s rapidly aging population and the country’s growing middle class are opening new opportunities for two Swiss medical companies targeting China as their next growth market.
Many countries around the world are facing the challenge of aging populations, this is particularly the case for China.
By 2035, about a third of its citizens, or some 400 million people, will be aged 60 and over, according to estimates released by the country’s National Health Commission (NHC), an increase of 100 million over a period of just 13 years, and almost the equivalent of the entire population of the European Union.
A “silver economy” – in reference to the graying hair of elderly people – which represents billions. The aging society and associated health concerns are attracting some of the world’s largest healthcare companies who see strong growth opportunities in a rapidly expanding market.
Among them are Swiss company Sonova, the world’s largest maker of hearing aids, and medical technology group Ypsomed, which specializes in manufacturing insulin pumps for diabetics.
External content
This external content cannot be displayed because it may collect personal data. To view this content you must authorize the category Third Party Services.
Accept More information
“One of the most profound demographic changes in history”
The McKinsey Health Institute predicts that the number of people aged 65 and older in Asia will double to 1.6 billion by 2050, describing the increase as “one of the most profound demographic shifts in history.” This trend is more pronounced in China.
Increasing life expectancy also contributes to this challenge. In 2021, a Chinese citizen could expect to live on average to just over 78 years old, almost four years longer than in 2010. By 2035, this figure could reach 81 years old, according to a study by the China Center for Disease Control and Prevention and Nanjing University of Science and Technology.
While the fact that people are living longer is good news, it also makes them more vulnerable to disease. The World Health Organization estimates that about 75% of people over 60 in China suffer from chronic diseases such as diabetes, cancer and cardiovascular disorders.
The diabetes jackpot
One of the Swiss companies benefiting from this demographic shift is Ypsomed, a diabetes specialist and world leader in injection and infusion systems for self-medication. “The potential is enormous and China undoubtedly represents one of the fastest growth opportunities for our company,” says Simon Michel, CEO of Ypsomed.
“We are the only Western manufacturer of insulin pens and medical devices for liquid drug application in China. We have always had a very good network and been very close to major Chinese pharmaceutical companies,” he says.
China is the largest diabetes market in the world. According to the International Diabetes Foundation, 13% of adults aged 20 to 79 suffer from this disease in China, or more than 140 million cases, compared to only 6% in Switzerland. By 2045, more than 174 million people in China will have diabetes, the foundation estimates, attributing the increase in part to an aging population, as well as increasingly unhealthy diets and lack of exercise.
External content
This external content cannot be displayed because it may collect personal data. To view this content you must authorize the category Third Party Services.
Accept More information
A golden future for Ypsomed
China is already Ypsomed’s largest market outside of Europe and the Swiss-listed company estimates that 500 million of its disposable pens and a further 10 million of reusable pens are currently in circulation in the country.
Ypsomed generates a turnover of around $50 million (CHF45.7 million) from its Chinese pharmaceutical customers, which represents 9% of the group’s total turnover.
Simon Michel predicts that this figure will reach 15% by the end of the decade. “There are a large number of new drugs that need to be injected and the demand is increasing dramatically,” he explains, referring to treatments for diseases such as obesity, diabetes, Alzheimer’s disease and cancer.
The hard cash of deafness
Sonova is another Swiss company exploiting China’s changing demographics. As the world’s largest provider of hearing care solutions, sold under brands such as Phonak, Sennheiser and Unitron, Sonova generates a total annual turnover of 3.7 billion francs and is active in more than 100 countries.
While its largest markets are Germany and the United States, the company has now set its sights on China, where the growth potential is much greater.
“We have more than 280 million people aged over 60 and this number will only increase with the next wave of baby boomers joining the 65 and over club,” says Fang Fang, Sonova’s business leader in China since 2022.
Increase in household income
The main reason for this expected increase in turnover is that household incomes have increased significantly over the past decade.
In 2023, China’s average annual disposable income was 39,218 yuan (4,988 CHF), more than triple the 12,520 yuan (1,627 CHF) in 2010, according to government statistics.
Under a long-term plan published in 2023, the government aims to double per capita income by 2035 compared to its 2020 level. “When a family can afford a car, she will soon use health services, such as a hearing aid,” adds Fang Fang.
External content
This external content cannot be displayed because it may collect personal data. To view this content you must authorize the category Third Party Services.
Accept More information
Sonova on the Chinese market
Sonova saw the potential of the Chinese market as early as 2003, when it opened a manufacturing plant in Suzhou, about 110 kilometers west of Shanghai. The company then increased its presence in China in 2014 by beginning to develop hearing aids for the local market.
The biggest move came in 2022 when Sonova acquired HYSOUND Group to expand its retail presence.
The deal gave the company a nationwide chain of approximately 200 audiology care clinics across 70 cities in China, employing 650 people. This means that more than 10% of the workforce of the multinational based in Stäfa, in the canton of Zurich, is now based in China.
The difficulties of the Chinese market
A 2023 market study by the European Hearing Aid Manufacturers Association (EHIMA), however, showed that although hearing loss currently affects 4.2% of the Chinese population, just under one Chinese person is affected. in ten use hearing aids.
Fang Fang acknowledges that it will take time to expand its business in China, despite its potential. The company estimates that less than 3% of people with hearing loss in China own a programmable hearing aid.
A low utilization rate which is partly due to people not wanting to accept that their hearing loss is serious enough to need help and having preconceived notions that the hearing loss is not bad enough serious enough to need a hearing aid. Hearing aids are also stigmatized in China, making people who need them reluctant to use them.
Olivia Kinghorst (SWI), Helen James (SWI)
Adaptation: Julien Furrer (RTS)
