China healthcare firms offset policy pressure with global growth

Most major healthcare companies reported satisfactory 2025 financial results.

China’s healthcare sector’s innovation, artificial intelligence and global expansion are offsetting persistent domestic policy pressures, according to a UOB Kay Hian report.

Most major healthcare companies reported satisfactory 2025 results with strong revenue and earnings growth concentrated in biopharmaceuticals, contract research and manufacturing services (CRDMOs), and internet healthcare platforms.

Drugmakers are moving toward higher-margin licensing deals and global partnerships. “Licence income becomes a new source of growth,” the report noted, highlighting how companies are monetising their research pipelines internationally.

Biopharma firms are increasing cross-border licensing deals, whilst CRDMOs are strengthening relationships with multinational pharmaceutical clients.

China’s CRDMO segment remains a standout beneficiary of global demand. WuXi AppTec and WuXi Bio both reported strong revenue and earnings growth in 2025, driven by rising demand from international biopharma companies.

At the same time, artificial intelligence (AI) is becoming a defining competitive advantage. Internet healthcare platforms are using AI to improve efficiency, enhance service delivery and expand margins.

Ali Health expects revenue growth of 10 to 15% and net profit expansion of 20 to 30%, whilst Ping An Good Doctor is expected to deliver profit growth of around 40%.

Corporate health management services are also gaining traction and could contribute more than half of total revenue within three to five years.

Moreover, AI is also transforming medical devices, particularly in emerging categories such as surgical robotics. Companies like Edge Medical and MicroPort MedBot reported revenue growth of 185% and 114%, respectively.

However, not all segments are benefiting equally. Traditional healthcare businesses remain under pressure from policy reforms.

Medical device companies have been hit by anti-corruption campaigns and volume-based procurement programmes, which have squeezed pricing and slowed growth.

Drug distribution is facing similar challenges. Sinopharm reported flat revenue and earnings, with only modest growth expected in 2026 as centralised procurement policies and budget constraints in the public healthcare system continue to weigh on margins.

The traditional Chinese medicine segment has been particularly hard hit. China TCM reported a 10.7% decline in revenue and a 47.5% drop in profit, whilst Shineway also posted double-digit revenue declines.

Despite these challenges, the overall outlook remains positive as analysts maintain an ‘overweight’ stance on the sector.