China Life Sciences & Health Care TeamMarch 2024China LSHC Industry Survey 2024 State of Industry in China 2China Life Sciences & Health Care Industry 2024 Survey Results© 2024. For information, contact Deloitte China.Content◼Framework◼Results –Questions & Deep-dive•China LSHC Business Outlook & Considerations•Regulatory and Digital Revolution•New Business Opportunities & Challenges◼Concluding insights◼Appendix 3China Life Sciences & Health Care Industry 2024 Survey Results© 2024. For information, contact Deloitte China.Note: SOE –State-owned Enterprise; POE –Private-owned Enterprise; JV –Joint Venture; WOFE –Wolly Foreign-owned EnterprisesChina LSHC Industry 2024 Outlook Survey –Framework •Survey period: 15 January 2024 to 9 February 2024•Engaged China-based Life Sciences & Health Care (LSHC) sector operators and investors: 124 respondents 25%18%19%38%5%39%18%39%Company TypeSOEPOEJVWOFELess than RMB 100 millionRMB 100 million to 1 billionRMB 1 billion to 5 billionMore than RMB 5 billion2023 Revenue Size66%19%15%Less than 5,0005,000 to 10,000More than 10,000No. of Employees19%46%35%Chairman/CEOC-suite LevelOther Management LevelManagement Level69%20%8%1%2%Industry SectorPharmaMedical DevicesHealthcare ServicesDistributor/ RetailerOthersSlightly more domestic companies, as POE & SOE this year are 44%, in 2023 just 35%Similar size respondents with 42 having >5k employees, in 2023 there were 50 respondentsVery consistent from 2023Aligned with size, larger companies with revenues >1B are 71 companies, in 2023 that segment totaled 75Very consistent from 2023 4China Life Sciences & Health Care Industry 2024 Survey Results© 2024. For information, contact Deloitte China.China LSHC Business Outlook & Considerations 5China Life Sciences & Health Care Industry 2024 Survey Results© 2024. For information, contact Deloitte China.Note: Large cos –company with 2023 revenue exceed RMB 1 billion; SOE –State-owned Enterprise; POE –Private-owned Enterprise; JV –Joint Venture; WOFE –Wolly Foreign-owned Enterprises; there are a few responses are unknown for the 2022 survey therefore the total sum of 2022 percentage may not be 100%#1. How did your company perform (top line) in 2023FY? Overall Business Outlook & ConsiderationsKey Insights31%29%40%13%41%46%32%47%18%Annual financial performance isbetter than plannedAnnual financial performance isin line with plansAnnual financial performance isworse than plans41%28%31%11%37%52%28%38%31%28%31%41%22%44%34%33%53%7%50%16%34%8%32%61%28%56%17%32%27%41%14%42%45%28%50%19%AllLarge cosSOE&POEWOFELife Science•Overall : while 60% saw 2023 results as planned or better, a significant improvements from previous year (~50%) yet 40% had aworse than planned performance in 2023 –showing that expectations were high but failed to materialize.•Large and Foreign companies (WOFE) are gaining better business outcome in 2023FY –probably resulting from a more cautious approach to past year. Especially for foreign businesses, as 50% reported a better performance than planned •Local companies (SOE/POE) seemed to have had higher expectations for 2023 –and which did not materialize. •Surprisingly, life science companies (86/124) are reporting for 73% either below or above expectations 2023 results –showing that 2023 was full of surprises.2024 Survey2023 Survey2022 Survey 6China Life Sciences & Health Care Industry 2024 Survey Results© 2024. For information, contact Deloitte China.Note: Large cos –company with 2023 revenue exceed RMB 1 billion; SOE –State-owned Enterprise; POE –Private-owned Enterprise; JV –Joint Venture; WOFE –Wolly Foreign-owned Enterprises#2. Your 2023 business performance was mainly impacted by... Overall Business Outlook & ConsiderationsKey Insights81%57%50%40%38%23%11%63%40%27%56%21%10%Effects from the VBP policies or NRDL inclusionAchieving new product launches in ChinaIncreased business development efforts (e.g. global orlocal driven deals)Partnering with local/domestic organizations to reach afaster market penetrationChanges in Hospital access during the yearLocalizing your supply chain in ChinaIncreased direct patient engagementAllLarge cos⑥⑦⑤④③②①SOE&POE⑥⑦⑤④③②①WOFE⑥⑦⑤④③②①C-level⑥⑦⑤④③②①Life Science⑥⑦⑤④③②①•Pricing and the overall economic value cycle remain the top impact factors for all stakeholders since our last year’s study•Successful product launch has risen of importance, as this is the new battlefield to stay relevant and also grow topline •Enhanced localized business development efforts and allocated resources, together with finding a better market access throughpartnering models are cited by nearly half of the respondents. Especially foreign companies are keen to explore such models.•Interestingly, the localization programs for existing supply chains remain the same from prior year. Carbon emission as well as global production capacities and local market volumes are yet to eventually generate changes.2024 Survey2023 Survey 7China Life Sciences & Health Care Indus