This publication has not touched on the subject of Alzheimer’s before, probably because the disease has largely been ignored in China.
In this essay Peter Fuhrman and Dr Wang Yansong – respectively the chief executive officer and chief operating officer of China First Capital, a principal investment and advisory firm – explain why the increasing longevity of the population means that China will account for half of the world’s Alzheimer’s cases and require vast amounts of healthcare spending to remedy the worst effects of the disease.
Alzheimer’s is the fastest-growing, major fatal disease in China. Today there are at least 9.5 million diagnosed sufferers, with perhaps just as many cases unidentified. Almost one million Chinese are diagnosed every year with Alzheimer’s, with the number of new cases expected to accelerate sharply from around 2030.
It is also the major disease with the greatest mismatch between the number of patients and the amount of specialised care available. The United States has about half the number of Alzheimer’s patients as China, and 73,000 beds in specialist treatment centres. China today has fewer than 200 beds. Alzheimer’s care is a $250 billion industry in the US but in China it’s barely even begun to exist.
The reason for this mismatch is clear. China’s healthcare system is already under pressure to improve the quality of its care, especially for acute or infectious diseases like cancer, hepatitis and serious asthma. But Alzheimer’s isn’t a top priority in government policy or for healthcare companies or investors. Yet no disease is likely to impact on more lives or cost more to treat in the years ahead.
By 2050, the number of Alzheimer’s patients in China is projected to exceed 45 million, about half of the total suffering from the disease worldwide.
The full cost of caring for all of these people is impossible to estimate but Alzheimer’s is already the most expensive disease to treat in the US. The government there pays for more than half of treatment through national health insurance funded by taxes on companies and individuals. And with the number of cases expected to double in the next 20 years, spending on Alzheimer’s is already set to become the single-most expensive item in the US budget, larger even than military spending.
China will almost certainly take a different path in how it funds treatment of the disease, with more of the spending coming from patients and their families, rather than through national health insurance. On average Chinese patients will be cared for longer by relatives, rather than placed in specialised nursing homes. But the almost total lack of Alzheimer’s treatment centres, and nurses and doctors trained to treat the disease, is one of the most significant market failures in China’s healthcare industry.
While state-owned firms and private sector companies have been making significant investments in old age care (what the Chinese refer to as yanglao), most of this money has gone towards building and selling apartments in retirement communities – i.e. places for older people who are still fundamentally healthy and active.
There has been little investment in the area of elderly care with the most urgent need now and in the future – specialist facilities for people with Alzheimer’s and other chronic diseases that afflict older people (such as Parkinson’s, serious arthritis, and recovery from strokes).
Alzheimer’s is not even regarded as a disease by many Chinese but more as the inevitable and natural outcome of aging and an unfortunate side-effect of longer lives.
In fact, the national broadcaster CCTV has been promoting public service adverts to raise awareness that Alzheimer’s is a medical condition. This is similar to the education process that began in the US and Europe over 40 years ago. There were few cases anywhere in the world back then. But the private and public sectors began spending heavily on training for doctors and nurses, building out care infrastructure and preparing for the projected surge in patients.
Alzheimer’s – like diabetes, obesity and colorectal cancer – is also a disease bred from economic success. As a country becomes richer and healthcare standards improve, people live longer. Nowhere has this transformation happened quicker than in China, meaning that nowhere else has seen such explosive growth in the number of Alzheimer’s cases.
Average life expectancy in China has increased more in the last 30 years than it did in the previous 3,000 and it is still growing faster than in developed countries.
The facts: Alzheimer’s is an incurable disease that afflicts a large number of older people, but not the majority. About 3% of people aged 65 to 74 and 17% of those between 75 and 85 will develop the disease. For people over 85, there is a 30% chance of getting it.
It is still a mystery why some people get the disease and most others do not. One interesting correlation: people with higher levels of education are less likely to suffer from Alzheimer’s. The more you use your brain in complex ways, the more you may innoculate yourself against the disease.
Rural people are more susceptible than city dwellers too. Because China still has a larger percentage of its population living in rural areas, that suggests that the percentage of over-eighties suffering from Alzheimer’s may end up higher than in US and Europe or in Asia’s more urbanised societies, such as Japan and South Korea.
Women are also far more likely to get Alzheimer’s than men, because they tend to live longer lives.
Despite billions of dollars in scientific and pharmaceutical research, there are no drugs or surgical treatments for the disease. A drug cure, widely predicted in the West 20 years ago, now seems very unlikely. Brain chemistry and biology make developing a treatment difficult. Since 2002, 244 treatments were tested in clinical trials in the US and Europe. Only one received FDA approval in the US. It has a very limited, short-term impact.
Although there are no drugs to cure Alzheimer’s, there have been remarkable successes in managing the disease at specialised care facilities. Staff work to slow its advance through physical therapy, counselling, equipment that improves memory and mobility, and the provision of a safe living environment designed to care for people gradually losing their ability to think, speak and function.
The result: Alzheimer’s patients in the US and Europe now live twice as long from point of diagnosis as they did 30 years ago, or an average of 8-10 years.
The longer patients live, the more likely they will spend their final years in specialised care facilities. In this last stage, patients are often unable to talk, feed or bathe themselves, and can remember almost nothing. Their immune systems gradually stop working. As the brain is overcome by the disease and begins to decompose, bodily functions like breathing, digestion and swallowing are disrupted.
In the US and Europe, the average annual cost of caring for an Alzheimer’s patient is about $60,000, with the highest spending coming in the last two years of life.
There are dozens of listed companies in Europe and the US focused on research into the disease or providing specialised care. In China, there are no local equivalents. Traditionally, more money has been spent on children’s education than on medical care for older people. But as the Chinese live longer the way that money is spent across three generations is likely to change. The grandchildren of people in their eighties will usually already be through college and have started working. That leaves more money available – both in the hands of older relatives and their children – to fund higher quality care for people at the ends of their lives.
A French listed company called Orpea is moving fastest to build a business in Alzheimer’s care in China. Orpea is already a leader in the field with 775 nursing homes and clinics in Europe, and revenues of €2.8 billion last year. But it also opened China’s most advanced Alzheimer’s clinic in Nanjing last year and it is planning to expand quickly across the country.
In Nanjing, the 5-star facility is as deluxe as one would find anywhere in the world, with marble floors, an elegant dining room, a huge indoor pool and water therapy centre. In total, it has 140 beds, including 22 in the Alzheimer’s clinic. None of the real estate at the facility is for sale. It is a service business, offering specialised care and housing to the elderly, including the most challenging patients with the final stages of the disease.
Most of those living in the Nanjing care centre are paying about Rmb20,000 ($2,915) a month. Though expensive, that’s still half the price of a shared room in a 3-star nursing home in the US. The standard of care is as high as any specialised Alzheimer’s treatment centre in the US or Europe. And in almost all cases, the children of the patients are paying the bill.
Regardless of culture, Alzheimer’s tends to effect people the same way. Nothing can restore patient memory or stop the advance of a disease that is 100% fatal. The goal of treatment is to slow the disease’s progression by treating related health problems and the decline in motor skills.
Most important is keeping patients physically and intellectually active and Orpea is using a new form of treatment known as “psychomotricity” which rebuilds connections between a patient’s motor and cognitive skills.
Successful treatment not only lengthens the lives of people with Alzheimer’s, it also makes its sufferers more content, more social and more self-sufficient than if they were being cared for by their relatives at home.
Orpea is also learning new things about how to care for patients in China. Late-stage patients (those who have lost the ability to speak or recognise their surroundings) still enjoy sessions in which they stuff meat dumplings, for instance. There’s a special kitchen and dining room just for Alzheimer’s patients, and the Nanjing centre has both a karaoke and a “memory room” with objects from the 1950s-60s. As Alzheimer’s progresses, patients can’t remember recent events, but they can often recall memories from their youth, including old songs.
Orpea plans to open at least two new nursing homes in Beijing this year and add further facilities soon in Shanghai. For now, it has few rivals in China, especially at the high-end of the market. But it says it welcomes competitors. “The need is so great, and the impact on patients’ lives so positive that we hope China will quickly develop a large, capable group of companies to care for people here,” explains Orpea’s China CEO, Nathaniel Farouz.
So how should the Chinese improve their Alzheimer’s treatment infrastructure and bring it quickly up to global standards?
The biggest need will be providing care to sufferers of the disease from families with average incomes and savings levels.
One likely path will be for Chinese companies to acquire or partner with specialist nursing home providers from the US and Europe. There were rumours recently that the large local investment group CMIG was seeking to buy Orpea, although Orpea has denied that any deal is being actively discussed.
If there’s one advantage to getting a late start in responding to the disease it is that China can learn from the best ideas developed in the US, Europe and Asia.
Japan, for example, is not only building specialist nursing homes for Alzheimer’s patients in the final years of their lives, but also community centres for those that continue to live at home or with their relatives.
Home nursing care is also expanding quickly in the West and this kind of service seems to be improving and lengthening the lives of Alzheimer’s patients. Home nursing is still at a very early stage in China, but it is already the fastest growing industry and the largest source of new jobs in the US.
The main beneficiaries of professional Alzheimer’s care are the patients, whose lives and health are improved. But there are also economic benefits for society as a whole. Alzheimer’s care could offer millions of new, longer-term and better-paying jobs for people at all educational levels.
From such little spending on specialised care today, China will certainly grow into the world’s largest market for Alzheimer’s treatment. Governments at national, provincial and local level should play a key policymaking and regulatory role. They must set standards for treatment and provide more transparent rules on which aspects of Alzheimer’s care will be reimbursed. And they can also do a great deal in fostering the spread of high-quality, private-sector nursing homes for chronically ill people in cities across the country.
As the UN World Health Organisation recommended in a recent report: “Central or local governments could adopt preferential tax policies or offer other financial incentives” for Alzheimer’s care services and education.
In rural China, the government’s role will be even more important because the number of Alzheimer’s cases will be proportionately higher and the financial resources of their relatives more limited.
In fact, it’s hard to think of many areas in China with better long-term investment fundamentals than specialised Alzheimer’s care.
But ultimately the industry shouldn’t be measured or motivated by profits. The greatest return on investment will be in limiting the suffering, pain, and sadness of Alzheimer’s patients and their families.
This essay is adapted from a Chinese language version of an article published separately in Caijing Magazine this month. The authors have no business relationship with Orpea.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.