China Watch P228:Monthly data tracker,April 2016

　　Monthly data tracker: April 2016.

　　Recent data suggest that: 1) drug consumption growth accelerated in March to19.8% YoY vs. 12.7% YTD 2m16; 2) government spending on health care inMarch increased 32% YoY; 3) inpatient and outpatient traffic grew 1.5% and5.5% YTD Feb16, respectively; 4) the price of 6-APA was unchanged while 7-ACA reached a new low of RMB380/kg; 5) TCM raw material prices weremostly lower in April; 6) commercial insurance inflow and outflow in Marchincreased 63% and 44% YoY, respectively.

　　Macro data: government spending, drug consumption, commercial insurance.

　　Government spending on health care registered 32% YoY growth in March2016 with RMB171bn, vs. 13% YoY growth in March 2015 and 38% YoYgrowth in March 2014. Meanwhile, drug consumption growth accelerated to19.8% YoY in March, vs. 12.7% YTD 2m16 and 14.2% in 2015. Notably,commercial healthcare insurance inflow continued to outpace outflow, withthe former growing 63% and the latter growing 44% YoY in March. YTD2016,commercial healthcare inflow and outflow recorded growth of 79% and 35%,respectively.

　　Prices of 6-APA and 7-ACA fell 0% and 10% MoM, respectively.

　　The price of 6-APA as of April 2016 stayed unchanged at RMB153/kg; the priceof 7-ACA dropped 10%, reaching a new low of RMB380/kg. We remindinvestors that 7-ACA production had resumed in September 2015 at a 16%price cut from RMB630/kg in June 2015.

　　TCM raw material prices have stabilized.

　　The TCM raw material price index climbed 0.26% MoM to 1,097, picking upslowly after an 8-month downward trend. The price of honeysuckle in April lost8% MoM while the price of indigowoad root climbed 3% MoM. Honeysuckleand indigowoad are the main ingredients used in Shineway’s flagship product,Qing Kai Ling. The price of ophiopogon root was 1% MoM lower in April, whilethe price of radix ginseng decreased 7% MoM; both are the main ingredientsused to make Shen Mai.