The healthcare industry: The rapid modernization of a key global pillar

From digital diagnostics to AI-powered patient management, modernization is reshaping the healthcare industry at every level. The sector now stands at a pivotal moment where innovation is no longer optional but essential to meeting the demands of the modern world.

Healthcare has modernized based upon three structural shifts: integration of care delivery, digital transformation—driven increasingly by AI—and resilience in response to systemic shocks—such as technological and regulatory developments, tariffs and COVID-19. Care is increasingly delivered across hospitals, retail and home settings, creating a continuous patient journey rather than isolated episodes. Digitalization, especially artificial intelligence (AI), is enabling predictive care, faster diagnostics and personalization at scale.

A core challenge for the West is fragmentation and high regulatory complexity, which slows innovation and makes scaling difficult. China, by contrast, benefits from centralized policy frameworks and the ability to scale platforms nationally. This agility not only accelerates domestic adoption but also allows Chinese players to set technical and product standards that may later be adopted globally. Competition in the industry is therefore now not just about care delivery, but about who defines the rules and produces the technologies that others will follow.

Hospitals

Hospitals are evolving from acute-care silos into integrated ecosystems that coordinate prevention, treatment and long-term management. Their future role lies in becoming orchestrators of care pathways, aligning incentives and building multidisciplinary teams around patient needs.

AI is a powerful enabler of this shift: predictive analytics can anticipate patient risks, while decision-support systems help clinicians tailor interventions. In China, integration is advancing rapidly through digital referral platforms that redirect patients from overcrowded tertiary hospitals to primary and community settings, which can improve speed and quality of care. In Europe and the US, progress is slower due to regulatory and reimbursement fragmentation, which makes aligning providers more complex. This fragmentation creates hurdles for scaling, giving China an advantage in shaping new integrated care standards.

Technology, especially AI, is transforming hospitals in three ways:

• Clinical outcomes: AI-powered diagnostics in imaging, pathology and genomics are already matching or surpassing human accuracy.
• Operational efficiency: Predictive models optimize patient flow, bed allocation and resource planning.
• Extended care: Digital platforms connect hospitals with patients at home, creating continuous monitoring systems.

China has scaled AI and digital health faster because it can deploy solutions across massive datasets under national platforms—for example, rolling out AI diagnostic tools such as DeepSeek across tertiary hospitals and using tools like Infervision’s CT-screening during the pandemic. Infervision’s InferRead CT Lung is now deployed in 250+ hospitals worldwide, including 25+ in Europe, and operates in 30+ countries with clearances from regulatory bodies in the US, Europe, Japan and China.

Infervision’s system, which has been used across 34 hospitals and over 32,000 cases, provides quicker and in some cases real-time diagnoses from scans and works across different machines of differing quality, as well as managing further testing needs.

Western systems, constrained by privacy laws and fragmented IT standards, innovate more slowly but with greater emphasis on trust and safety. The result is that Chinese systems often set the pace of AI adoption, while Western frameworks eventually define global standards for safety and interoperability.

In the EU, for example, healthcare varies across countries due to differing regulations, subsidies and pricing systems, making access to innovative medicines uneven. In China, disparities are less about regulation and more about regional development gaps—some areas are advanced while others lag behind. However, China has rapidly expanded access through technology, such as remote doctors and AI diagnostics, creating faster nationwide impact. In contrast, Europe’s fragmented regulations and strict data protection laws slow down the adoption of such technologies.

Finding the right balance of efficiency and quality is an ongoing challenge for hospitals, but the two are not opposites—they reinforce each other when systems are designed correctly.

The most effective approaches include:

• Standardizing clinical pathways to reduce variation.
• Automating administrative and scheduling tasks so clinicians can focus on patients.
• Using AI-driven triage and monitoring to allocate resources where most needed.
• Embedding outcome-based performance measures.

China leverages AI triage tools and remote monitoring to handle patient volumes, achieving scale quickly. AI systems like DeepSeek are already deployed across major hospitals to speed up admissions processes and data collection, while rural clinics use Tencent-backed WeDoctor for 90% accuracy in diagnostics. Europe and North America ensure quality through strict protocols, though sometimes at the expense of speed. The challenge for the West is to overcome fragmentation across payers, regulators and providers, which makes scaling harder—leaving room for Chinese technologies to gain a first-mover advantage globally.

As a result, globally we are seeing a growth in verticalization in the sector, with major hospital groups and insurers increasingly collaborating and acquiring assets across the healthcare value chain, from private hospitals to pharmacies and long-term care. This vertical integration allows companies to control multiple players in the system, driving efficiencies, lowering drug and treatment costs through scale, and reducing the financial burden on the state. Private equity firms and global healthcare groups are actively fueling this trend, making verticalization one of the sector’s defining developments.

Retail

Healthcare retail is shifting toward digital-first journeys, where consumers expect to research, order and consult online while still valuing trusted physical touchpoints. Omnichannel models now combine e-commerce, apps, telepharmacy and in-store interactions.

In China, integration into super-app ecosystems like WeChat, Alipay and JD Health has made digital healthcare retail mainstream. China is well-known for being better at accepting some trade-offs for convenience and speed of development, and while there are privacy and other related drawbacks to this, the results are generally good.

In the West, stricter regulation on prescriptions and advertising slows expansion but ensures oversight—for example, ongoing delays in allowing prescription drugs to be served through online platforms. This regulatory fragmentation delays scaling, giving China a potential edge in setting global digital retail health standards.

All aspects of healthcare require a great deal of trust between user and provider, and this trust is built on three pillars: the consistency of professional standards across channels, product authenticity and supply chain traceability, and transparency in data use—particularly as AI personalization grows. This forms what I call a strong customer value proposition.

Western consumers rely on regulatory safeguards for trust, while Chinese platforms are advancing rapidly but must continue investing in counterfeit prevention and quality assurance to meet consumer expectations. Globally, the challenge is to sustain trust as healthcare retail becomes increasingly AI-driven and personalized, and fundamentally, much of the system is still backed by people who provide the human connection that is so important to building trust.

Future growth lies in expanding from product sales to service delivery: preventive health (vaccinations, screenings), point-of-care diagnostics in retail settings, chronic disease management supported by AI and digital monitoring, and personalized wellness, including genomics and nutrition.

Pharmacy retail offerings are also broadening, moving beyond medicine into wider health and beauty lifestyle products. Categories such as food supplements, longevity-enhancing treatments and dermo cosmetics are growing rapidly, reflecting a more holistic concept of wellbeing.

Supply Chain

Success in healthcare supply chains hinges on two factors: price and speed. Competitive pricing requires scale and vertical integration to negotiate better value, while speed depends on managing vast assortments across omnichannel systems to meet customer expectations for fast, flexible delivery. In China, advanced last-mile logistics and AI-driven stock forecasting are setting the pace, highlighting how proximity and responsiveness are now as critical as price in capturing market share.

Technology is evolving at a significant pace. Pharmacy automats, robot picking, autonomous mobile robots (AMR) goods-to-person systems, and other solutions are becoming mainstream, with return-on-investment periods getting more attractive every year. This allows wider adoption and accelerates transformation.

In the supply chain—as in any discipline—it is vital not to lose focus on the patient. Patients do not care about technology; they care about proximity, service, affordability, safety and results. But without vertical integration, automation and proximity, it is impossible to remain competitive in the modern retail environment. Regulation is less decisive here, with leading technology providers from the US, Europe and China competing on AI-enabled logistics and robotics.

The decisive factor may be scale: Chinese adoption is faster and project sizes are larger, creating cost advantages similar to those seen in the electric vehicle market. While Western providers remain ahead in quality, Chinese providers are rapidly closing the gap.

The pandemic forced a shift from just-in-time efficiency to resilience-first strategies. In Europe and the US, this has triggered significant discussion of nearshoring and reshoring. As an example, GSK is investing £200 million to boost UK manufacturing, including £67 million for its Montrose site, strengthening supply resilience. Tariffs are also now playing a central role in moving production closer to consumers.

Examples include diversified sourcing across regions, the creation of strategic reserves for critical medicines and closer government-industry collaboration. Globally, however, large-scale relocation of production remains limited, with most changes seen in stock levels rather than in new factories. In healthcare, nearshoring is still more the exception than the rule, but tariffs and geopolitical shifts may accelerate this trend.

Sustainability in healthcare supply chains is increasingly driven by regulation, financing requirements and consumer expectations, but while reputational risks are high, consumers are often unwilling to bear the extra costs—making it harder to build a clear economic case.

That being said, promising initiatives include green warehouses (for instance, BREEAM-certified facilities), optimized logistics routes, and AI-enabled demand forecasting to cut waste and improve inventory accuracy. The main challenge is financing these measures without raising patient costs.

Europe is embedding sustainability into procurement rules, while China pilots low-carbon logistics hubs and pursues strong national policies to reduce emissions. This is one area where convergence between regions is clear, as sustainability becomes both a regulatory requirement and a competitive differentiator.

Conclusion

The next decade will be shaped by AI-driven personalization, omnichannel health hubs and sustainable supply chains. Hospitals, retail and logistics will converge into a seamless, data-driven ecosystem where care is continuous rather than episodic. The power of the individual will grow immensely, providing better insights and choices for both care and related products.

Healthcare is an extremely resilient industry and a critical part of consumer life, so healthcare spending tends to rise as a share of total expenditure. It remains one of the most stable and promising areas for investment, tied to the most valuable asset people have: a healthy life.

The critical question is who will define the standards and platforms for this future. Western systems, while highly regulated and fragmented, ensure trust and safety but struggle with scaling innovation. China’s ability to deploy AI, digital platforms and new service models quickly may allow it to set global standards—whether for diagnostics, equipment or supply chain systems. Over time, Western countries may adopt or adapt these standards once regulatory frameworks catch up.

The future of healthcare delivery will therefore be defined not only by technology and patient needs, but by who sets the standards—whether in Shanghai, Brussels or Washington—that will shape the global healthcare ecosystem of tomorrow.