China Healthcare: Potential Opportunities From One Of The Fastest Growing Major Global Healthcare Markets

An Overview of the KraneShares MSCI All China Healthcare Index ETF (Ticker: KURE)

KURE | 3/31/2026

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KraneShares MSCI All China Healthcare Index ETF — KURE

Investment Strategy:

KURE seeks to measure the performance of the MSCI China All Shares Healthcare 10/40 Index. The Index is a free float-adjusted market capitalization-weighted index designed to track the equity market performance of Chinese companies engaged in the healthcare sector. The securities in the Index include all types of publicly issued shares of Chinese issuers, which are listed in Mainland China, Hong Kong, and the United States. Issuers eligible for inclusion must be classified under the Global Industry Classification Standard (GICS) as engaged in the healthcare sector. The issuers included in the Underlying Index may include small-cap, mid-cap, and large-cap companies.

China Healthcare Sector Highlights:

• China is the second largest healthcare market globally, with total out-of-pocket healthcare expenditures estimated to have reached $420 billion in 2025, after doubling over the past ten years.
• There is still opportunity for considerable growth in China's healthcare market, with per capita out-of-pocket healthcare spending at just over $298, compared to an average of $1,200 among the Organization for Economic Cooperation and Development (OECD) countries.
• China's aging population, rising incomes, and increasing urbanization may provide a sustained catalyst for growth in China's healthcare sector.

KURE features:

• Exposure to Chinese companies listed in Mainland China, Hong Kong, and the United States that are involved in the healthcare industry.
• Exposure to key healthcare subsectors: Biotechnology, General Pharmaceuticals, Care Providers, Medical Devices, and Traditional Chinese Medicine.
• Exposure to companies that may benefit from China's growing middle class and aging population.
• Access to major global healthcare companies that are often not captured by broad indexes.

An aging population means a growing healthcare market.

• China's population is aging rapidly, and this demographic shift is likely to have significant implications for the country's healthcare system.
• China's population aged over 60 is expected to more than double by 2050 to more than the entire US population.
• China's healthcare expenditure is still small compared to the OECD average.

Population in China aged 65+ as % of Total Population

(2015–2025 trend showing increase from ~10% to ~16%)

Number of People aged 60+

• 2025: ~320 million
• 2050 Projection: ~500 million

China's health expenditure could surge in the coming years due to demographic changes and rising incomes.

China - Elderly Health Expenditure: Scenarios

Scenario	2025	2035	CAGR
Constant Per Capita Expenditure	~0.6%	~1.3%	+8% CAGR
Per Capita Expenditure Rises to 50% of OECD Average	~0.6%	~6.6%	+27% CAGR

Data from KraneShares, Pew Research Center, and OECD as of 12/31/2025. Assumes constant CNY/USD exchange rate, 1% average annual inflation, that health expenditure doubles for ages 65+, and equivalent scaling of out-of-pocket expenditure and covered costs.

China healthcare stocks have exhibited low correlations to both broad-based global benchmarks and global healthcare benchmark since KURE's inception in 2018.

Weekly Correlation Since KURE Inception (12/31/2018 – 3/31/2026)

Correlation	KURE	S&P Biotech Index	S&P Global Health Care 1,200 Index	S&P 500 Index	MSCI ACWI Index
KURE	1
S&P Biotech Index	0.36	1
S&P Global Health Care 1,200 Index	0.29	0.64	1
S&P 500 Index	0.33	0.60	0.76	1
MSCI ACWI Index	0.37	0.63	0.76	0.97	1

As China's population moves to cities and wages increase, healthcare is becoming a greater focus.

• As average household income and urbanization rates have risen, Chinese citizens have greater access to healthcare knowledge and have a greater ability to pay for medical-related costs.
• This is leading to a surge in the diagnosis and treatment of non-communicable diseases such as cancer.
• In 2016, the government responded to growing healthcare concerns by launching the "Healthy China 2030 Plan," a national initiative that promotes diet, exercise, and access to healthcare services.

China Urban Population

(Population in Millions: 189 in 1980, 300 in 1990, 452 in 2000, 658 in 2010, rising to 953 in 2025)

Disposable Income of Urban Households in China

(RMB: Rising from ~22,000 in 2015 to ~44,000 in 2025)

China's domestic pharmaceutical market could be poised for significant future growth after regulatory overhaul.

• China's pharmaceutical sales are estimated to have been approximately $120 billion in 2025 and maintain a compound annual growth rate (CAGR) of 7.22% through 2028.
• Per capita, out-of-pocket health spending remains low at $350, as compared to an average of around $5,000 for OECD countries, implying significant upside potential for health spending.
• Thanks to universal single-payer health insurance established in 2011, 95% of China's population has access to health care services.

China Total Annual Pharmaceutical Sales

(Billions of RMB, 2012–2025)

• Launch of "Healthy China 2030 Plan" drove sales growth.
• The expansion of the scope of centralized drug and device approvals and purchasing led to a sales slump in the short term.
• Sales return to growth.

We believe recent declines in the share prices of China's leading healthcare companies have not been fundamentally driven.

China Health Care (Total EBIT vs. Price)

• Chart comparing KURE Price (left axis) vs. Total EBIT in Millions (right axis) from 6/1/2018 to 6/1/2025.
• KURE price has declined while total EBIT has remained relatively stable, suggesting price declines are not fundamentally driven.

S&P Global 1,200 Health Care Index (Total EBIT vs. Price)

• Chart comparing S&P Global 1,200 Health Care Index level (left axis) vs. Total EBIT in Millions (right axis) from 9/1/2018 to 9/1/2025.
• Index price and EBIT have moved more in tandem compared to KURE.

China's Healthcare Ecosystem

General Pharmaceuticals

Medical Devices

Care Providers

Biotechnology

Traditional Chinese Medicine

China has become a top location for medical outsourcing services and drug innovation.

The transition from a generic health care model to one based on innovation and competition is supported by public policy in China.

Contract Research Organizations (CRO) Overview

• CROs use their state-of-the-art, turn-key labs with advanced technological capabilities and access to a deep bench of scientists to develop new drugs and treatments for companies that wish to outsource their R&D processes.
• They are thereby able to profit from the global R&D process without bearing as much risk, which makes for a defensive business model.
• Industry leaders Wuxi Biologics and Wuxi Apptec provide end-to-end support to pharmaceuticals from discovery to commercialization.

Main Beneficiaries of Research and Development (R&D) Spending

• Contract organizations are the main beneficiaries of the strong growth in R&D spending in China as more companies outsource their R&D needs.
• Contract research organizations also receive R&D spending from abroad as multinationals hire them to test and develop new drugs.

Innovations

• Akeso has developed a new lung cancer treatment that could be twice as effective as the current global best-in-class treatments, based on clinical trial data.

Innovent Biologics has increased revenues ninefold since 2019.

The biotechnology firm has developed one of the most effective treatments for lung cancer.

Innovent Biologics' Annual Revenue

(RMB, Billions)

Year	Revenue (RMB Billions)
2019	~1
2020	~4
2021	~4.5
2022	~4.7
2023	~6.2
2024	~9.5
2025	~13

Out-Licensing and In-Licensing represent a significant opportunity for China's pharmaceutical firms.

Definitions:

• Out-Licensing: The practice of selling pharmaceuticals or medical devices developed in China in international markets.
• In-Licensing: The practice of selling pharmaceuticals or medical devices developed in international markets in China.

Favorable Policies

Several market-friendly policies have been introduced encouraging joint ventures between multinational companies and domestic companies, which include:

• Increasing efficiency and transparency of drug review and approval processes
• Maximizing quality of generic drugs
• Enhancing efficiency in R&D innovations
• The Chinese government has been working to speed up the approval process for new drugs and to encourage the development of innovative drugs in recent years.

Pharmaceutical In-Licensing

The Hisun-Pfizer joint venture is mutually beneficial in international marketing and in the commercialization of generic medicines in China.

Medical Devices In-Licensing

Fosun Pharma and Intuitive Surgical's joint venture is mutually beneficial in biomedical technology and pharmaceutical manufacturing and distribution.

Pharmaceutical Out-Licensing

Eli Lilly developed a lung cancer treatment with Innovent.

The number of out-licensing deals has increased in recent years, leading to an even more global customer base for China's pharmaceutical firms.

No. of China Drug Licensing Deals: In vs. Out

Year	Out-Licensing	In-Licensing
2017	2	37
2018	10	64
2019	12	85
2020	21	83
2021	42	128
2022	48	66
2023	73	170
2024	70	19
2025	186	20

China's medical device market is world-class with both domestic and international customer bases.

• Due to perceived quality advantages, medical equipment imports from the U.S. and Europe remain high. However, as quality increases, Chinese domestic medical device companies are increasingly competing with U.S. and European companies, making particularly strong gains in medium-level technology niches.
• In addition to benefitting from strong domestic demand, China's top medical device companies have overseas operations and serve customers globally.

China Medical Devices Market

Metric	Medical Devices
Total Market Size ($ Billions)	45.0
Expected Compound Annual Growth Rate (CAGR) 2025-2032 (%)	9.40%

Medical Devices

Mindray is a leading global supplier of in-vitro fertilization equipment, ventilators, among other key medical devices.

Global medical devices giant Mindray has doubled its revenue since 2019.

Mindray Annual Revenue

(RMB, Billions)

Year	Revenue (RMB Billions)
2019	~16
2020	~21
2021	~25.5
2022	~31
2023	~35
2024	~37
2025	~35 (estimated)

The Traditional Chinese Medicine (TCM) industry represents a sizable portion of the entire market.

• TCM has a rich 2,000-year history encompassing herbal medicine, acupuncture, massage and dietetics.
• In December 2016, China's State Council issued the "Strategic Plan on the Development of Traditional Chinese Medicine," making the development of TCM a national strategy. The policy emphasizes promoting a balance between Western medicine and TCM practices.
• TCM has a global footprint, and the global TCM market was valued at $86 billion in 2025 and is expected to grow to $98 billion by 2032.
• TCM practitioners emphasize preventative medicine and treating diseases before they occur through healthy living and proper diets. This is especially important in China, which has increased obesity, diabetes, and smoking rates.
• TCM companies can also benefit from increasing incomes and consumer spending, as many TCM products are popular for personal wellness purposes rather than urgent medical needs.

TCM has over 2,000 years of tradition

In Traditional Chinese Medicine, good health is believed to be achieved by a balance between yin and yang.

Traditional Chinese Medicine

Tong Ren Tang manufactures and sells traditional remedies in China and abroad.

As China's population becomes more health conscious, the demand for high quality preventative care also increases, providing a catalyst for private hospitals and facilities that offer health examinations, evaluations, and consulting services.

Privatization

• Rising demand from wealthier Chinese seeking quality care and diverse services has led to increased privatization of hospitals to match demand, but public hospitals still far outnumber private hospitals.
• We believe China's public hospital system will be insufficient to satisfy the need of the population through 2050, leading to the establishment of more private hospitals.

Healthy China 2030: Upgrading Primary Care Institutions

• The "Healthy China 2030" policy outlines the government's plans to upgrade the standards and quality of service in primary care institutions.
  • The government sees general practitioners as the gatekeepers of people's health and primary method of controlling medical expenditures.
  • By 2030, the goal is to have five qualified general practitioners available for every 10,000 residents in China.
  • The National Health and Family Planning Commission estimates China needs to add 210,000 general practitioners.
  • The establishment of a medical network and referral system may help reduce overcrowding in China's largest tertiary hospitals.

Care Provider

Aier Eye Hospital is a leading private hospital administrator in China and globally. Aier operates 718 ophthalmology facilities in Mainland China, 101 clinics in Europe, 8 clinics in Hong Kong, 14 clinics in Southeast Asia, and one clinic in the United States.

Example Holdings in the KraneShares MSCI All China Healthcare Index ETF (Ticker: KURE)

Subsector	Example Holding	Holding Weight (as of 3/31/2026)	5-Year Average Revenue Growth	Ex-China Comparable Company	5-Year Average Revenue Growth
General Pharma.	Jiangsu Hengrui	4.58%	17.50%	Pfizer	17.32%
Medical Devices	Mindray	4.28%	4.90%	Thermo Fisher Scientific	11.57%
Care Providers	Aier Eye Hospital	2.01%	16.40%	Community Health Systems	-0.74%
Biotech	BeOne	8.17%	80.64%	Gilead Sciences	5.18%
Traditional Chinese Medicine	Tong Ren Tang	0.86%	10.26%	Natural Alternatives International	4.81%

Many of China's leading healthcare companies operate and serve customers globally. Nonetheless, they are under allocated to in global healthcare portfolios.

WuXi Biologics

• Market Cap ($, Billions): 19
• % of S&P Global Health: 0

Country	No. of Facilities
USA	3
Germany	1
Ireland	1
Singapore	2

WuXi AppTec

• Market Cap ($, Billions): 44
• % of S&P Global Health: 0

Country	No. of Facilities
USA	5
Germany	1
Switzerland	1

Mindray

• Market Cap ($, Billions): 28
• % of S&P Global Health: 0

Country	No. of Facilities
USA	3

KURE Portfolio Characteristics

Subsector Breakdown

• Biotechnology: 37%
• General Pharmaceuticals: 50%
• Medical Devices: 10%
• Care Providers: 2%
• Traditional Chinese Medicine: 1%

Market Cap Breakdown

• Large Cap: 97%
• Mid Cap: 3%

Listing Location Breakdown

• Hong Kong: 55%
• Mainland China: 44%
• United States: 1%

KraneShares MSCI All China Health Care Index ETF

Investment Strategy:

The KraneShares MSCI All China Health Care Index ETF (KURE) seeks to measure the performance of MSCI China All Shares Health Care 10/40 Index. The Index is a free float adjusted market capitalization weighted index designed to track the equity market performance of Chinese companies engaged in the health care sector. The securities in the Index include all types of publicly issued shares of Chinese issuers, which are listed in Mainland China, Hong Kong and United States. Issuers eligible for inclusion must be classified under the Global Industry Classification Standard (GICS) as engaged in the healthcare sector. The issuers included in the Underlying Index may include small-cap, mid-cap and large-cap companies.

Fund Details (Data as of 3/31/2026)

Field	Value
Primary Exchange	NYSE Arca, Inc.
CUSIP	500767835
ISIN	US5007678353
Total Annual Fund Operating Expense (Gross)	0.79%
Total Annual Fund Operating Expense (Net)*	0.65%
Inception Date	01/31/2018
Distribution Frequency	Annual
Underlying Index	MSCI China All Shares Health Care 10/40 Index (USD)
Net Assets	$80,417,056
Number of Holdings	54

Top 10 Holdings as of 3/31/2026

Holding	Ticker	%
INNOVENT BIOLOGICS INC	1801	8.69
BEONE MEDICINES LTD-H	6160	8.17
WUXI BIOLOGICS CAYMAN INC	2269	6.63
AKESO INC	9926	5.74
WUXI APPTEC CO LTD-A	603259	5.68
JIANGSU HENGRUI PHARMACEUT-A	600276	4.58
SHENZHEN MINDRAY BIO-MEDIC-A	300760	4.29
SINO BIOPHARMACEUTICAL	1177	4.18
CSPC PHARMACEUTICAL GROUP LT	1093	3.61
HANSOH PHARMACEUTICAL GROUP	3692	3.59

KURE Performance History as of 3/31/2026

	Cumulative %			Average Annualized %
	3 Mo	6 Mo	Since Inception	1 Yr	3 Yr	5 Yr	Since Inception
Fund NAV	-1.34%	-15.89%	-17.17%	12.90%	-4.74%	-11.69%	-2.28%
Closing Price	-0.18%	-15.19%	-16.43%	13.84%	-4.09%	-11.82%	-2.17%
Underlying Index	-1.12%	-15.76%	-12.06%	13.67%	-4.01%	-11.03%	-1.56%

Index Definitions:

S&P Global 1,200 Health Care Index: The S&P Global 1200 Health Care index consists of all members of the S&P Global 1200 that are classified within the GICS® health care sector, including both developed and emerging markets. The index was launched on September 30, 1999.

MSCI World Health Care Index: The MSCI World Health Care Index is designed to capture the large and mid cap segments across 23 Developed Markets (DM) countries. All securities in the index are classified in the Health Care as per the Global Industry Classification Standard (GICS®). The index was launched on September 15, 1999.

S&P Biotech Index: S&P Select Industry indexes are designed to measure the performance of narrow GICS sub-industries. The S&P Biotechnology Select Industry Index comprises stocks in the S&P Total Market Index that are classified in the GICS Biotechnology sub-industry. The index was launched on January 27, 2006.

S&P 500 Index: The S&P 500 Index is widely regarded as the best single gauge of large-cap U.S. equities. There is over USD 9.9 trillion indexed or benchmarked to the index, with indexed assets comprising approximately USD 3.4 trillion of this total. The index includes 500 leading companies and covers approximately 80% of available market capitalization. The index was launched on March 4, 1957.

MSCI All Country World Index (ACWI): The MSCI ACWI captures large and mid-cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries. With 2,558 constituents, the index covers approximately 85% of the global investable equity opportunity set. The index was launched on May 31, 1990.

Term Definitions:

Earnings before Interest and Taxes (EBIT): A company's total revenue before deducting interest and taxes.

Price to Earnings Ratio (P/E): A company's share price divided by its earnings per share. The P/E ratio is meant to provide a sense of whether a company is over or under-valued.

Revenue: The money a company makes from selling goods and services, before the deduction of any expenses.

Revenue Growth: The change in a company's revenues over a specified period of time.

Compound Annual Growth Rate (CAGR): The compound annual growth rate is the rate of return would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment's life span.

Urban Population: Population of urban and suburban areas.

Disposable Income: The income that does not go towards housing and basic necessities.

Per Capita Expenditure: The average annual spending per person on healthcare needs, including both out-of-pocket costs and covered expenses.

Correlation: The degree to which two variables, in this case investments, move in tandem with one another. It is expressed using a number between -1 and 1, with -1 indicating a perfectly inverse relationship, 0 indicating no synchronization whatsoever, and 1 indicating they always move in lockstep with one another.

Important Notes:

Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' full and summary prospectus, which may be obtained by visiting www.kraneshares.com/kure/ Read the prospectus carefully before investing.

Risk Disclosures:

Investing involves risk, including possible loss of principal. There can be no assurance that a Fund will achieve its stated objectives. Indices are unmanaged and do not include the effect of fees. One cannot invest directly in an index.

This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative, educational, or informational purposes and is subject to change.

The Fund may invest in derivatives, which are often more volatile than other investments and may magnify the Fund's gains or losses. Derivatives are also subject to liquidity and counterparty risk.

The ability of the Fund to achieve its respective investment objectives is dependent, in part, on the continuous availability of A Shares and the ability to obtain, if necessary, additional A Shares quota. The Fund is subject to political, social or economic instability within China which may cause decline in value. Emerging markets involve heightened risk related to the same factors as well as increase volatility and lower trading volume.

Narrowly focused investments typically exhibit higher volatility. The Fund's assets are expected to be concentrated in a sector, industry, market, or group of concentrations to the extent that the Underlying Index has such concentrations. KURE is non-diversified.

ETF shares are bought and sold on an exchange at market price (not NAV) and are not individually redeemed from the Fund. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns.

The KraneShares ETFs and KFA Funds ETFs are distributed by SEI Investments Distribution Company (SIDCO), 1 Freedom Valley Drive, Oaks, PA 19456, which is not affiliated with Krane Funds Advisors, LLC, the Investment Adviser for the Funds, or any sub-advisers for the Funds.