Capital accumulation, risk hidden: troubles of mobile medical growth

Release date: 2014-12-23

Alibaba, Xiaomi, Kyushutong, Kang Enbei, Baiyang Medicine, these leading companies in the industry, now have a common interest intersection - Internet medical. This borderless cross-industry hotspot is becoming a topic of increasing capital attention.

In the first ten days of December 2014, mobile phone manufacturer Xiaomi cross-border investment in wearable health equipment, pharmaceutical company Kang Enbei through mergers and acquisitions into the drug e-commerce, health asset management group Baiyang Pharmaceutical announced the creation of a comprehensive online medical The solution, a lot of big incidents came one after another, "medical on the fingertips" ushered in hot heat.

After the mobile industry in the consumer goods industry, the mobile information technology is subverting the most special attributes of medicines and medical services. In the three major areas of drug sales, hardware manufacturing and medical services, Internetization is taking place.

Recently, Paigang, chairman of Baiyang Pharmaceutical Group, said in an exclusive interview with the 21st Century Business Herald that the rules of the Internet are integration, optimization and cooperation. The volume of funds is not the most important indicator of Internet medical care. “Building this industry is a time-consuming process. Internet companies and medical companies are faced with different thresholds and they have to be broken.”

In the camp of Internet companies and traditional pharmaceutical companies and medical providers, on the one hand, there are constantly “new players” entering and new products being launched. On the other hand, there are still not enough successful profit models and a wide range of solutions. For reference, the uncertainty here has also become a great resistance for the investment community and industry to promote Internet medical care.

Pharmaceutical retail: the policy door will open

As the year is approaching, it is regarded as one of the most important events in the industry in 2014, and the new drug market will eventually land. This landmark event also means that China's drug sales policy is showing an unprecedented trend of relaxation.

According to various sources, the new regulations for online drug sales, "Internet Food and Drug Administration Supervision and Management Measures" are likely to be fully implemented on January 1, 2015, which will not only enable OTC (over-the-counter drugs) that have already been sold in e-commerce channels. Further formalization with health care products, online sales of prescription drugs that have been strictly controlled before will also be lifted.

Policy has come to the fore, and more and more large listed companies are eager to try new water channel sales.

Following the pharmaceutical companies such as Jiuzhoutong (600998.SH), Shanghai Pharmaceuticals (601607.SH; 02607.HK) and Kangmei Pharmaceutical (600518.SH), the domestic botanical drug company Kang Enbei (600572.SH) also started this month. Joined the e-commerce army, acquired 30.81% of the B2B e-commerce Zhencheng Pharmaceutical through the price of 271 million yuan, and owned the “medical online” sales platform and the information-based pharmaceutical logistics distribution system covering many medical institutions.

Not only is the sales side boiling because of the New Deal, but even the pharmaceutical marketing line has spread from offline to the Internet. Baiyang Medicine is one of the earliest "people who eat crabs."

As one of the first online pharmacies in China, Baiyang Medicine has a dedicated team of about 100 people specializing in medical information applications. According to its chairman, Fu Gang, there are only a handful of companies in the industry that invest hundreds of millions of dollars in online R&D every year. The reason for the radicalization is because the group believes that "the change of information technology to the industry will enable them to find a chance to overtake a corner in a manufacturing field."

At present, Baiyang Pharmaceutical has two major layouts for pharmaceutical e-commerce: one is to do precise marketing on the Internet to improve the communication efficiency of the brand. This practice has become a common practice in the field of fast-moving, but there are few drugs in the field of advertising marketing. Some people try; the second is to develop the drug O2O system, and strive to create an integrated distribution model of “doctors prescribe drugs online, patients take drugs offline”.

In the past five years, with the transformation and precipitation of the electricity business, domestic pharmaceutical e-commerce channels are also exploring a variety of platform architectures and profit models. Representative enterprises mainly include third-party platforms such as Tmall [microblogging] medical hall and Jingdong Pharmaceutical City, self-built platforms such as Jiuzhoutong and Yixintang, and vertical pharmaceutical e-commerce such as Jianyi.

Profit problem: growing troubles

However, China's pharmaceutical e-commerce, which is rapidly developing and occupying the top of the mountain, has a “growth trouble” while its sales record has been broken for years.

In 2013, as a platform-based B2C website, the transaction scale of Tmall Medical Museum was about 2.04 billion yuan, accounting for 47.89% of domestic pharmaceutical e-commerce. In contrast, all self-operated B2C e-commerce websites have a total annual transaction volume of 1.68 billion yuan, accounting for 39.44% of the market. But under the high growth of the market, the profit rate is geometric?

The preface of the executive director of UBS Securities, I said that the prospects for the rise of medical e-commerce are clear, but the process is long. In 2013, the sales volume of a number of pharmaceutical e-commerce companies reached 300 million yuan, and a few companies have achieved profitability. The sales of the top ten pharmaceutical B2C companies have exceeded 100 million yuan, but it will take time to convert the scale into profits.

In this high-risk market, the operational risks faced by pharmaceutical e-commerce companies are not limited to the pressure of profit. Earlier, some media released survey data saying: "On the pharmacy network, Golden Elephant Network, Shanghai Pharmacy Network, Tmall, Amazon [microblogging] and other online businesses, only 36% of enterprises support drugs and medical care. There is no reason to return the equipment. The same product has different return regulations on different e-commerce platforms. The chaos of non-standard after-sales can be seen."

In this regard, Liao Guanghui, an expert in the field of mobile medical and the chairman of Guangzhou Express E-Commerce Co., Ltd., said in an exclusive interview with the 21st Century Business Herald: "Now many companies are rushing to do Internet medical care, and they have not really figured out the characteristics of the Internet. Whether it is an Internet enterprise or a traditional pharmaceutical company, it is necessary to maximize the advantages through multi-level cooperation, and grasp the core medical resources is the king. The medical industry is a life-related industry. No matter how medically, the bottom line of quality and service must be kept. ."

Early adopters of Baiyang Medicine: taking doctors as the core

In this round of Internet medical tides of capital accumulation, medical services and information sales other than the sale of physical drugs are also highly regarded. However, as the policy uncertainty faced by online sales of drugs, the online business of medical services is also in the chaos of exploration.

Due to the fact that the current staffing positions, income and benefits of medical staff in China are still tied to public medical institutions, the doctors' practice of multi-point practice among medical institutions has not been fully recognized and widely promoted despite several years of trials.

After the prejudging of the future policy, a group of companies like Baiyang Medicine began to build a re-integration business of medical resources on the mobile Internet. Fu Gang told 21st Century Economic Reporter that the competitors represented by Alibaba have always valued different drug channels. Baiyang Pharmaceuticals focuses on “taking doctors as the core driving force of the health industry”.

According to the 21st Century Business Herald reporter, based on the academic needs and medical status of medical staff, Baiyang Pharmaceutical launched the “Baiyang Health Network (both members and doctors), handheld medical news, medical letters, medical conferences. A number of APPs (Intelligent Terminal Application Software) are built around medical services and information platforms.

Take “Baiyang Health Network” as an example. This APP is Baiyang Pharmaceutical Group's software for the management of a large number of chronic disease patients. For chronic diseases such as diabetes and high blood pressure, long-term regular medication, continuation of prescriptions and regular review are the common needs of hundreds of millions of patients, but the long queue of registration and the practical difficulties of not being able to fix the doctors with the designated doctors have allowed Baiyang Medicine to see it. Business opportunity.

“Because of the permission to prescribe, Baiyang’s APP can continue the new prescription with the APP after the first prescription for chronic disease treatment through the actual consultation, eliminating the cost of queuing registration. After passing the prescription to the patient through the mobile phone, the patient can choose a pharmacy to distribute in Baiyang Medicine's own pharmacy library and a series of pharmacy cooperation suppliers, forming a closed loop of service." Fu Gang said.

The reporters of the 21st Century Business Herald learned that the profit model that Baiyang tried was based on the interests of doctors who could negotiate service fees themselves after they continued their services through the information system. Such service fees can range from a few dollars to tens of dollars each time, depending on the patient's own acceptance. In terms of design logic, the doctor adds extra income and the patient reduces the cost of queuing time.

Fu Gang told 21st Century Economic Reporter that the first phase of the new APP will select 2,000 doctors to go online for consultation. In the pharmaceutical logistics distribution, the company will integrate the partners and its existing 170,000 pharmacy resources, and screen out 10,000 of them, which will be pushed out in large cities and prefecture-level cities.

“Starting from the slow-moving patients after discharge, our next app focus will focus on the sub-health groups and help them configure high-level doctors for health management. We have previously invested in a genetic testing company, which will be a future business linkage. Part of it," he said.

Mobile Medical: Capital Shops Feast

At present, there are many communication and consultation APPs connecting doctors and patients online, including Good Doctor, Neusoft Xikang, Chunyu Doctor, Fun Medical Network Palm Hospital, Baiyang Health Network, etc., but there are few profitable people.

As with the initial dilemma of almost all Internet products, the long incubation period and the pressure to promote the burning of money are also reflected in Internet medical products. The heavy reliance on capital promoters has caused great concern in the industry.

In September of this year, Fun Medical Network just got a nearly 10 million US dollars A round of financing led by Honghui Capital, and Dr. Chun Yu also won a $50 million round C in the investment of CICC and Rushan Ventures in August. Financing and planning to land in the capital market in 2017. Previously, Dr. Chun Yu had received a $3 million investment from Blue Run A and a $8 million investment from Bertelsmann Asia Investment Fund. The company's accumulated financing has exceeded 61 million yuan.

This is just the tip of the iceberg of the industry capital feast. In 2014 alone, there were more than 85 financing projects in the domestic Internet medical field.

According to incomplete statistics, this year, including the Neusoft Group's Xikang platform, Neusoft Medical's 3.7 billion investment, and the company's handheld pharmacy launched a $5 million A-round venture capital, telemedicine company Wadi Kang WorldCare and Taimei Medical treatment has received 10 million RMB A round of investment, oncology specialist APP anti-cancer guards received 2 million US dollars of A round investment, telemedicine enterprise eucalyptus won tens of millions of RMB investment, mobile medical enterprise Huima medical technology has obtained millions RMB angel investment, and so on.

In response to this phenomenon, Baiyang Pharmaceutical said that it will not use external investment to transfuse blood and switch to a diversified business profit incubation APP project with a view to controlling business risks as much as possible.

According to Fu Gang, the company currently has a “Baiyang Health Brand Online Fund” with a fund pool of 200 million yuan. Providing project financing, online sales sharing and equity investment to high-quality online brands to network the potential stocks of a number of segments.

At the same time, the brother company Baiyang Investment has also participated in several pharmaceutical companies with IPO prospects and annual sales of over 100 million enterprises. Coupled with Baiyang Pharmaceutical's own pharmaceutical business and Baiyang Real Estate's investment in medical logistics, pharmaceutical production bases, medical service centers and healthy communities, diversified sources of profit will become the financial guarantee for Baiyang APP's new business.

Road resistance and length: medical hardware exploration

At present, the industry has reached a general view that the success of mobile medical APP depends largely on the maturity of Internet medical intelligent terminals. The enthusiasm of pan-Internet companies for mobile medical innovation hardware is no less than the investment in building software platforms.

Just earlier this month, a number of Chinese companies, including Jingdong and Xiaomi, made a round of C-investment in US wearables manufacturers and health and fitness platform provider Misfit, raising $40 million. About one-third of Misfit's current business composition comes from China. The head of the company has no ulterior motives to regard China as a strategic market.

The ambitions of Chinese companies are also beginning to emerge. According to the financing agreement, Xiaomi and Jingdong will become strategic partners of Misfit. This move also led to Xiaomi's independent development of the 79-yuan smart bracelet, and another series of smart bracelets with higher prices.

Traditional pharmaceutical companies are not willing to fall behind. In August of this year, Lepu Medical (300003.SZ) was involved in the field of wearable medical equipment for 14 million yuan, closely following the pace of Jiu'an Medical (002432.SZ). Liao Guanghui analyzed the 21st Century Business Herald reporters that the competition for mobile medical devices will continue in the next few years, with great business opportunities and returns. However, it is necessary to be alert to the various risks hidden in the lively scene of the industry.

"At present, the development of hardware equipment is still in its infancy, and there are still problems in user experience and profit model. Moreover, the concept of medical health of Chinese people is more traditional, and the use of mobile products is not much. Some enterprises spend a lot of money on research and development equipment. Consumers are most in need, and the process of turning into profitability will be very long and dangerous for companies," he said.

One of the prominent contradictions is the “squatting” attitude of the regulatory authorities on the identity of hardware devices.

In August of this year, the “U Sugar 2.0 Product”, a diabetes wearable detection management device developed by Youyi Network Technology Co., Ltd., was officially pre-sold. However, at the end of the 20-day pre-sale period, the product was removed from the official website overnight.

According to the news that Yuyi Network had previously disclosed to the 21st Century Business Herald, the non-invasive blood glucose testing equipment was difficult to be put into clinical use because it was difficult to register through the approval of the State Food and Drug Administration. Such products should be classified as the second category of medical device products approved by the regulatory authorities. Because there are few precedents for product standards and technical references, not only in China, but also in Europe and the United States, they are often blocked outside the door. .

However, on December 18, Yuyi Network re-released the upgraded version of the blood glucose monitoring app, and announced that the previously removed U-sugar non-invasive blood glucose testing equipment has obtained CE certification in the European Union and began to apply to the Food and Drug Administration of China. It is expected to become the first non-invasive blood glucose testing equipment approved in China.

In addition, behind the savvy investment in hardware and software, the issues of professionalism and homogenization are becoming more and more serious. Many people in the industry have said that mobile medical equipment cannot replace professional medical care after all, and its functions are still outside the medical industry. It is urgent for relevant departments to follow up the corresponding regulatory mechanisms. At the same time, how to differentiate and continuously innovate such products with similar versatility and similar pricing will lead to industrial elimination in the next few years.

Source: 21st Century Business Herald

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