Internet healthcare has gone through a turbulent 2021.
Recently, Internet medical giants have disclosed their 2021 financial reports, when the "strictest supervision" of the Internet medical rules landed for nearly half a year, what is the development of the Internet medical industry?
The "strictest supervision" rules were introduced, and the market value of Internet medical giants shrank
After the market education of online medical treatment during the new crown pneumonia epidemic in 2020, the Internet medical and health market has been in a period of rapid development in the past two years. According to statistics from the National Health Commission, in the first half of 2021, the number of domestic Internet hospital registrations has exceeded 1600. Jost Sullivan predicts that by 2025, the size of China's Internet medical and health market will grow rapidly to 1.5 trillion yuan, and the penetration rate will increase from 4.3% in 2020 to 13.2%.
In last year's Aoyi News "Internet Medical Platform" evaluation report, it was found that some platforms had chaos such as simple medical procedures, arbitrary prescription drug issuance, and uneven qualifications of practicing physicians. In October 2021, the Medical Administration Bureau of the National Health Commission issued the Detailed Rules for the Supervision of Internet Diagnosis and Treatment (Draft for Comment), which pointed out the gray areas that exist in the development of Internet medical care in the report: AI prescriptions, first buy drugs and then make up prescriptions, online drug rebates, etc., and further demarcated the boundary between medical, pharmaceutical and scientific and technological services, requiring Internet medical care to be "of the same quality and same supervision" as physical diagnosis and treatment to the greatest extent. The regulatory rules, which are known as the "strictest in history", also propose that artificial intelligence software should not be fraudulently used to replace the doctor's own treatment, and at the same time require the establishment of an evaluation and withdrawal mechanism for medical institutions, and require Internet hospitals that rely on physical medical institutions to obtain a "medical institution practice license" separately, and check once a year. It can be said that the draft for comments has ushered in a new challenge to the Internet medical industry, which means that the era of "barbaric growth" of the industry is coming to an end.
Source: The official website of the Medical Administration and Medical Reform Bureau of the Health Commission
Xu Xiaoliang, vice president of the Guangdong Medical Device Industry Association and deputy general manager of the Southern Institute of Pharmaceutical Economics, believes that in the past two years, due to the stimulation of the epidemic, the construction of Internet hospitals has developed vigorously. The introduction of the Internet diagnosis and treatment regulatory rules has a slight cooling effect on the entire market while clearing the source. Indeed, the secondary market has also reacted to this. JD Health (06618. HK), Alibaba Health (00214. HK), Ping An Good Doctor (01822. HK) three Internet healthcare giants have started a downward spiral since the second quarter of last year. Compared with the high point of stock prices in 2021, the market value of the three giants of JD Health, Ali Health and Ping An Good Doctor Internet medical industry continues to shrink. According to statistics, the stock prices of the three companies have fallen by 59%, 70% and 71% respectively in the past year.
Giants disclose financial reports Losses continue
On March 28, JD Health released its 2021 financial report. According to the financial report, Jingdong Health's revenue in 2021 was 30.68 billion yuan, an increase of 58.3% year-on-year. Net loss narrowed to 1.073 billion yuan from 17.235 billion yuan in the same period last year; earlier, on March 15, Ping An Health (formerly Ping An Good Doctor) released its 2021 financial report. According to the financial report, the revenue in 2021 was 7.334 billion yuan, an increase of 6.8% year-on-year. Net loss widened to $1,539 million from $949 million in the same period last year. JD Health's loss margin narrowed, while Ping An Health's loss widened. In November last year, Alibaba Health released its mid-year report as of September 30, and the financial report disclosed that Alibaba Health's revenue was 9.36 billion yuan, an increase of 30.7% year-on-year; a loss of 232 million yuan during the period, a profit of 279 million yuan in the same period of the previous year; an adjusted loss of 283 million yuan, a profit of 436 million yuan in the same period last year.
Source: Jingdong Health's 2021 financial report
Source: Ping An Health's 2021 financial report
Under the dual role of the strictest new regulations and the general coldness of the pharmaceutical market, the three giants of Internet medical care, which have lost money endlessly, have fallen into the dilemma of "the ship is difficult to turn around".
Judging from the annual report, the e-commerce genes of Ali Health and Jingdong Health make it difficult to escape the setting of "selling drugs" to make money. According to the annual report data, the sales revenue of pharmaceutical and health products is still the main source of JD Health's total revenue. In 2021, Jingdong's health commodity revenue was 26.177 billion yuan, an increase of 56.1% year-on-year, accounting for 85.3% of the total revenue; from April to September last year, Alibaba's health and pharmaceutical self-operated business achieved revenue of about 8.1 billion yuan, an increase of 34.5% year-on-year, accounting for nearly 87% of the total revenue. Among them, the self-operated pharmacy operated by the "Ali Health" brand accounted for 64% of the drug revenue, and the prescription drug business revenue increased by 127.3%.
In order to try to get rid of the "selling drugs" setting, JD Health has been exploring "service" to make money in the past year. According to the annual report, in terms of services obtained from online platforms, digital marketing and other services, JD Health's revenue in 2021 was 4.5 billion yuan, an increase of 1.9 billion yuan or 72.7% compared with 2.6 billion yuan in 2020. The reason for the increase in performance is the increase in digital marketing service fees, the increase in the number of advertisers on the platform, and the increase in the sales volume and number of third-party merchants on the online platform, which has increased commissions and platform usage fees; Ping An Health is also seeking a breakthrough in its business model. According to the annual report, in 2021, Ping An Health has adjusted its business structure, and the original four major sectors of medical services, consumer medical services, online malls, health management and interaction have been integrated into two major businesses: medical services and health services. The three major sectors of consumer healthcare, online mall business, health management and interaction were merged into health services.
Overall, the first wave of dividends in Internet medical care has passed, and it is urgent to find new growth points.
The "second echelon" players broke into the IPO at a loss
While the three giants adjusted their business models, a group of second-tier enterprises that avoided the e-commerce model and focused on building Internet medical services began the road to IPO.
In 2021, Yidu Technology and Medical Pulse Tong successfully landed on the Hong Kong Stock Exchange, and WeDoctor, Zhiyun Health, Yuanxin Technology, Dingdong Health, and Keya Medical also submitted listing applications. Under the concept of Internet medical treatment, these IPO companies have made achievements in different segments, such as Keya Medical entering the Internet medical industry with AI technology, and Dingdong Health plans to create profit space by building offline "smart pharmacies".
However, from the prospectus, these second-tier Internet medical companies are also in a state of loss.
Taking Tencent-based medical company Yuanxin Technology as an example, the prospectus shows that the company's losses (net losses) for the period from 2018 to 2020 were 118 million yuan, 201 million yuan and 363 million yuan, respectively, and the loss in the first 8 months of 2021 was 462 million yuan, with a cumulative loss of 1.144 billion yuan in more than three years; the prospectus of Dingdong Health shows that from 2019 to 2021, the company recorded operating income of 1.276 billion yuan. 2.229 billion yuan and 3.679 billion yuan, the net loss of the same period was 274 million yuan, 920 million yuan and 1.599 billion yuan, respectively, the cumulative net loss of the three years was as high as 2.793 billion yuan; WeDoctor prospectus shows that the loss of WeDoctor in 2018-2020 was 4.052 billion yuan, 1.937 billion yuan and 1.914 billion yuan, and the adjusted net loss was 415 million yuan, 757 million yuan and 869 million yuan, respectively. WeDoctor lost 8 billion yuan in three years.
Xu Xiaoliang believes that from the perspective of the Internet hospital business model, the initial cost of hospital licenses, the construction of software information systems, the call for the cohesion of doctor resources and other aspects will be relatively high. And because the platform initially needs to open the market by gaining user trust, it cannot initially have a high fee for medical services, so there will be a status quo of "not making ends meet". "They will also monetize from the perspective of the products behind them, such as the sale of related drugs." In Xu Xiaoliang's view, the landing and realization of the entire business model of Internet medical care needs to be integrated through the integration of the upstream and downstream industrial chains, and then form a closed loop in order to continue to move forward.
The expectations of the public and capital for Internet medical treatment are not only a "selling drugs" platform, in the future, in the fiercely competitive track, how Internet medical care tells a good business story is worth looking forward to.
Aoyi news reporter Lin Shiyan