The internet medical transformation is accelerating, why do institutions give Ali Health an "overweight" rating?

In the post-epidemic era, Internet medical care has become one of the most concerned areas. For the head enterprises that started with pharmaceutical e-commerce, whether to continue to ride on the road of e-commerce, or to invest a lot of resources to "water" Internet medical services while the basic disk is growing rapidly, each family has shown a different attitude.

The meaning behind the "overweight" rating

As the earliest Internet medical leading enterprise listed and mature and operating for many years, Alibaba Health's recent series of actions have revealed its strategic upgrading and business transformation in the new trend of the industry.

Since mid-October, Morgan Stanley, Guosen Securities, CITIC Securities, China Merchants Securities and other institutions have issued research reports to give Ali Health an "overweight" or "buy" rating.

On the one hand, research institutions have observed that new regulations on drug network sales are about to be introduced, and prudent policies are conducive to the long-term healthy and stable development of the industry. At the same time, the entire industry is also under pressure in the short term due to various factors, and institutions have lowered the revenue growth expectations of Ali Health, JD Health and other related enterprises.

On the other hand, various research institutions have given Ali Health an "overweight" rating, the reason is that it is optimistic about Ali Health's long-term commitment to the infrastructure investment of the Internet medical ecosystem, and believes that this move will consolidate its leading position in the Internet medical industry.

Morgan Stanley Research Report pointed out that Ali Health is backed by the huge customer base of the parent company, and in the long run, Internet medical services may have significant synergies with pharmaceutical e-commerce.

China Merchants Securities said that Alibaba Health's two major online platforms, the Medical Deer APP and the Alipay Medical and Health Channel, can now empower all of Alibaba's business channels and provide customers with various O2O medical services. In addition, the company will continue to tap into the potential health management market through its chronic illness benefit program. Therefore, although the company is still in the investment stage of Internet medical infrastructure construction in the short term, the company's investment will be effectively transformed into the core competitiveness of its platform and help the company maintain a leading position among its peers.

It is worth mentioning that after short-term pressure, pharmaceutical e-commerce still has a very large room for growth. Guosen Securities Research Report believes that Ali Health is in the explosive stage of increasing Internet penetration of medical products, and after fiscal 2022 (2021.4-2022.3), the growth rate of income has decreased with the expansion of scale, but the overall development is still in a period of rapid development.

IQVIA's research report released in July this year predicts that by 2024, the out-of-hospital market of pharmaceuticals will reach 394 billion, of which online retail sales will increase to 19.4% (5% in 2018). China Renaissance Capital has also published a research report predicting that the over-the-counter drug (OTC) market that can be combined with drugs can be combined, and the out-of-hospital drug market that the Internet model is expected to penetrate is about 500 billion yuan.

The government also encourages pharmaceutical e-commerce and Internet medical services. The recently released "14th Five-Year Plan" national medical security plan points out that it supports the orderly development of new models and new formats of medical and health services such as telemedicine services, Internet diagnosis and treatment services, Internet drug delivery, and home care services.

Build a closed loop of Internet medical ecology

In 2020, the Internet medical industry ushered in essential changes, and the policies and market dividends brought by the epidemic made Internet medical care enter a new stage, and the business ushered in rapid growth. The new trends that the industry has revealed are that users pay more attention to health management and online medical services, which is testing the adaptability and growth rate of various enterprises.

In fact, whether it is the scale of the number of users served, the total transaction value of the platform's medical and health-related categories, or the value of the pharmaceutical professional services provided to consumers by the pharmaceutical self-operated business, Alibaba Health is the largest online pharmaceutical and health product service platform in China, as well as the online drug retailer with the largest amount of drug sales.

While the basic plate of pharmaceutical e-commerce is growing rapidly, Alibaba Health has continued to cultivate Internet medical care in recent years, accumulated long-term accumulation in health services and digital infrastructure business, and established a closed loop of Internet medical ecology.

According to data from the Mob Research Institute, from the perspective of the Internet medical segment, the users of the pharmaceutical e-commerce platform grew the fastest, an increase of 66% year-on-year, followed by the growth rate of the medical and health management platform, with a year-on-year increase of 31.4%. Meeting the rapidly growing user demand is the deep thinking behind Ali's health drop.

In September this year, Goldman Sachs released a research report saying that it gave Ali Health a "buy" rating for the first time. The bank believes that Alibaba Health has a market-leading online medical product sales platform, and has captured the outlet of "Internet + medical treatment" through its medical deer APP.

In September 2020, Alibaba Health APP was officially renamed as "Medical Deer" APP, continuing to increase investment in Internet medical business, providing services such as medical content search, online consultation, registration, vaccine services, physical examination appointment and report interpretation, drug delivery, and health knowledge education. As of March this year, the number of monthly active users of the Yilu APP has steadily exceeded one million.

In August this year, Ali Health announced its deep integration with the Xiaolu Chinese Medicine Platform. On the basis of the medical and health service system of online and offline integration built by the medical deer App + Alipay medical and health channel, the addition of Xiaolu Chinese Medicine is expected to make Ali Health the most perfect Internet chinese and Western medicine collaborative service platform.

In addition, through Alibaba Group's resource synergy and cross-border cooperation, Alibaba Health is gradually penetrating into all aspects of the medical industry and transforming into a comprehensive medical and health service platform. Innovative businesses such as "hepatitis B insurance" and "family insurance" launched by Alibaba Health and ZhongAn Insurance are its important layouts in the closed loop of "medical + drug + insurance".

In this series of changes, Alibaba Health is changing from a traditional pharmaceutical e-commerce business to a comprehensive medical and health service platform, which is a change that follows the trend. Focusing on the long chain of users' health and medical needs, Alibaba Health has connected a one-stop medical and health service system that integrates online and offline, and penetrates the service into the user's entire medical and health journey in an all-round way.

For example, in the field of oncology medical services that have a significant impact on people's health, Alibaba Health has carried out in-depth layout through ecological construction. In March this year, Alibaba Health strategically invested in Zero Kr Technology to explore the construction of a full-cycle service platform for cancer patients; in June, it signed a strategic cooperation agreement with Herui Gene to jointly create a tumor early screening inclusive medical service with "Internet platform + tumor early screening technology + medical security" as the core; the most recent layout was to participate in the investment of high-tech enterprises in the field of tumor precision medicine, Gilinga, and exert efforts to develop the whole chain of cancer prevention and treatment products and services.

Alibaba Health once said that accelerating its efforts in the field of cutting-edge medical science and technology is from the perspective of user value. Moving to the 7th year of the company's life, Ali Health's chess moves are more focused on the innovative development of the industry and the needs of public health, rather than short-term profit-seeking, which is exactly the state of being an industry leader.

This article originated from the Financial Circle Network