What is the magic of Internet healthcare to catch the gaints' eyes?

In August, the Internet giant made quite a few moves in the healthcare sector:

• On August 12th, ByteDance completed its wholly-owned acquisition of Baike Mingyi for 500 million yuan ($78 million).

• On August 17th, JD Health received $830 million in Series B financing from Hillhouse Capital, and on the following day, it announced launched "family doctor" services based on an "Internet +healthcare" model. 

• On August 20th, according to Hong Kong Economic Times, JD.com plans to spin off JD Health to raise US$1 billion for a Hong Kong IPO, which is expected to take place as soon as next year.

 

The medical track kicks off a boom this year. In the first half of the year ending June 16, 2020, the amount of funding raised in the healthcare sector in China reached RMB 50.88 billion, an increase of 46.2% from the previous year.

Tencent, JD.com and other Internet giants have laid out the medical track. The Internet industry may seem to have little connection with the healthcare industry, but from the investment, financing news and business layout, the healthcare sector has long been a track for the intensive layout of Internet giants, and this year's epidemic has also brought new variables to the industry.

The convenience of Internet healthcare was highlighted during the epidemic as demand for healthcare knowledge increased, which is a huge market that has yet to be tapped.

According to the data of Analysys International, in May 2020, the the number of its active users in the medical field was 41,348,000, up 38.4% compared to the same period last year. But the corresponding Internet medical penetration rate in China's healthcare industry is only 8%.

With user demand increasing and market space yet to be tapped, there is no reason for the giants to miss this chance. Today, the Internet giants like Alibaba, Tencent, JD.com, Huawei, ect. with technology, capital and business model to attack on all sides, betting on this industry that may bring explosive growth.

 

Alibaba: focus on B2C model

Among the giants, Alibaba has already made many investments in the medical field. Alibaba's early layout in the medical field is the B2C model. In January 2014, Alibaba teamed up with Yunfeng Fund to make a strategic investment totaling $170 million in CITIC 21CN Company Limited, getting a 54.3% stake and renamed it "Alibaba Health".

Relying on Alibaba Health, Alibaba has shifted the advantages of its e-commerce platform to the pharmaceutical retail sector. According to Alibaba Health's financial report, as of March 31, 2020, the GMV of Tmall's pharmaceutical platform has exceeded 83.5 billion yuan, the overall revenue of its own business exceeded 8.1 billion yuan, and the number of its its annual active users exceeded 190 million. 

At the same time, Alibaba exerts its advantages in e-commerce, cloud computing, financial technology and other fields, and collaborates with resources, such as Taobao, Tmall, Alibaba Cloud, Alipay to focus on B-side operation, achieving the collaborative development of users and the medical industry.

At the technical level, Alibaba Cloud provides support in the fields such as medical AI, Internet hospitals and medical informatization. For example, it introduces deep learning into the field of intelligent medical diagnosis and medical data analysis, and applies it to medical clinical prevention, diagnosis, treatment and other medical processes. Alibaba Health's financial report shows that the brain health screening AI engine has successfully landed in iKang.

On the payment side, Alipay has broadened its business scope in addition to providing a traffic entrance for medical services. Besides, other Alibaba-backed platforms such as Dingtalk, Cainiao, etc. also provide support in medical information technology, drug distribution and other aspects.

At present, Alibaba Health has formed five major business segments: hospital e-commerce, Internet healthcare, smart healthcare, product traceability, and consumer healthcare. 

Therefore, it is very clear that Alibaba aims to collaborate with other resources in the system to deepen the penetration of Internet technologies and products in the medical field.

Through self-built platform, business collaboration, investment expansion, coding technology, Alibaba's medical ecological closed loop is being formed.

 

Tencent: deepen the cooperation around the whole medical industry chain

Tencent's layout in the healthcare sector also began with investments.

Since 2014, Tencent has been investing in some medical platforms. And t hese invested projects can be grouped into the following categories: hospital side, smart device side, and health management side.

From the investment layout, the difference between Tencent's medical layout and Alibaba's is that Tencent hopes to maximize its own traffic advantages, and strengthen its own connection advantages through registration, health management and other layouts.

According to the official introduction, Tencent has formed four major product layouts in the medical field: Tencent Miying, Tencent Cloud, Tencent Security and Tencent Medical.

As a whole, with the penetration of the Internet into the medical field continuing to deepen, Tencent's businesses and capabilities have become more closely integrated with medical care. Based on the foundation of connectivity, Tencent will continue to deepen cooperation and penetration around the entire medical industry chain.

 

JD.com: access to the entire industry chain from pharmaceutical retail

JD Health is the key layout of JD.com in the medical field, which has received $931 million in Series A funding and $830 million in Series B funding, and is the third "unicorn" in JD.com.

Although both JD.com and Alibaba belong to the e-commerce industry, their development logic in the medical field is quite different due to the differences in their business models. Generally speaking, the core idea of JD Health is: based on JD Pharmacy, JD Health will focus on the retail side of medicine, and then gradually expand into the deep field of pharmacy services and Internet medical services.

At present, JD Health's retail segment has become the largest pharmaceutical retail channel in China.

Due to its own e-commerce and logistics base, JD.com has grown rapidly. With the help of JD.com online platform, the pharmaceutical retail business can be quickly promoted, and the upstream procurement advantages of JD.com retail and the nationwide logistics network of JD.com Logistics can be applied to the medical field. At present, it has served more than 400 cities in 21 provinces.

JD.com's heavy asset investment has become the basis for its development in the medical field.

 

Huawei: take advantage of technology and hardware

Unlike Alibaba, Tencent and JD.com, Huawei's layout in the medical field is more focused on leveraging its own advantages in technology and hardware capabilities. On the B-sides, Huawei focuses on promoting the application and implementation of new technologies such as 5G, cloud computing, artificial intelligence, and Internet of Things in the medical field, emphasizing personalized customization with cooperative medical institutions, while for the C-sides, it mainly focuses on smart wearables.

In terms of business direction, Huawei Healthcare is mainly involved in three fields: digital hospital, regional health informatization, and graded diagnosis and treatment.

• Digital hospital operations include mobile health, digital hospital networks and small and medium hospital networks;

• Regional medical information platforms include innovative ICT solutions such as virtualized cloud platforms, health records lifecycle management, and cloud networks;

• Tiered diagnosis and treatment includes a new ICT architecture based on medical collaboration, cloud sharing, open and compatible one network, one cloud and one platform, as well as working with partners to build tiered diagnosis and treatment solutions.

In March this year, Huawei launched two smart watches that support underwater monitoring, scientific sleep and other functions; in April, Huawei set up a new company to sell Class I, Class II and Class III medical devices.

In addition to the Chinese market, Huawei's medical layout also extends to overseas. In April this year, Huawei Cloud announced free and open medical AI services to the world, providing AI medical services including gene sequencing, drug screening and AI-assisted diagnosis.

At present, Lanwon Technology has launched AI+CT assisted diagnosis and quantitative analysis services in cooperation with Huawei Cloud, and has gone live in four hospitals in the Ecuadorian capital; while Joyware Electronics has jointly launched an intelligent AI thermal imaging temperature detection system with Huawei Cloud, which has gone live in Argentina's Ezeiza International Airport.

For the giants, the attractiveness of the market is an important driving force for its entry into the medical field. According to the reports, by 2030, the total scale of China's health service industry will reach 16 trillion yuan, and the industry has great potential for development.

However, the healthcare industry suffers from challenges such as unbalanced resource allocation and data fragmentation, all of which provide opportunities for the giants to enter the game.

This is an article from WeChat official accounts Deep Insights (ID: deep_insights), written by Cao Yu, translated by Chris Yuan.