Can JD Health set off a fever pitch in the Internet healthcare?


JD Health, Chinese largest online healthcare platform, soared 56% on its debut in Hong Kong on Tuesday, December 8. And the shares closed up 56% at HK$110. The company's market value topped $44 billion at the close of Tuesday trading, as investors bank on the pandemic boom in digital health services. This means that JD Health has become Asia's biggest health care listing on record, surpassing the US$2.3 billion offering by Japan's Ostuka Holdings Co a decade ago.

But it has only been 19 months since JD Health became an independent unit from its parent company, so why has it been so successful on its first day of trading? As a rising star in Internet healthcare, what impact will the listing of JD Health have on the entire industry?


JD Health's market cap surpassed that of Alibaba Health


The first-day gains lifted Beijing-based JD Health to a market value of roughly $44 billion, surpassing that of rival Alibaba Health with a market cap of HK$321.536 billion, and Ping An Good Doctor with a market cap of HK$104.977 billion.

Of course, such success is driven by a number of factors.

From the external environment, the development potential of the Internet medical industry has been recognized by the market. Data show that the market size of China's Internet medical industry is developing rapidly, with an average annual compound growth of 39.37%, and is expected to reach 94.1 billion yuan in 2020. According to the data of the Health Care Commission, as of November 2019, the number of completed Internet hospitals in China reached 269, and is expected to reach 300 for the whole year.

From the layout point of view, JD Group, Dada, JD Health, JD Digits and JD Logistics are working together to empower each other. For example, through the logistics advantage, JD Health's omnichannel layout has covered more than 200 cities across the country, according to demand can provide same-day, next-day, 30 minutes, 7 * 24 fast delivery service. Therefore, with the aggregation cooperation, it also raises the market valuation of JD Health.

In terms of JD Health's business, its services include online consultation and prescription refills, chronic disease management, family doctors, consumer medical and health services, enhancing user stickiness to a certain extent.

However, Alibaba Health and Ping An Good Doctor have the backing of giants like Alibaba and Ping An of China, and are also enjoying the afterglow of the dividends of the Internet medical industry, so why would they be overtaken by the "newcomer" JD Health?


Each has its own advantages


The main reason why the shares of JD Health soared more than 50% on the first day of listing may be that in the current healthcare pattern, JD Health's financial data is relatively more excellent compared to this quarter only to turn a loss to profit Alibaba Health and deep losses in the dilemma of Ping An Good Doctor. According to the prospectus data, in the first half of 2020, JD Health's revenue was about 8.8 billion yuan, up 76% year-on-year, and the company (which was JD Health business before it became independent) recorded consecutive profits of 210 million yuan, 250 million yuan and 340 million yuan from 2017 to 2019, respectively.

Although JD Health has achieved good results on its first day of listing because of its strong supply chain management capabilities and high customer acquisition, Alibaba Health and Ping An Good Doctor, after all, entered the industry earlier and still have advantages that JD Health can hardly reach for the time being.

Alibaba Health has the backing of e-commerce giant Alibaba, which has advantages in the data of annual active users and average daily consultation volume. JD Health has more than 150 million cumulative users and 72.5 million active users, while the annual active consumers of Tmall's pharmaceutical platform have exceeded 250 million in the latest financial report. Therefore, JD Health is still some distance away from Alibaba Health.

In addition, Alibaba Health recently announced that as of September 30, the company has signed up more than 39,000 doctors at the director, deputy director and attending physician intermediate level or above to provide online health services, a big increase of about 10,000 from six months ago. And Ping An Good Doctor has a free medical team of nearly 2,000 people, signed nearly 6,000 all from the tertiary hospitals, with the title of associate director or above, both in terms of professional physician resources and platform efficiency are far more than Alibaba Health.

For the time being, perhaps the recent lack of star stocks and the impact of Ant Group result in the market's expectations for JD Health are too high, and when the market sentiment calms down, the pattern may still continue for some time. But this field in addition to these three, some big players on the Internet medical also seems to be waiting for momentum, the industry pattern may still have some variables.


The industry situation may change again?


In the field of healthcare, although JD Health, Alibaba Health and Ping An Good Doctor have formed a certain leading edge, the potential of Internet healthcare, for the major giants troubled into traffic anxiety still has an unspeakable attraction.

In May, ByteDance completed the acquisition of Baike Mingyi for hundreds of millions of yuan; in September, it completed the first brand confirmation of its medical and health business and launched the independent brand "Xiaohe Medical". Baidu Health intended to build a business closed loop with algorithms and artificial intelligence abilities. Recently, Pinduoduo also applied for the trademark of "Duoduo Health".

The entry of ByteDance, Baidu and Pinduoduo has already made the competition in the field of Internet healthcare fierce, but the attempt of Tencent and Meituan have made the situation more and more serious. It even began to threaten the position of JD Health, Alibaba Health and Ping An Good Doctor.

Tencent, the market leader in Hong Kong stocks, has made 41 investments in the medical field in recent years. According to news, Tencent led investment in Chinese startup MicroTech Medical, which is dedicated to developing the world's leading diagnostic and treatment products and solutions for diabetes management.

It is clear that Tencent also has an Internet medical gene that cannot be ignored. In addition, Tencent also has a product called Tencent Medical Dictionary, which has accumulated a group of audiences through the dissemination of medical science knowledge. With Tencent's current capital strength, it is not impossible that the next "JD Health" will be born in the future once the Tencent Medical Dictionary enters the Internet medical field.

As a newcomer in the Hong Kong stock market and a leader in the field of local life, some of Meituan's actions have also puzzled the market. According to Tianyancha, a large data technology service company with a vast repository of Chinese enterprise information, Beijing Sankuai Technology Co., Ltd, an affiliate of Meituan, has added the trademark "Meituan Professional Pharmacy", which is internationally classified as medical horticulture and advertising sales, and seems to have the intention of stepping into the Internet healthcare.

Meituan 2020 third-quarter earnings report shows that Meituan flash shopping in the pharmaceutical consumer demand further highlighted, a single quarter drug orders increased more than twice last year. The number of the pharmacy platforms stationed in Meituan reached nearly 100,000 by the end of the third quarter.

In terms of delivery speed, Meituan has achieved an average delivery time of 23 minutes. In other words, within half an hour, Meituan is able to meet the needs of some acute diseases with conventional medicine. In terms of such delivery speed and comprehensive strength, once Meituan enters the game, the existing Internet medical landscape naturally has some variables.

But even if the Internet medical ushered in a demand blowout, the outbreak seems to have been unstoppable, however, the Internet medical inflection point and pain points coexist. The Internet medical industry is still facing two major pain points, namely the difficulty of profitability of the business model and the difficulty of improving the interaction of doctors.

In the current Internet medical industry, the appointment line hanging is popular, but this business can not charge, there is no substantial revenue. The cost of online consultation and online drug is difficult to fully cover operating costs, so the Internet medical losses are common phenomenon.

And according to Li Tiantian, the founder of, its existing doctors are more than 2 million, but the actual number of doctors involved in online consultation is only 15,000, a ratio of less than 1%. So the lower interaction of doctors also lowers the possibility of long-term profitability.

All in all, whether it's the giants who have prepared to enter the field, or the performance of JD Health on its first day of listing, it seems to be a sign that this segment of Internet healthcare will become the next "community group buying". But the current industry challenges have not yet been overcome, and the Internet medical industry may still be in a protracted battle for a long time.

This is an article from WeChat official accounts Gangguyanjiushe (ID: ganggushe), translated by Chris Yuan.