Patients Lost Patients Gained: China's Healthtech Leapfrogs after Covid-19
The epidemic was a nightmare for the traditional and a boon for the innovative ones who have never applied their technology on this scale.
Taking a step back at a time before the pervasive virus, Chinese healthcare services had already begun a transformative surge.
This is a country with massive urban & rural imbalances in healthcare services for an expanding and aging population and an enriching middle class. The public health of these unique demographics is managed by result-driven regulators and supported by a bourgeoning technological ecosystem.
The transformation was doomed to be realized in China’s healthcare. COVID-19 has only accelerated this shift from traditional to digital, cyber and data-driven in China.
"Hospitals are breeding grounds of the virus,” rumor had it in China while the epidemic was peaking. As citizens are stuck at home, visiting the hospital for primary healthcare service was a high-risk operation for most.
The country’s already-sophisticated online ‘cyber-health’ firms seized the opportunity to promote their services. China’s online healthcare market may reach CNY 200 billion (the equivalent of around USD 29bn) in 2020 after the epidemic, a consultancy in Beijing found. The outbreak has added billions to the industry in a matter of days.
Different players have lined up to prove their dexterities.
The online health platform Medlinker (医联) has announced that it has set up a free online consultancy channel to address inquiries around the epidemic area and asked doctors from the mainland to join the volunteer group of medics. The platform is known as ‘the LinkedIn of doctors' in China and is backed by a group of wealthy investors, including Sequoia.
Tencent's healthcare arm, TTD (企鹅医生), known as Tencent Trusted Doctors, has also initiated a free online health consultancy channel for the pervasive virus.
Miaoshou Doctor (妙手医生), on the other hand, utilized its massive pharmacy network to address the needs of Chinese citizens, many of whom have been struggling to find facemasks and knowledge about an appropriate response. The company has been promising that prices will not be inflated.
The largest player in China's online health scene, Ping An Good Doctor (1833: HK), has responded to the crisis by sending over 10 million facemasks to numerous Chinese cities through its pharmacy network, as well as setting up an online consultancy channel through its widely used platform.
Chinese insurance giant PingAn’s Good Doctor and internet behemoth Tencent’s WeDoctor, the largest players, have seen substantial growth in users.
Medical Imaging and Analysis
Moving from services to cutting edge fields of Chinese health technologies, medical imaging-related models were one of the main actors of the digital transformation.
Deep-learning driven medical image analysis companies have found a golden opportunity to prove their value and capabilities. Several companies have quickly developed algorithms to detect lung abnormalities through CT-scan and ultimately spot the coronavirus, possibly alleviating the excess demands on lab-based diagnostics.
Infervision (推想科技), a Qiming-backed company, described its coronavirus detection model as working through CT lung screening. This means that the new model detects ground-glass opacities (GGO) in the lung that may later be confirmed as one of the complications of the virus. It is the first deep-learning-based medical imaging analysis firm from China, which could obtain a CE certification from the EU.
LinkingMed has launched its AI-based detection model for pneumonia CT-screening and prediction based on Baidu’s PaddlePaddle (Parallel Distributed Deep Learning).
Medical infrastructure providers, such as the Baidu-backed Neusoft Medical Systems (东软医疗), moved one step forward, sending a standby epidemic treatment unit to Wuhan with CT machines – a high-end medical facility that most Chinese hospitals don’t have.
One of the strategic Chinese healthtech companies, the country’s only largest medical imaging device maker United Imaging (联影医疗) equipped Wuhan’s coronavirus-focused hospitals with CT-machines at the very beginning of the epidemic. The company has also played a strategic role in the Chinese government’s systematic efforts to supply medical equipment to the afflicted countries around the world, including Iran, Iraq, Italy, and Serbia.
Diagnosing the coronavirus is as important as curing patients to sustain the social order and curb the spread of the epidemic. Chinese companies saw this and acted.
One company performed outstandingly both in domestic and global markets in diagnostics: BGI Genomics (300676: SH). The firm, as the manufacturer of COVID-19 diagnostic kits, provided a one-stop COVID-19 examination plan for enterprises. The company, and many others, have accelerated China’s normalization and “flattened the curve”.
Huo-Yan Lab, a diagnostic lab chain that is equipped with BGI’s automatic machine for sample preparation was confronted with a multiple fold jump in diagnosis demand and it delivered. Since the launch of the lab on February 5, in Hubei province where Wuhan is the capital city, it has received a provincial-level total of 57 thousand patients samples as of February 24.
Vaccine makers and immunization hopes
Not dozens, but hundreds of vaccine makers around the globe announced a pipeline for the new coronavirus in a moving statement of solidarity against one of the most extensive and pervasive pandemics in centuries, including behemoths Sanofi and Johnson & Johnson (JNJ: NYSE).
Numerous Chinese companies, naturally, joined the race, as their home is the known origin of the epidemic, and then pandemic. Cansino Biologics (6185:HKEX), Tianjin-based biotech which previously developed an Ebola-vaccine and Walwax Biotechnology (300412:SH), known for its pneumococcal and meningococcal vaccines are amongst private companies that deserve to be kept tabs on. The company is Qiming-backed and publicly traded on both the Hong Kong Stock Exchange and SSE Star Marker, the new Nasdaq style board of China.
Although the mission to develop the vaccine first was already militarized and being approached as a national security issue, private vaccine makers were quickly soaked with capital by investors, in a move to put a price tag on a possible catastrophe.
At the beginning of January, while Chinese media was mentioning a “rumor” and a “mysterious Sars-like virus” named “Wuhan pneumonia” by some, Chinese A-share investors started to price the vaccine makers. Most of them outperformed the CSI300 Index.
Is this permanent?
To elaborate on whether the financial and technical influx in the Chinese healthtech scene will be a renaissance in the industry, it is feasible to recall how China leapfrogged from being a country with very premature financial services to a country that is leading in mobile payment penetration rates.
Chinese tech companies currently have an advantage compared to their western peers, thanks to the lax medical data regulations, high smartphone penetration rates, and a well-set complementary tech ecosystem. Financial and technical capacity for China’s healthtech could always be transferred from the giants, including Alibaba, Baidu, and Tencent.
Plummeted user acquisition costs and surged costumer trust presumably push Chinese healthtech to a state where it leads the rest of the world, transforming this very problematic and unevenly distributed healthcare services scene in the country.