Three internet giants dominate the market of the Chinese e-health: Alibaba, Baidu and Tencent (WeChat).
While public institutions are also beginning to enter the market, the government is considering the establishment of a clear legislative framework, essential for the development of the sector.
Alibaba, Baidu and Tencent: the leaders of the Chinese eHealth market
The internet giants are the pioneers of e-health innovation in the Chinese market. Among them, there is on the top the BAT trio: Baidu, Alibaba and Tencent (WeChat).
Alibaba promotes its « Future Hospital »
Alibaba is currently the industry motor and so far the most complete group in the market, both in terms of investment in creation of health services. They thus offer online tools, a variety of online service (appointment making, direct consultation …) and online drug stores.
In May 2014, the e-commerce company started to promote its « Future Hospital ». The group launched Alipay, an online payment tool, and a mobile platform available to healthcare providers to help them to create an online hospitals platform.
The patients can use the site to remotely access all hospital services, including booking appointments and settlement of medical insurance.
But Alipay is having some difficulty to link to each patient’s account of basic health coverage. This bug impedes the automation of reimbursement process via Alipay.
However, the group remains positive and continues to develop eHealth projects. Last year, Ma Li, vice president of strategy at Alibaba Health Information Ltd, said the company plans to launch a click and collect application which allows patients to order health products online and then pick up them from a nearby pharmacy.
Tencent closely follows Alibaba
Such as Alibaba, Tencent is interested on telemedicine and mHealth. He took advantage of the reputation of its famous plateform WeChat and WeChat Pay, its digital payment device, to create an open platform and form partnership with healthcare providers. The goal: to book appointments online, consult a doctor via their computer or smartphone, etc.
Tencent also invests in promising eHealth start-ups. In 2014, he invested $ 100 million in Guahao.com, a service provider headquartered in Hangzhou which provides users with online access to medical registration systems in more than 1,100 hospitals in 23 provinces. By the end of the year, 160 million patients had already used the device. In 2015, Guahao provides easier access to its services via WeChat (Tencent), the most popular social platform in China.
Baidu invests in cloud devices
On its side, Baidu focuses on the establishment of a big health data cloud. Among its products: Dulige, a service which provides cloud computing to analyse user’s physiological index.
With the Chinese Center for Prevention and Disease Control, the firm also wants to set up an epidemics prevention system in real time, such as its US rival Google. Thanks to algorithms which can detect keywords typed into its search engine, as « cold » or « fever », Baidu will then be able to identify areas where an outbreak of a particular disease is emerging.
The Chinse eHealth market attracts large-scale investments. Some 80 deals in the private sector were recorded in 2014, these deals involved US$1.7 billion in cash injections.
Recently, some insurance companies are also investing in the market. For instance, the holding Ping An Insurance (insurance and financial conglomerate) launched in June 2016 its own mobile medical record.
« These initiatives of private companies are complementary to public service »
“We should not consider these initiatives [of private companies] as enemies but rather as complementary to public service,” analyzed Denise Silber, president of Basil Strategies and specialist in e-health (Figaro, 2014).
For its part, Carine Milcent, a doctor specialized in the Chinese health system, is more critical. “This private sector dominance raises questions on an ethical point of view, she said to H&TI. How will these companies use patients personal data? Will they focus on quality of care provision or will they favor the profit?” Indeed, they could partner with advertisers to help them to develop targeted advertising based on individuals health data or sell private information to insurance companies.
Chinese public institutions are more and more interested in eHealth
Public institutions are slowly penetrating the market of e-health. Based in Shanghai, the Zhongshan Hospital has launched a service allowing patients to pay their bills with UnionPay’s credit or debit cards via mobile application. The tool automatically calculates what the patient has to pay after deducting national health insurance contributions.
eHealth legislation: the Chinese government is still groping
In 2013, the pharmaceutical industry was held to 25% or 30% by foreign companies. But the market is becoming increasingly difficult to integrate. The 12th five-year plan included the establishment of China’s high-quality solutions in the biomedical field. The 13th five-year plan follows the same logic.
The current rules are limiting the development of e-health in China
To maximize control of its health system, the government has strict rules. Current laws are very likely lagging behind the huge development of e-health in the country, noted in an article published in August 2016 on LinkedIn by Cecilia Wu, investment strategy Manager at Sanpei Ventures, a young venture company (Shanghai). Although they have demonstrate in recent years some interest in the e-health sector, the authorities still remain rather vague on their position. For now, the state has implemented any effective market surveillance system.
Example: “In the US e-commerce channel stands for 30% of total drug sale versus less than 1% in China, Cecilia Wu said. US online prescription drug sale occupies 50% of the drug e-commerce while in China it is a forbidden territory.”
As the authorities have recently relaxed the regulation of non-prescription drugs (over-the-counter drugs or OTC drugs) online sale, Alibaba anticipated, considering that the law on the online sale of prescription drugs should be soon less strict. “Several months ago, China FDA even halted and prohibited the OTC drug retailing on Alibaba’s Yao.Tmall, the marketplace to aggregate diverse online pharmacy vendors.” A blow to the e-commerce group.
The expectation of a clear legal framework
The government observes the convergence of medical services and the digital sector but is not yet very active in it. The digital health and m-health solutions are among the key areas outlined in the government’s five-year plan for the development of healthcare in China.
“There are concerns about overheating and possible bubbles forming in the digital health care market,” said a few months ago to the Shanghai Daily Norman Chen, a venture partner at Fidelity Growth Partners Asia. His advice: “Venture capital firms need to move fast and to stick to their strategic focus.”
Market players are awaiting a position from the government. Regulations about the rights of telemedicine devices, for instance, are developing but not yet implemented. Besides, what are the rules to follow in case of partnership between a public institution and a commercial enterprise?
Answers should be made by the government by 2026. China has indeed been ordered by the World Bank to accelerate the reform of its health system. Among the recommendations issued by the international organization there is the promotion of electronic tools development and health data sharing to improve quality of care and the relationship between patients and practitioners.