As China’s elderly population steadily increases alongside public demand for high-quality healthcare services, e-healthcare could provide short-term solutions, increasing opportunities for foreign investment.
China’s healthcare industry has entered the digital age, facilitating changes for many hospitals and private sector entities. Internet health care, with online medical consultation, is becoming a new reality for more and more Chinese citizens. The development of the sector has been significantly boosted by the COVID-19 pandemic, receiving particular attention from government authorities and technology companies to expand market access.
What is Internet Health?
Internet health is a subcategory of the broader digital health sector, which involves artificial intelligence and machine learning for diagnosis and treatment. Unlike traditional environments, where patients and providers interact in clinics or hospitals, internet-based healthcare takes place through virtual platforms accessed through mobile devices and computers. These platforms enable a wide range of health services and products, including medical consultations, hospital appointment scheduling, drug prescription, health information management, health insurance and telemedicine. .
By easing the burden of visiting overcrowded hospitals, e-health services provide more convenience to consumers seeking medical treatment. With more instant feedback, consumers who are concerned about their symptoms can get reliable information for self-monitoring and self-medication, reducing the need to meet with a doctor in person. Such a service is also transforming the healthcare industry from its traditional focus on treatment to prevention.
Internet health care prices vary by type of service. The most common channel is text and image consultation, which allows patients to have access to certain interactions with their doctor for a specific period of time. Other services are voice and video consultations.
According to research data, the average price for a 48-hour text/image service package is 65 RMB (9.64 USD), while 8.32 RMB (1.23 USD) per minute for voice consultation and 17.56 RMB (2.6 USD) per minute for video consultation. Pricing also varies widely across platforms, reflecting differences in vendor quality, marketing power, and consumer willingness to pay.
|Prices and Consumer Preferences for Different Types of Internet Health Services|
|Kinds of services||Price||Consumer preference|
|Image/text (per pack)||65.1 RMB (9.64 USD)||71.6%|
|Voices (per minute)||8.32 RMB (1.23 USD)||16.4%|
|Video (per minute)||17.56 RMB (2.6 USD)||12%|
A key innovation in Internet health marketplaces is the development of a reputation system to systematically collect and publish user feedback, helping consumers assess the quality of providers more transparently. Internet health can also provide a solution to mitigate geographic disparities in access to high-quality medical services, thereby reducing the strain on the system due to regional disparities in the state of health infrastructure.
What are China’s internet health policies?
Internet-based healthcare is an integral part of the country’s “Healthy China 2030” master plan to achieve the country’s long-term economic and social development goals. Since its introduction in 2016, the Chinese government has intensified its efforts to support the development of the health technology industry through a series of policies and regulations.
In April 2018, the General Office of the State Council published a document titled “Internet plus medicine and health”, detailing a comprehensive framework for integrating the Internet and information technology into healthcare. The regulations have advanced supply-side structural reform to mitigate the unbalanced and inadequate development of the sector. China’s health technology boom has followed the implementation of the global framework.
In August 2019, the National Healthcare Security Administration (NHSA) launched the Electronic Medical Insurance System – regulating prices and insurance policies to allow internet-based medical services to be covered by the medical insurance system from the country. Patients can access hospital services through WeChat and Alipay platforms. This incorporation was further strengthened with NHSA guidelines in October 2020 to actively promote the payment and management of medical insurance from the “Internet+” medical service.
In May 2020, the National Health Commission (NHC) released a statement to encourage provincial governments to establish their own regulatory statutes to manage online medical providers and expedite market access for internet-based hospitals. Later in September of the same year, the State Council again stressed the need to expand Internet-based health clinics. Since then, many provincial governments have enacted regulations to improve market conditions for e-healthcare.
Health on the Internet is also at the center of the concerns of the 14e Five-Year Plan (FYP), which calls for greater connectivity between regions, balanced development between cities and countries, and the use of big data. The government’s next goal is to accelerate the incubation of the Internet health market and promote the industrialization and large-scale application of big data in precision medicine, health management, research and development. drug development and medical insurance.
Market Status and Outlook of the Internet Health Sector: An Ecosystem in the Making
Internet-based healthcare has seen explosive growth during the COVID-19 outbreak, with a drastic increase in the number of users. As access to hospitals became restricted with the closures, many turned to online sources for medical services. Alibaba Health says it has more than 15,000 contracted medical facilities, including nearly 400 Class III hospitals in 17 provinces, which are connected to medical insurance payment services. The company reported in the first quarter of 2020 that the total net frequent active users of Alipay’s healthcare channel exceeded 390 million.
Many tech giants, sensing the opportunity, are rushing into this emerging industry. Currently, there are 1,748 internet healthcare startups in China. Among all those sharing the cake, Ping An Good Doctor, a Hong Kong-listed subsidiary of insurance giant Ping An, saw a 26.7% year-on-year growth in the average number of daily online consultations at 831,000 in the first half of 2020, with online medical services revenue doubling to RMB 694.9 million (US$101.56 million).
Lessons learned from handling the pandemic can profoundly shape the direction of China’s healthcare market, which is expected to nearly triple from RMB6.5 trillion ($960 billion) in 2019 to RMB17.6 trillion. RMB ($2.61 trillion) by 2030. Despite this growth, the market currently remains relatively underdeveloped, China’s healthcare spending – including pharmaceuticals, medical devices, distribution, hospitals , pharmacies and insurance – representing only 7.12% of total GDP in 2021, while the United States reached 18% in the same year. The gap leaves enough growth potential for companies in the healthcare sector.
The Internet health industry is still in its early stages of development. Repeated construction with similar functions on different platforms can trap consumers and investors. Further efforts are needed to clarify the value of each platform and to establish different operating strategies and service models according to distinct characteristics. With the favorable policies of the government, more stable and sustainable planning will be crucial to promote and build the capacity of the industry.
Nevertheless, the market still represents promising prospects. China’s healthcare industry has shown an attractive performance with a cumulative return of 160% over the past ten years. The success of digital health companies relies on the vast amounts of medical data from Chinese patients. China’s demographics are a key factor contributing to the boom, with the elderly population (aged 65 or older) expected to double from 10% of the population in 2017 to 20% by 2037.
Internet-based healthcare in China should receive more priority attention from the government. Foreign investors engaging in the provision of health services are well advised to pay attention to this rapidly developing sector.
Moreover, the pace of urbanization and growing middle class population are also supporting the growth in domestic demand for higher quality healthcare products and services. With a rapidly aging population and citizens demanding higher quality services, China’s healthcare sector is already well positioned to become a priority area of government attention over the next decade. As a major industry branch, internet health, with its convenient access to the public, sees great potential for growth.
How can foreign investors get involved in the business?
Health remains a positive area for foreign investment. In the latest catalog of industries to encourage foreign investment (2020 version), China encourages foreign investment in several sectors related to e-healthcare, including:
- Online health care
- Digital medical system, community care, personal health maintenance related product development and application
- Medical information services such as health consultation, health management and medical knowledge
All in all, internet health, which has seen significant growth during the pandemic, presents great opportunities for investors.
About Us China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors in China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen and Hong Kong. Please contact the company for assistance in China at email@example.com. Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, USA, Germany, Italy, India and Russia, in addition to our business research facilities along the Belt & Road Initiative . We also have partner companies helping foreign investors in the Philippines, Malaysia, Thailand and Bangladesh.