Source | Haike Finance
Article | Xu Junhao
The big health industry continues to break through boundaries.
AI medicine, which is in the ascendant, is an example. According to the data released at the recent 2024 Zhongguancun Forum Annual Meeting "Remodeling Medicine: Innovative AI Transformation in Medicine", 18 enterprises in Beijing have successfully obtained three types of registration certificates for 27 medical AI assisted diagnostic scenarios.
It should be noted here that according to the provisions of the Classification Catalogue of Medical Devices, if AI diagnostic software only has auxiliary diagnostic functions and does not directly give diagnostic conclusions, it will be declared as a Class II medical device; If a clear diagnosis prompt is provided for the lesion site, the risk level is relatively high, and it needs to be managed according to the third category of medical devices. Compared with Class I and Class II registration certificates, Class III registration certificates are more stringent in review and management, which is also a key threshold for AI medical diagnostic products to be introduced to the market.
Many players have set foot in the AI medical field, such as Jingdong Health's medical and health industry model "Jingyi Qianxun", and safe and healthy AskBob AI doctor. Previously, Baidu's Lingyi Zhihui fundus image aided diagnosis software for fundus lesions was approved with three types of certificates. These highlights the possibility of combining the health industry with technology, and also shows the prosperity of the market.
According to the Research Report on China's Health Management Industry released by the research organization iResearch, the scale of the domestic health management market has reached 1810.7 billion yuan in 2023, and is expected to reach 3255.8 billion yuan by 2028, with a compound annual growth rate of 12.5%; From the perspective of market segmentation in 2023, the proportion of health insurance is the highest with 56.8%, the Internet medical service is the second with 19.4%, followed by health examination with 16.8%, commercial pension with 5.3% and gene testing with 1.7%. In other words, the scale of the Internet medical market in 2023 will be about 351.3 billion yuan.
Among the numerous players of Internet medicine, Ping An and Health are worthy of attention.
Ping An Health, backed by Ping An Group, launched the health management APP "Ping An Good Doctor" in 2015 and was listed on the Hong Kong Stock Exchange in May 2018. At that time, its annual average daily consultation volume of online diagnosis and treatment reached 535000. Today, official data show that the cumulative consultation volume has exceeded 1.42 billion times. Other players, such as JD Health, will only have 450000 daily online consultations in 2023.
Jingdong Health, Ali Health, Dingdong Health and other enterprises rely on the Internet's C-end capabilities, focusing on pharmaceutical e-commerce. However, Ping An Health has early turned to the B-end of enterprises and the F-end of financial customers, and has expanded its layout to the elderly care field. However, the Company has suffered losses for 9 consecutive years from 2015 to 2023, with accumulated losses exceeding 7.1 billion yuan.
The market still has room for exploration. The "drug selling" model is mature but not sexy. Ping An Health is exploring more possibilities in uncertainty. After "burning money", the sustainable development ability of New Road has yet to be verified.
01
Mode has changed several times
The main direction of the Internet medical field is "medicine" and "medicine", that is, online diagnosis and treatment and medical e-commerce.
The pharmaceutical e-commerce model is not complicated, and it is the source of income for many large health enterprises, so that these enterprises are jokingly referred to as "selling medicine in the name of health" by netizens. For example, the recent financial report of JD Health shows that the company focuses on the supply chain of medicine and health products, with a revenue of 53.529 billion yuan in 2023, of which 45.652 billion yuan is from the sales of proprietary goods, namely medicine and health products, accounting for 85.3%; The revenue from platform, advertising and other services was 7.877 billion yuan, accounting for 14.7%.
This model was also a major source of income for Ping An Health.
Taking 2021 as the boundary, the main business of Ping An Health has four segments before, namely online medicine, consumer medicine, health mall, health management and interaction. Take the 2020 financial report as an example, the company's revenue is 6.865 billion yuan, accounting for 54.1% of the total revenue of 3.713 billion yuan; Online medical, consumer medical, health management and interactive income were 1.565 billion yuan, 1.382 billion yuan and 203 million yuan respectively, accounting for 22.8%, 20.1% and 3% respectively.
Pharmaceutical e-commerce is also e-commerce, and it is difficult for Ping An Health without e-commerce genes to achieve low-cost and efficient e-commerce operations like JD Health and Ali Health. This has made the gross profit rate of Ping An Health Mall go down all the way while increasing its income. According to the financial report, from 2018 to 2020, the annual revenue of the Health Mall will be 1.864 billion yuan, 2.902 billion yuan and 3.713 billion yuan respectively, and the gross profit margin will be 10.8%, 8.1% and 6.9% respectively.
There is also Dingdong Health who insists on "selling medicine". In 2023, Dingdong Health will have a revenue of 4.857 billion yuan and a loss of 231 million yuan, which is different from JD Health, which has a revenue of 53.529 billion yuan and a profit of 2.142 billion yuan. Ali Health's financial reporting cycle is different. Its revenue in the half year from March to September 2023 is 12.96 billion yuan, with a profit of 445 million yuan, which is also far more than Dingdang Health.
Therefore, Ping An Health focuses its development on online diagnosis and treatment. The original product name "Good Doctor" means to provide consultation services. According to the financial report, the number of the company's own medical team in 2020 was 2247, an increase of 59.5% over 2019, and the AI auxiliary diagnosis and treatment system has penetrated into 23 departments of its own medical team; The number of external doctors contracted by the company also exceeded 21000.
According to Haike Finance, when users send text, voice or pictures in the corresponding functions of Ping An Good Doctor APP, the system will provide a list of relevant doctors for screening, and users can also browse for doctors by department. The general consultation time in APP is 15 minutes, and the fees vary from a few yuan to dozens of yuan depending on the doctor's qualifications. There are doctors sharing on the social platform, and the safe and good doctors draw about 20%. If the doctor has issued an electronic prescription, the user can directly go to the health mall to purchase drugs. Follow up consultation may also involve referral, registration and hospitalization arrangement services, secondary diagnosis and treatment services, etc.
The gross profit rate of online diagnosis and treatment business is much higher than that of pharmaceutical e-commerce. From 2018 to 2020, Ping An Health's online medical business revenue was 411 million yuan, 858 million yuan, and 1.565 billion yuan, with gross margins of 40.1%, 44.2%, and 56.2%.
Compared with other online diagnosis and treatment APPs, Ping An Good Doctor's user activity is significantly ahead. According to the data of research organization iMedia Consulting, the top three MAUs (monthly active users) in this field in December 2021 are Ping An Good Doctors with a MAU of 11.5 million, Chun Yu Doctors with a MAU of 2.1 million, and Good Doctors Online with a MAU of 1.89 million.
However, online diagnosis and treatment is still a C-end traffic business, and the key to user growth is drainage. Traffic costs have soared. Compared with Alibaba, JD and even the other Internet players with the same layout in the health field, such as Byte, Baidu and Tencent, Ping An Health can hardly claim customer advantages. Therefore, in October 2021, Ping An Health announced the "Ping An Health Strategy 2.0" plan and began to focus on B-end users. The financial report shows that the company will serve 520 enterprises in 2021, and this number will grow to 1508 in 2023.
In other words, the focus of Ping An Health's business model has shifted from To C to To B, with little success.
02
Cost reduction but difficult to open source
The change of mode is related to the change of manager.
Since the establishment of Ping An Health in August 2014, Wang Tao, who has served as a senior executive in Microsoft, Jinshan, Ali and other enterprises, is the chairman and CEO of Ping An Health, and Ping An Good Doctor APP is also created by him. However, in May 2020, Ping An Health announced that Wang Tao's performance of management responsibilities did not meet the expectations of the Board of Directors, and he was removed from his position as chairman of the Board of Directors.
During Wang Tao's tenure, Ping An Health followed the path of the so-called Internet medical platform, which focused on online diagnosis and treatment and medical e-commerce. Fang Weihao, Wang Tao's successor, drastically changed the Internet medical platform model to the group empowerment model in 2021, and the APP also changed its name from a good doctor of peace to a good doctor of peace and health, weakening the concept of "good doctor" in online diagnosis and treatment.
According to the financial report, Ping An Health has optimized the C end and focused on the B end since 2021, integrating the original four business segments into two major segments of medical services and health services: medical services include online consultation, referral and appointment registration, hospitalization arrangements, disease diagnosis and treatment and related drugs, medical equipment sales, with revenue of 2.288 billion yuan in 2021 and gross profit margin of 36.1%; Health services provide a variety of standardized health service packages that integrate the services of medical and health institutions, such as physical examination and medical beauty, and also include product sales and advertising services other than drugs in medical services. In 2021, the revenue will be 5.046 billion yuan, with a gross margin of 18.9%.
In terms of revenue, health service is the main business of the company. According to the financial report, the company's revenue in 2022 will be 6.205 billion yuan, including 2.592 billion yuan for medical services and 3.612 billion yuan for health services; In 2023, the revenue will be 4.673 billion yuan, including 2.075 billion yuan for medical services and 2.598 billion yuan for health services.
At the performance conference in March 2022, Fang Weihao said that the unique advantage of Ping An Health lies in the empowerment of the commercial insurance ecosystem. Ping An Group has 225 million personal financial users. Ping An's channels have penetrated 70 million employees of large and medium-sized enterprises. These people are strongly related to Ping An Health's medical and health services.
Since then, Ping An Health has always continued the path of group empowerment, and Li Dou has not changed since he took over from Fang Weihao in October 2023. The 2023 financial report recently released by Ping An Health mentioned that the company will continue to focus on the comprehensive financial users and enterprise users of Ping An Group, and the business structure has been continuously optimized.
Structural optimization has indeed brought about an increase in gross profit margin, but it is not enough to offset the decline in revenue.
According to the financial report, from 2022 to 2023, the gross profit rate of medical services will increase from 35.1% to 40%, and the revenue will decrease from 2.592 billion yuan to 2.075 billion yuan, because the revenue of low strategic synergy business will decrease and the synergy with the comprehensive financial business of Ping An Group will be deepened; The gross profit margin of health services increased from 21.1% to 26.1%, and the revenue decreased from 3.612 billion yuan to 2.598 billion yuan, because the revenue of some physical sales businesses with low relevance to the managed medical strategy and low profitability decreased.
However, from 2018 to 2021, the revenue of Ping An Health increased from 3.337 billion yuan to 7.334 billion yuan, and declined to 6.205 billion yuan in 2022. The revenue in 2023 is even lower than that in 2019, that is, 5.065 billion yuan.
The loss of Ping An Health narrowed to 323 million yuan in 2023, the lowest loss level since its listing in 2018. But this narrowing is the result of throttling rather than open source. In addition to the aforementioned business cuts and product adjustments, the reduction of sales expenses and personnel adjustments are also important reasons for the narrowing of losses. According to the financial report, from 2021 to 2023, the marketing and sales expenses in the company's operating costs decreased from 1.756 billion yuan to 835 million yuan, and the administrative expenses decreased from 1.846 billion yuan to 1.48 billion yuan; In December 2023, the number of in-service employees of the company was 1753, more than 60% less than the peak of 4561 in June 2021.
To reduce the cost and address the symptoms rather than the root cause, Ping An and Health still need to break through the dilemma of declining revenue.
03
Potential comes from retirement?
To create a new growth curve, Ping An Health provides the solution of "providing for the elderly".
Since 2021, Ping An Health has followed Ping An Group into the elderly care industry, and only recently has it been upgraded to a strategic level. In the 2023 financial report, the company's strategy has changed from "comprehensive finance+medical health" to "comprehensive finance+medical pension", proposing to provide comprehensive financial users of Ping An Group with full scene medical health pension services. At the performance conference in March 2024, Li Dou mentioned "pension" for many times, highlighting the importance the company attaches to this field.
Ping An Health tries to build a home health care service system that includes medical treatment and health management. For example, in terms of rehabilitation care products, the "safe and carefree" product system is launched to provide 10 short-term or long-term services, such as rehabilitation and home care, with specialized disease as the dimension, for patients with rehabilitation care needs, such as nerves, bones, heart and lung, pain, etc. The service system will also monitor the elderly in real time through intelligent monitoring equipment combined with the housekeeper platform. The device can detect the blood sugar, blood pressure, heart rate, respiration, blood oxygen and other indicators of the elderly at home, and will respond in time in case of abnormalities, and notify emergency contacts and doctors to intervene if necessary.
The related products also include "Xiaoxinbao", "Ping An Family Doctor - Elderly Guardian Edition", etc., including butler accompanying, online diagnosis and treatment, offline medical in-patient accompanying, nurse visiting and nursing and other services.
According to the financial report, Ping An Health is committed to building an elderly care service system that integrates intelligent housekeeper, life housekeeper and doctor housekeeper to provide 7 × 24 hours of all-weather services and connect more than 500 home-based elderly care services; By the end of September 2023, the number of contracts per customer and the total personal assets per customer of individual customers using Ping An Group's medical and pension ecosystem services are 1.6 times and 3.4 times higher than those of other individual customers respectively; By the end of 2023, Ping An's home-based elderly care service has covered 54 cities, providing 100000 people with home-based elderly care service qualifications.
This action is closely related to the social background.
The aging of the domestic population is obvious. According to the data of the National Bureau of Statistics, by the end of 2020, the population aged 60 and above in China will exceed 260 million, accounting for 18.7% of the national population; By the end of 2023, the population aged 60 and above in China will have exceeded 290 million, accounting for 21.1% of the national population. The proportion of the population aged 60 and above in three years will increase by 2.4 percentage points.
However, the Government Work Report released in March 2024 mentioned the key word "pension" for 13 times, pointing out that we should vigorously develop pension finance and implement the national strategy of actively responding to population aging.
Under this trend, the market scale is bound to grow. According to Ai Media, the market size of China's pension industry will reach 13.9 trillion yuan in 2024 and 21.1 trillion yuan in 2027; The industry includes intelligent hardware, rehabilitation aids and other equipment, as well as information solutions, home-based elderly care products, elderly care institutions, etc.
Ping An Health chose "old-age care" as the breaking point, combining it with online diagnosis and treatment, medical care services, in line with market trends, but also has differentiated advantages. But it still takes time from the concept landing to the market wide acceptance, and it is difficult to quickly increase revenue in the short term. In addition, the home service under the Internet mode relies on intelligent devices. At present, the popularity of intelligent devices for the elderly needs to be improved.
In fact, the imagination space of Internet medicine pushed up by the epidemic is falling back, and overseas Internet medical platforms are also facing the problem of weak growth.
For example, Teladoc Health, a well-known Internet medical enterprise, also focuses on online diagnosis and treatment services. The company mainly serves enterprises or insurance companies whose employees are insured. To B provides value-added services such as online diagnosis and treatment, and can provide expert consulting services for complex diseases in professional fields. The company set a high price of about $294 per share in February 2021, and now it has dropped to about $14. According to the financial report, Teladoc Health's revenue in 2023 will reach 2.6 billion dollars, an increase of 8% year on year, but the company estimates that the growth rate in 2024 will be only 5%.
After the strategic focus shifted from the C-end to the B-end, Ping An Health has not yet solved the problem of revenue decline. Narrowing the loss is only a small step, and it is still challenging to achieve the breakeven by 2025 as expected. However, Ping An Health still has a lot to do to really stabilize its market position and continue to move forward.
(Statement: This article only represents the author's view, not Sina.com's position.)
