Fangzhou Jianke Becomes First Healthcare IPO in Second Half of 2024, Leading the Chronic Disease Management Sector

Recently, Fangzhou YunKang Holdings Co., Ltd. was officially listed on the Hong Kong Stock Exchange. The company owns Fangzhou Jianke (06086.HK), China’s largest online chronic disease management platform, and has been deeply engaged in chronic disease management services for many years. This news has drawn significant attention from investors to Fangzhou Jianke and has boosted overall confidence in the internet healthcare industry.

The development of China’s internet healthcare sector has spanned over two decades. In recent years, the entry of tech giants and an influx of capital from financial markets have intensified competition within this sector to an extraordinary degree.

Amid increasingly severe homogenization, the “Internet + Chronic Disease Management” segment in lower-tier markets has emerged strongly, becoming a new direction for industry upgrading. According to relevant data, the market size of chronic disease management in China reached approximately RMB 769.9 billion in 2023, and is projected to grow to around RMB 1.1882 trillion by 2029.

China has the largest elderly population in the world, and population aging continues to pose new challenges to the country’s public health services. According to Han Ruidong, an assistant researcher at the Macroeconomic Division of the Forecasting Department of the State Information Center, China’s population aged 60 and above is projected to exceed 400 million by around 2035 and reach approximately 500 million by the mid-21st century. Furthermore, the latest data from the National Health Commission indicates that more than 180 million elderly people in China suffer from chronic diseases, with the prevalence of having one or more chronic conditions reaching as high as 75%. In fact, chronic diseases are not exclusive to the elderly; the trend toward younger onset is becoming increasingly evident. Notably, in recent years, the growth rate of chronic disease prevalence has surged particularly among individuals aged 15–24 and 25–34.

On one hand, the prevalence of chronic diseases continues to rise, and medical advancements have led to an increasing severity of chronic conditions, resulting in a growing population of patients with chronic diseases and their escalating healthcare needs. On the other hand, the awakening of public health awareness is driving explosive growth in the chronic disease health management market.

The growing willingness of consumers to pay for health services is evident from data disclosed by Fangzhou Pharmaceutical. Its chronic disease management platform under the H2H (Hospital to Home) smart healthcare ecosystem service platform currently boasts approximately 42.7 million registered users. The number of paying users has seen significant growth over the past three years, rising from 2.53 million in 2021 to 3.89 million in 2022 and further to 4.44 million in 2023. Moreover, users demonstrate a strong willingness to pay, with the platform’s conversion rate from active users to paying users reaching 36.2%, which is higher than the industry average.

Fangzhou Pharmaceutical’s prospectus also disclosed that its continuously growing base of registered users, paying users, and registered physicians has become a key cornerstone for the company’s sustained revenue growth. As of December 31, 2023, Fangzhou Pharmaceutical’s service platform had over 42.7 million users and more than 210,000 registered physicians, with revenue achieving growth for three consecutive years, reaching RMB 2.434 billion in 2023.

As population aging continues to deepen, the prevention and control of chronic diseases has been elevated to a national strategic priority. The government has repeatedly issued policy documents encouraging online chronic disease management services, with the aim of gradually increasing residents' healthy life expectancy and effectively controlling the burden of chronic diseases.

Riding the policy tailwinds of internet healthcare, Fangzhou Pharmaceutical identified the chronic disease management sector as a key focus, deepening its engagement in this field and pioneering the unique H2H model.

What is H2H? According to Fangzhou Pharmaceutical’s prospectus, the H2H (Hospital to Home) service platform is a comprehensive online chronic disease management platform built upon its large customer base derived from established physician-patient relationships, long-term partnerships with leading pharmaceutical companies, and efficient business operations. Leveraging advanced technological capabilities, it provides digital solutions for patients, physicians, pharmaceutical enterprises, and other stakeholders, including integrated medical services, online retail pharmacy services, and customized content and marketing solutions.

Among these, big data and artificial intelligence technologies have played a significant role in Fangzhou Pharmaceutical’s H2H service platform. According to disclosures in Fangzhou Pharmaceutical’s prospectus, its team-developed AI physician assistant supported approximately 65.7% of consultations, significantly enhancing customer service representatives’ order-processing capacity, which increased from an average of 67.3 orders per day in 2019 to 366.2 orders per day in 2023.

Meanwhile, the H2H service platform has significantly enhanced physicians’ efficiency in chronic disease management. Its efficient and convenient patient management model has attracted more than 212,800 registered physicians from 15,000 medical institutions to join the platform, with an average physician retention rate of approximately 93.2%, far exceeding the industry average.

Driven by an efficient management model and significant convenience, Fangzhou Pharmaceutical’s H2H service platform has seen increased physician willingness to use the system and improved service efficiency, as well as higher patient adherence and greater willingness to pay. Consequently, the effectiveness of chronic disease management on the platform has continued to strengthen, resulting in sustained revenue growth.

It is evident that Fangzhou Pharmaceutical’s business model, products, and service capabilities have gained market recognition. This not only demonstrates the company’s intrinsic value but also underscores the industry value of the “Internet + Chronic Disease Management” sector.

Driven by sustained market demand, favorable policy developments, and the integration of emerging technologies such as big data and artificial intelligence, the chronic disease management market—valued at over one trillion yuan—is poised for greater corporate entry and exploration.

As a frontrunner, Fangzhou Pharmaceutical’s listing on the Hong Kong Stock Exchange will further enhance its service quality and standards, generate more scalable growth effects, and boost overall confidence in the internet healthcare industry.