Dialogue with Beyond Ventures: Five Emerging Trends in Digital Health Signal Cautious Optimism for 2023

Recently, Meditrust Health completed its Series C+ financing round with strategic investment from HSBC Group. MARATHON VENTURE PARTNERS was the angel investor in Meditrust Health. Yang Ruirong, Founding Partner of MARATHON VENTURE PARTNERS, commented, “This transaction involving a mature project has brought some fresh air to 2023.”

Yang Ruirong, Founding Partner of MARATHON VENTURE PARTNERS

MARATHON VENTURE PARTNERS focuses on early-stage investments in the digital health technology sector, with 80% of its portfolio companies funded at Series A or earlier. For instance, in 2017, MARATHON VENTURE PARTNERS invested in the newly established Shukun Technology, which has since become a global leader in providing AI-powered healthcare solutions for disease screening, diagnosis, and treatment planning and selection. Meanwhile, MARATHON VENTURE PARTNERS also served as an early investor in well-known enterprises such as Beden Medical, Mingyi Zhonghe, and Weimai Medical.

Over the past six years, MARATHON VENTURE PARTNERS’ RMB and USD funds have invested in more than 70 companies, including those in the fields of medical devices and equipment with core technologies and innovative business models, mobile healthcare and services, precision diagnostics, and health insurance technology. The cumulative assets under management have exceeded RMB 3 billion.

In an interview with VCBeat, Yang Ruirong shared his views on the incremental growth of the digital health industry in 2022; while repeatedly emphasizing the three core value propositions of digital health—efficient outreach, innovative payment models, and efficiency enhancement—he also discussed new trends and opportunities in the digital health sector for 2023.

Amidst the profound transformation of the healthcare industry, influenced by uncertainties such as geopolitical competition, the energy crisis, and capital market volatility, investors are increasingly prioritizing risk control and favoring sectors with clearer commercialization pathways. Furthermore, the restructuring of the healthcare value chain driven by volume-based procurement (VBP) and DRG/DIP payment reforms has compelled all industry stakeholders—including pharmaceutical and medical device manufacturers, hospitals, and physicians—to actively or passively seek new sources of growth. In this context, Yang Ruirong firmly believes that “digitalization can bring new incremental growth to the healthcare industry.”

The confident tone stems from Marathon Venture Partners’ continuous tracking of the digital healthcare industry. Marathon Venture Partners has largely kept pace with the growth trajectory of digital health innovation, adhering to “Efficient Reach, Innovative Payment, Enhanced Efficiency“Three major directions accurately hit the inflection point where digital health gained market recognition and acceptance, ushering in an era of mutual reinforcement with clinical practice. In response to the changes in the digital health industry in 2022, MARATHON VENTURE PARTNERS outlined five major development trends:”

Clinical practice and digital health are closely integrated, accelerating the translation of clinical research achievements.Driven by policies promoting the commercialization of scientific research achievements, an increasing number of medical experts are assuming core roles in digital health enterprises, contributing increasingly important and relatively scarce medical professional expertise. Furthermore, digital innovation is placing greater emphasis on enhancing the capabilities and efficiency of the healthcare supply side, demonstrating a development trajectory that progresses from superficial to deep integration and from general practice to specialized care.

Based on this, MARATHON VENTURE PARTNERS has also been moving closer to the clinical front, identifying entrepreneurs from medical and research institutions. In 2022, it invested in and incubated nearly ten vertical disease management companies with deep involvement from clinicians, achieving significant progress. For example, Botong Medical, founded by Professor Wang Jiejun of Shanghai Changzheng Hospital, is China’s first comprehensive pain management service platform focusing on “cancer pain treatment,” and has successfully established its presence in Shanghai. In 2022, Botong Medical completed over RMB 10 million in angel and Pre-A financing rounds within four months. Both rounds were led and followed up by MARATHON VENTURE PARTNERS.

Digital health products that have entered the commercialization stage are more closely integrated with healthcare services.This trend aligns with digital healthcare’sCustomer-centricity and the provision of comprehensive solutions are two defining characteristics. Bundled solutions that combine “standardized products + personalized services” will become the product development direction for an increasing number of enterprises.

Digital Medical Product Approval Pathways Are Becoming Increasingly Clear, While Product Robustness Remains to Be ValidatedWith the issuance of the Guiding Principles for the Classification and Definition of Artificial Intelligence Medical Software Products, regulatory authorities have gradually clarified their oversight approaches and approval procedures for digital health products; however, aspects such as technical and clinical robustness and usability of these products still require validation.

Low Digital Health Penetration: Commercial Access and Operations as Core BarriersAccording to statistics from VCBeat, as of November 2022, the National Medical Products Administration (NMPA) had issued a total of 25 Class III AI certificates and 30 Class II certificates that meet the definition of digital therapeutics, marking the highest annual approval numbers across various fields to date. However, the adoption rate of digital health products in clinical settings remains low. This is primarily due to two factors: first, hospitals have long decision-making cycles, complex procedures, and very high entry barriers; second, given the prevailing trend of integrating digital health products with services, companies are required to possess strong organizational expansion capabilities, posing significant challenges to their operational efficiency.

“The Digital Healthcare + Innovative Payment” Model Is Taking Shape and Will Be the Core of the Future Healthcare System.2022In October, Hainan Province recommended the inclusion of digital therapeutics products in commercial health insurance, directly addressing the most critical payment issue for the implementation of digital therapeutics; meanwhile, many commercial insurance companies are also actively exploring the potential of disease-specific health insurance. MARATHON VENTURE PARTNERS believes that,The healthcare payment system is gradually shifting toward a patient-centric, “value-first” orientation that maximizes health outcomes per unit of medical expenditure. In this context, city-specific supplemental commercial health insurance (“Huiminbao”) will serve as the “vanguard” of commercial health insurance, providing a safety net for unexpected medical expenses for a broader population.

In the field of innovative payment solutions, MARATHON VENTURE PARTNERS has invested in Medbank Health, an innovative healthcare service platform; Baozhunniu, a leader in scenario-based insurance; and DaoCloud, a leading enterprise in container technology. In 2022, it consecutively invested in the angel round and Series A+ round of Yibao Technology, a comprehensive service platform for “Huiminbao” (city-specific supplemental medical insurance). Currently, Yibao Technology’s business covers more than 50 cities, with over 25 million enrolled users. It not only provides one-stop insurance services covering the entire process from product actuarial analysis, underwriting, to claims settlement and after-sales support, but also connects insurance companies, innovative pharmaceutical enterprises, and innovative healthcare service providers to deliver end-to-end healthcare services.

Yang Ruirong reiterated that focusing on the digital health sector and seeking new technological breakthroughs to address more fundamental needs of the healthcare industry remains the unwavering strategic direction of MARATHON VENTURE PARTNERS.

A set of data illustrates the potential of the digital health industry. According to the latest analysis from MARATHON VENTURE PARTNERS’ Global Digital Health Database, among more than 65,000 healthcare projects in the United States over the past two decades, digitally focused healthcare startups accounted for nearly 50% of all funded healthcare ventures. In contrast, among China’s more than 42,000 healthcare projects, this proportion remains below 10%. “Driven by factors such as an accelerating aging population, healthcare reform policies, and shifting patient behaviors, digital health still holds substantial room for growth.”

Focusing on project selection,MARATHON VENTURE PARTNERS will achieve forward-looking deployment in the digital healthcare industry through further focused iteration on three foundational pillars: efficient outreach, innovative payment models, and enhanced operational efficiency.

In terms of breadth of coverage, MARATHON VENTURE PARTNERS believesCounty-Level and Below Markets and Community MarketsThe value of acquiring precise traffic still exists, andWomen's Health, Home Care Management, Rehabilitation, NutritionThe demand for consumer-grade medical products under rigorous medical guidance should not be overlooked; in terms of in-depth exploration, MARATHON VENTURE PARTNERS will continue to focus onDermatology, Cardiovascular, Oncology, Orthopedics, Neurology, etc.Full-course management solutions for various vertical disease areas.

MARATHON VENTURE PARTNERS believes that the combination of medical insurance and out-of-pocket payments can no longer sustain the growth of the entire healthcare industry. An increasing number of innovative medical devices and drugs will be brought to market through innovative payment platforms represented by Huiminbao (city-specific supplemental commercial health insurance).

In response, MARATHON VENTURE PARTNERS will continue to pursue two strategic approaches in the field of innovative payment solutions: first, byInsurance Promotion and Marketing Conversion Platform, and Claims Adjudication Services, providing services to insurance companies and the government while reaching consumers; on the other hand, focusing on the expanded medical services spawned and promoted by Huiminbao, such asDTP Pharmacies, Health Management, Medical Services, and Platform Services for Vertical Disease Managementetc.

Integrating digital technologies into the entire healthcare process—including pre-diagnosis, diagnosis, and post-diagnosis stages—can effectively improve medical efficiency. As the commercial translation of new-generation digital technologies such as AI, the Internet of Things (IoT), and 3D printing in the healthcare sector gradually accumulates to a critical point, an increasing number of clinical applications will emerge and be implemented.

Following this line of thought, MARATHON VENTURE PARTNERS summarizedThree Key Drivers of Efficiency: Digital Infrastructure, Precision Diagnosis, and Intelligent Tools.Specifically, the relationship among the three is as follows: Digital infrastructure revolutionizes information acquisition, leveraging comprehensive and timely data to achieve “visibility, controllability, and observability” of data; once a substantial data foundation is established, precision diagnosis and treatment tools—primarily CRISPR and gene sequencing—are employed to optimize therapeutic strategies and reshape clinical workflows; finally, intelligent tools such as surgical robots and 3D printing extend the capabilities of physicians, delivering personalized, high-quality healthcare solutions for patients.

At the start of the new year, it is appropriate to take stock and look ahead. Yang Ruirong stated that in 2023, entrepreneurs should maintain cautious optimism: while remaining hopeful about the future, they must also clearly recognize that numerous uncertainties persist in the macroeconomic environment, and the healthcare industry will enter a period of adjustment. For entrepreneurs, this presents an excellent window of opportunity to calm their minds, focus on products and services, and adjust their development strategies.