Alibaba Health Unveils New Strategic Vision: Becoming the Trusted Expert in Personal and Family Healthcare

“Alibaba Health aims to become a ‘trusted expert’ in safeguarding the health of you and your family. We are committed to making sustained efforts over decades—ten, twenty years at a time—to work hand in hand with everyone in advancing and elevating this goal,” said Zhu Shunyan, Chairman and CEO of Alibaba Health, at the 5th Future Healthcare Top 100 Conference hosted by VCBeat.

This marks the first time Zhu Shunyan has unveiled a new strategic vision to the public since assuming the roles of Chairman and CEO of Alibaba Health last year. Specifically, how does Alibaba Health interpret this new strategic deployment, and how will it implement the strategic plan in the future? VCBeat conducted an exclusive interview with Zhu Shunyan after the event.

On March 15, 2020, Alibaba Group announced that Zhu Shunyan, President of its Innovation Business Group, would assume the roles of Chairman and CEO of AliHealth. It has now been exactly one year since this Hubei-native executive took office. How does he view the evolution of his role over the past year, and what are his perspectives on the healthcare industry? These questions are undoubtedly of significant interest to external observers.

Zhu Shunyan founded Wuhan Xuncai Technology in 2003 and joined the UC Browser founding team in 2007, where he served as Senior Vice President responsible for marketing and building the commercialization system of UC Browser.

In June 2014, Alibaba Group acquired the UC Browser business, and Zhu Shunyan joined Alibaba as President of Alimama (Alibaba Group’s big data marketing platform). In 2017, Zhu Shunyan served as President of the UC Business Unit under Alibaba Entertainment. Since 2019, he has been serving as President of Alibaba Group’s Innovation Business Group.

"Strong technical background, highly logical, pragmatic and authentic, organizational architect"—these are the typical labels associated with Zhu Shunyan. Despite his rich experience in internet innovation, how will he gain insights into the transitions and changes that have been unfolding in the emerging field of healthcare over the past couple of years?

Over the past year, Zhu Shunyan has hardly taken a moment’s rest: in addition to managing his busy daily responsibilities, strengthening his “internal capabilities” has become a major focus of his work. Throughout the year, he engaged in in-depth knowledge-sharing sessions with nearly 100 industry leaders in the healthcare sector to understand and discuss current development trends in the industry.

Zhu Shunyan candidly stated that an individual’s cognitive perspective often determines their decision-making capability. In the continuous process of learning from external sources, Alibaba Health has also been supported by high-quality teams, which have provided significant assistance in its decision-making processes. When facing the previously unexplored field of internet healthcare, how should one shift their logical thinking? In his view, it remains necessary to clearly define “Internet+” and “+Internet.” “Industry + Internet” generally refers to enterprises upgrading themselves through IT technologies to improve internal and external communication efficiency, without fundamentally altering the original business logic.

However, “Internet Plus” is different. “Information and data are precisely where the Internet holds its greatest advantage.” Citing the views of an economics professor, he pointed out that information exchange is indispensable in human economic activities; without such exchange, economic activities cannot take place. “Many internet platforms start by focusing on news and platform services, with an emphasis on information. This is because information is easily digitized and is in demand by users.” Since information helps address cognitive gaps, users often have high-frequency needs for it, thereby forming the foundation of internet user platforms. The demands generated as users congregate will further drive the development of supporting industries.

“The core transformation lies in shifting from information to services.” Information chains tend to be relatively short, whereas service chains can be extended and expanded. For instance, e-commerce services involve not only online ordering but also numerous other stages, such as offline logistics and delivery. In the context of disease treatment, the service chain is even longer. “It is still difficult to specify exactly how this should be done at present, but we are confident that various means, including digitalization, should be employed to connect key nodes across the entire value chain, ensuring a superior user experience and ultimately meeting user needs. Furthermore, appropriate feedback mechanisms must be designed to monitor whether the system is operating as expected,” said Zhu Shunyan.

As Zhu Shunyan continues to deepen his reflections on the healthcare industry, Alibaba Health has also achieved remarkable results over the past year.

The main modules optimized include:

Yilu, a healthcare app that provides services such as online consultations, appointment registration, vaccinations, and physical examination bookings;

An online cloud pharmacy providing physicians with a complete pharmaceutical supply chain;

An AI for safe medication use that significantly improves the efficiency of prescription writing and review for physicians and pharmacists, enhancing the safety of online drug sales;

The nation’s first cloud-architecture-based smart hospital information system, facilitating electronic medical record (EMR) data sharing and enhancing physicians’ diagnostic efficiency through end-to-end intelligent workflows;

Entering the “Code for Assurance” traceability system in the field of new drug research and development;

Public welfare platforms that leverage internet-based solutions to enhance the quality of primary healthcare, among others.

A more positive signal is that, according to the interim financial report for fiscal year 2021 released last November, Ali Health achieved profitability for the first time. In its revenue breakdown, Ali Health reclassified its business segments to include, in addition to pharmaceutical direct sales and the pharmaceutical e-commerce platform, healthcare services, product traceability, and digital health businesses. This indicates that the strategic importance of healthcare services is becoming increasingly prominent.

Why Are Healthcare Services, Traceability, and Digital Health Businesses So Important? This Can Be Largely Interpreted from the Following Two Aspects:

Zhu Shunyan believes that both medical services and pharmaceutical care services involve issues such as how services are delivered and how revenue is ensured. Alibaba Health chose to enter the market through pharmaceutical e-commerce, primarily because it leverages a powerful e-commerce platform. Moreover, pharmaceutical services themselves are relatively standardized. Nevertheless, achieving profitability still relies on economies of scale. Today, with pharmaceutical e-commerce having achieved stable development, the new focus will shift to healthcare services.

However, healthcare services are relatively more difficult to deliver, as they are inherently personalized and individualized. Currently, the model of online medical consultations remains relatively simple in terms of service offerings. Returning to insights on “Internet Plus,” he believes that the internet should leverage its core strength—addressing information asymmetry—as a starting point. “Once information asymmetry is resolved, it can help users decide where to seek medical care. Then, through IT-enabled solutions, we can assess whether patients can be assisted with appointment scheduling and determine if pharmaceutical care services can be provided, thereby gradually expanding the service chain.”

In September 2020, the Ali Health app was rebranded as Yilu and launched, with a primary focus on delivering healthcare services. Throughout this process, Ali Health continuously expanded its user base and introduced online consultation, appointment registration, vaccination, and physical examination booking services in response to user demands.

During this year’s Spring Festival, amid resurgent COVID-19 outbreaks in certain regions, Ali Health promptly launched the “National Nucleic Acid Testing Map” on its Yilu app. This platform provided users across China with a comprehensive suite of services, including locating and booking appointments at nearby nucleic acid testing facilities, scheduling home-based testing, accessing test results, and checking policies for returning to one’s hometown. Its online appointment service alone has served millions of users nationwide.

In the course of providing services, enterprises either target a small-scale group with high average spending or a large-scale group with low average spending. In the healthcare sector, achieving inclusive services necessarily requires pursuing a massive user base; only in this way can the overall health level of Chinese residents be improved. However, in reality, most enterprises have yet to resolve the issue of scale. If healthcare services are provided at low prices, how can the business model remain viable? A more likely future business model will involve large-scale user operations and the purchase of health insurance, thereby reinvesting in and supporting the healthcare service system.

In the interview, Zhu Shunyan emphasized that Alibaba Health is not merely a builder of medical infrastructure. In the process of developing new digital healthcare infrastructure, Alibaba Health often makes strategic choices. “Foundational work serves the service system; without such groundwork, it is difficult to deliver high-quality services. For instance, in providing medication services, how can we guarantee the provenance of pharmaceuticals if traceability is not implemented?”

Guided by this logic, Alibaba Health has continuously strengthened its efforts in traceability and digital healthcare services over the past year. As of the end of September 2020, the coverage rate of Alibaba Health’s “Ma Shang Fang Xin” (Code for Assurance) traceability system among pharmaceutical manufacturers had exceeded 95%. In 2020, the traceability system was further applied to the field of new drug development, serving as a digital innovation tool for blinding management and end-to-end traceability of investigational medicinal products in clinical trials. Recently, the Ministry of Science and Technology approved the “Stem Cell Therapy for COVID-19” project, which also incorporated the “Ma Shang Fang Xin” traceability system. This marks the first time that full-chain traceability has been achieved for drugs used in clinical trials.

For Alibaba Health, the more pressing concern is how to further leverage IT solutions to enhance its capabilities amid growing service volumes. In response, Alibaba Health has adopted a relatively flexible strategy. The decision on whether to develop solutions in-house hinges on the availability of mature offerings within the industry. When reliable industry-wide solutions are already available, Alibaba Health tends to integrate them rather than building everything from scratch. For instance, in developing its cloud-based Hospital Information System (HIS), the company recognized that county-level medical consortia still required significant investment; only by establishing a robust cloud HIS could it better serve patients in these counties.

Such decisions will ultimately extend to Alibaba Health’s investment strategy in the healthcare sector. In the past, Alibaba Health’s business primarily focused on two areas: commerce-driven pharmaceutical operations (including its pharmaceutical e-commerce platform, direct-to-consumer pharmaceutical sales, and O2O pharmaceutical services) and technology-driven healthcare initiatives (such as internet-based medical services, product traceability systems, and smart healthcare solutions). Its previous investments were mainly aligned with these two core business segments.

Alibaba Health’s recent strategic investment in LinkDoc Technology was driven by the recognition that delivering in-depth, end-to-end fulfillment services in internet healthcare, while improving service quality and reducing costs, necessitates the adoption of digital solutions. Furthermore, Alibaba Health’s joint investment in clinical mass spectrometry company InnoCare Bio (Yingsheng Biology) and its strategic investment in LinkDoc Technology were primarily motivated by considerations of strategic synergy, seamless integration between services, and the potential for customization.

In Zhu Shunyan’s view, a key trend in the internet healthcare industry is the shift from the traditional “pharmaceuticals, medical services, and insurance” model to one driven by cutting-edge technology. Given Alibaba Health’s accumulated resources across various sectors, should it fully engage and deploy comprehensive investments in emerging technologies? In response, Zhu Shunyan stated that strategic prioritization would be applied. For Alibaba Health, the primary objective and mission remain delivering superior user experience. Investments in frontier technologies and the healthcare sector are all aimed at enhancing services for consumer-end (C-end) users. For instance, the investment in LinkDoc Technology was motivated by Alibaba Health’s need to establish a new service framework in the specialty pharmaceuticals sector, thereby enabling integrated online-to-offline (O2O) one-stop services. Such investments strengthen operational capabilities, improve service seamlessness, and reduce user switching costs.

In the healthcare sector, a stable, long-term, and continuously optimized system is of paramount importance. Patients require care that spans the entire lifecycle of their disease, making end-to-end management services essential. Frequent transitions between service providers would impose significant cost burdens and hinder information interoperability, thereby adversely affecting diagnosis and treatment. Alibaba Health aims to ultimately deliver stable, long-term, and sustainable services. According to Zhu Shunyan, Alibaba Health will further aggregate users on the Yilu App, expand its user base, and continue to provide high-quality services.

Due to the impact of the COVID-19 pandemic, internet healthcare companies witnessed a surge in their online consultation services in 2020. However, Zhu Shunyan believes that these data should be viewed more rationally; when user demand exploded abruptly, no company was adequately prepared to meet this surge. Now that the epidemic is under control, most internet healthcare platforms have failed to effectively retain users. This has prompted him to reflect further: companies in the internet healthcare sector must continue their efforts to explore how to sustainably create and deliver value for users.

He believes that the public health sector offers sustained opportunities for the development of internet healthcare, and internet healthcare companies need to seize these opportunities to better serve society. For instance, public health demands during the pandemic—such as online consultations, nucleic acid testing, and appointment registration for COVID-19 vaccinations—presented excellent opportunities for internet healthcare platforms. As platforms continue to refine and enhance their service offerings, they can subtly influence users over time, further boosting user engagement and attracting new users.

“Many people feel that providing information services is not enough and insist on offering treatment. However, for me, delivering information services is already a significant challenge—how can we provide high-quality information that is accessible to the general public while maintaining professionalism? When users repeatedly open the app to search for information, this itself represents substantial progress. By integrating additional on-demand services, we can gradually cultivate user habits. Otherwise, once pandemic-related nucleic acid testing is no longer required, what reason would users have to re-engage with the platform?”

Serving more people and improving service quality requires substantial investment. Only with large-scale investment can this mission be accomplished more rapidly. However, the healthcare industry is relatively slow-moving. It is precisely for this reason that Alibaba Health aims to earn users’ trust through professionalism, “aspiring to become the ‘expert’ in caring for your and your family’s health. We are committed to making sustained efforts over decades—ten or twenty years—to work together with everyone to advance and elevate this goal.”