Wanxu Health Secures Tens of Millions in Series A Funding to Target the Billion-Dollar Hospital SPD Market
VCBeat (WeChat ID: vcbeat) has learned that Wanxu Health, a healthcare IT company, recently completed its Series A financing round, raising tens of millions of yuan. The round was led by Qiaojing Capital, with Qilun Venture Capital participating as a co-investor. The funds will be used for the research and development of healthcare information systems, market promotion, and other purposes, with a particular focus on expanding its hospital SPD (Supply, Processing, and Distribution) business.
Wanxu Health is a high-tech enterprise headquartered in Shanghai, specializing in healthcare informatics products and solutions. With nearly two decades of experience in the field, the company has established technical advantages and a solid market share in the markets for pharmaceutical and medical device ERP systems and health insurance management systems. In recent years, Wanxu Health has focused on hospital SPD (Smart Supply Chain Management) services, identifying a new growth driver.
Wu Shaoxuan, General Manager of Wanxu Health, told VCBeat that Wanxu Health was founded in Shanghai in 2001 and has been dedicated to the medical informatics industry for nearly two decades. Currently, Wanxu Health’s main product lines cover three major areas: medical insurance information systems, ERP systems for pharmaceuticals and medical devices, and hospital SPD (Supply, Processing, and Distribution) services.
The medical insurance payment information system refers to the provision of transaction settlement software, intelligent prescription review software for medical insurance, and other solutions to designated medical insurance institutions. Having operated in Shanghai for many years, Wanxu Health serves 100% of the medical insurance pharmacies in Shanghai. In the context of stringent medical insurance cost containment, its intelligent prescription review software has been implemented and is providing services at over one hundred hospitals in Shanghai.
The future growth driver for this business lies in Shanghai’s pilot program for long-term care insurance and the issuance of its detailed implementation rules. Wanxu Health has rapidly responded by providing medical insurance transaction and settlement services to nursing homes, care facilities, and home-based care institutions. Currently, Wanxu Health serves nearly 1,000 elderly care institutions and is growing at a rate exceeding 50%.
Meanwhile, Wanxu Health provides ERP software to pharmaceutical companies, medical device manufacturers, chain pharmacies, and independent pharmacies, with the majority of pharmaceutical companies in the Shanghai region adopting its ERP system.
With the implementation of policies such as tiered diagnosis and treatment and the separation of prescribing from dispensing, Shanghai has piloted comprehensive reforms in community health services. Key components of these reforms include long-term prescriptions and extended prescriptions, which require robust information technology support. Wanxu Health has actively participated in Shanghai’s community comprehensive reform projects, providing IT infrastructure to over 100 community hospitals. In collaboration with partners such as Sinopharm and Shanghai Pharmaceuticals, it supports the prescription circulation needs arising from these community reforms.
It can be said that Wanxu Health is a leading enterprise in regional healthcare informatization that has remained largely under the radar. Currently, its annual revenue is in the tens of millions of RMB. Its clients include major Grade A tertiary hospitals such as Shanghai Sixth People’s Hospital, Huashan Hospital Affiliated to Fudan University, Tongren Hospital Affiliated to Shanghai Jiao Tong University, The First Affiliated Hospital of Zhengzhou University, Shandong Provincial Hospital, and Qilu Hospital, as well as large pharmaceutical commerce companies such as Sinopharm Group, Shanghai Pharmaceuticals, China Resources Pharmaceutical, Chongqing Pharmaceutical, and Humanwell Healthcare.
In recent years, with the implementation of policies such as zero markup on drugs and medical consumables and the “Two-Invoice System,” hospital pharmacy supply and materials management departments have transitioned from profit centers to cost centers. Against this backdrop, a pressing challenge for hospitals is how to maintain patient-centered care within controllable costs, effectively manage the circulation of drugs and consumables, ensure uninterrupted supply, and facilitate information resource sharing. Seizing this opportunity, Wanxu Health has prioritized the development of its Hospital SPD (Supply, Processing, and Distribution) business.
SPD, an acronym for Supply, Processing, and Distribution, refers to a third-party operational service model that processes pharmaceuticals, medical devices, consumables, reagents, and other medical supplies into optimal packaging units based on the actual needs of healthcare institutions. These supplies are proactively and periodically delivered to various consumption points, with settlement based on actual terminal consumption. This model ensures the quality and safety of medical materials while minimizing hospital costs for pharmaceuticals and medical devices, thereby achieving unified, refined, and efficient management of medical supplies within healthcare facilities.
Before laying out this business, Wanxu conducted specialized market research in the United States, Japan, and other markets. “SPD is an intelligent and efficient concept for supply management. It first appeared in the logistical supply management of the U.S. military and was later adopted in the supply management of medical institutions in the United States and Japan. By leveraging information technology and innovative operational models, SPD makes supply management more efficient, allowing medical institutions to focus more on delivering high-quality medical services.”
“Japan also initiated healthcare reforms in the 1970s and 1980s, imposing stricter requirements on hospital supply chain management. Today, most Japanese medical institutions have dedicated operational departments to manage supplies such as pharmaceuticals and consumables. This is very similar to the situation in China, where policy pressures are driving the refinement of medical supply management,” added Wu Shaoxuan.
Current material management in medical institutions is relatively "extensive," with a general emphasis on clinical operations while neglecting hospital operational management. The lack of integration and information asymmetry across various links of the medical supply chain lead to product inventory overstock, significant waste, and high overall operational costs. With the elimination of drug markups and reduced profits from consumables, hospitals face increasing operational difficulties and an urgent need to reduce costs and improve efficiency. Consequently, supporting SPD (Supply, Processing, and Distribution) information services have become a critical necessity for hospitals.
For pharmaceutical commerce enterprises, the innovation of hospital material management models actually represents an opportunity for innovative transformation. The centralized distribution of medical supplies has clear policy guidance and is an inevitable trend. The new in-hospital material management model can provide opportunities for pharmaceutical commerce enterprises to integrate channels. By helping hospitals build SPD (Supply, Processing, and Distribution) supply chain systems and deploying related equipment and information service software, pharmaceutical commerce companies can gradually break the existing distribution pattern and further increase the concentration of distribution.
Targeting a Brand-New Sector: Market Size Estimation as the First StepWhen entering an entirely new field, the first critical step is to estimate the market size, which will determine the company’s future growth potential. In the case of SPD (Supply, Processing, and Distribution) services, hospitals at Level II and above are potential adopters of SPD systems. Assuming approximately 2,000 Level III hospitals and 7,000 Level II hospitals in China, with each medical institution making a one-time investment of RMB 1 million for system procurement, this would represent a market nearing RMB 10 billion. When recurring service fees and collaborations with pharmaceutical distributors and medical device and consumable companies are taken into account, the market scale is expected to expand even further.
Wanxu Health employs three market strategies. First, as a third-party software vendor, it collaborates with pharmaceutical commercial companies to provide SPD (Supply, Processing, and Distribution) management software to medical institutions. Second, it partners with companies possessing regional hospital resources to advance the implementation of hospital SPD systems. Third, it adopts a sales agency model, engaging local agents with established resources to sell its SPD software systems. Currently, through these models, Wanxu Health has successfully established partnerships with several major pharmaceutical commercial groups and has implemented and served dozens of large Grade A tertiary hospitals.
Wu Shaoxuan told VCBeat that Wanxu Health’s significant investment in this business is driven not only by its promising growth potential but also by the company’s mature technical system and extensive market experience. “We hold a first-mover advantage in hospital SPD (Supply, Processing, and Distribution) services, being one of the earliest companies in China to enter this field. Our software maturity, technological capabilities, and implementation team expertise give us a distinct edge. These pronounced advantages in technology and market resources will further facilitate our future business development.”
“Of course, opening up a brand-new market inevitably involves various challenges. Years of experience in market development have shown that the management philosophy and operational strategies of domestic hospitals are undergoing a subtle transformation. ‘The introduction of SPD’s advanced management model into hospitals can significantly reduce their operational costs. There is clear and urgent demand for SPD management software and services. In the future, as the market gradually matures, we can also introduce intelligent logistics robots, AI-powered smart devices, and other technologies to further transform hospital supply chain management,’ emphasized Wu Shaoxuan. He stressed that SPD business is an integrated solution combining ‘hardware + software + services.’”
Wanxu Health’s current round of financing also reflects its optimism about this opportunity, aiming to accelerate the expansion of its SPD business by bringing in capital. “Wanxu Health maintains very strong operating cash flow. When we decided to enter the SPD market, upfront investments were required, including costs for personnel, R&D, and marketing. Capital support will help us rapidly replicate our early-stage market experience and quickly capture market share,” said Wu Shaoxian.
Pu Qiangling, Partner at Qiaojing Capital, the lead investor in this round, stated: “Qiaojing Capital has consistently focused on investment opportunities arising from healthcare system reforms. Driven by healthcare reform policies such as the ‘two-invoice system’ for pharmaceuticals and medical consumables, cost reduction and efficiency improvement have become imperative needs for hospitals. We are highly optimistic about the development prospects of hospital SPD (Supply, Processing, and Distribution) services. With over a decade of deep engagement in the healthcare informatics industry, Wanxu Health has established significant regional and first-mover advantages. Its platform-based information solutions integrate medical insurance settlement, ERP, and SPD systems, closely aligning with hospital operational scenarios. Furthermore, leveraging years of accumulated expertise in medical insurance settlement and pharmaceutical ERP software, the company is actively expanding into the long-term care insurance sector for the elderly and the prescription outflow business, which offers substantial growth potential.”
About Qiao Jing Capital
Qiaojing Capital is a professional, focused investment management firm with a differentiated strategy. Its investment team possesses deep industry insights and years of practical experience. Qiaojing Capital consistently adheres to value investing based on clinical needs in the healthcare sector, fostering new medical technologies to provide superior solutions for clinical practice in China and contributing to the advancement of global healthcare. Leveraging its industrial resources in the healthcare field, Qiaojing Capital safeguards value creation for its portfolio companies. Its investment focus spans multiple areas, including interventional oncology, cardiovascular and cerebrovascular diseases, orthopedics, genetic testing, chronic respiratory disease management, and pharmaceutical logistics and distribution. Portfolio companies include Langkai Medical, Tianzhu Ruichang, Aojing Medical, Feishuo Biology, Sena Biology, Chengyi Jiaren, and Zhixin Medical.