YuHeng Pharma Resumes Trading with Limit-Up, Partners with WeDoctor to Accelerate Transformation into Biopharmaceuticals and Chronic Disease Health Management

Yuheng Pharmaceutical (002437), which had been suspended from trading for over three months, officially resumed trading today (May 22) and immediately hit the 10.02% daily price limit.

According to yesterday’s announcement on the resumption of trading, the company is in discussions with China Health Investment Holdings Co., Ltd. and its affiliates, as well as intermediaries, regarding the introduction of strategic investors; no formal equity transfer agreement has been signed by the relevant parties yet.

During the trading suspension, although matters such as corporate restructuring and the introduction of strategic investors were not yet finalized, there are signs that Yuheng Pharmaceutical has achieved phased results both in terms of revenue from the chronic disease and general health sector, and in the future high-potential field of biologics.

Yuheng Pharmaceutical’s limit-up today was primarily driven by the major positive news of its strategic partnership with WeDoctor.

On May 18, Yuheng Pharmaceutical signed a strategic cooperation agreement with WeDoctor, China’s largest internet healthcare unicorn. The two parties will establish a cloud-based primary healthcare platform in Heilongjiang Province as a pilot project, and will replicate and promote the mature model nationwide at an appropriate time.

This is the first cloud platform targeted at primary healthcare institutions since the release of China's National Health and Medical Industry Cloud.

WeDoctor is Tencent’s key strategic investment in the internet healthcare sector. As WeDoctor’s largest institutional shareholder and strategic partner, Tencent has previously engaged in multiple in-depth collaborations with WeDoctor in the healthcare field.

At the signing of the strategic cooperation agreement between Yuheng Pharmaceutical and WeDoctor, a relevant executive from Tencent Cloud attended in person and delivered remarks.

The partnership between Yuheng Pharmaceutical and WeDoctor holds two significant implications:

I. This signifies that, as a physical pharmaceutical enterprise, it has become integrated into Tencent’s medical cloud ecosystem, paving the way for significant future growth potential;

II. By aligning with WeDoctor’s “Healthy China” strategy, Yuheng Pharmaceutical will enhance its comprehensive portfolio of chronic disease medications, thereby unlocking substantial market opportunities.

Behind the partnership between WeDoctor Cloud and Yuheng Pharmaceutical, Tencent and other shareholders of WeDoctor also played a pivotal supporting role.

As WeDoctor’s largest institutional shareholder and strategic partner, Tencent has engaged in multiple in-depth collaborations with WeDoctor in the healthcare sector. As early as 2016, WeDoctor and WeChat jointly launched an appointment-based medical consultation service within their Urban Services platform, covering dozens of large and medium-sized cities across eastern, central, and western China, including Shanghai, Xi’an, Changzhou, Harbin, Shijiazhuang, Xining, and Dongguan.

On May 18, the day the cooperation agreement was signed, a Tencent Cloud representative attending the signing ceremony stated that Tencent Cloud would fully leverage its advantages in data computing and platform support to facilitate the Primary Care Cloud jointly established by WeDoctor Cloud and Yuheng Pharmaceutical, thereby accelerating the deployment and application of the Primary Care Cloud across primary healthcare institutions throughout China.

It can be said that the primary care cloud is not only a strategic initiative jointly pursued by WeDoctor and Yuheng Pharmaceutical, but also part of Tencent’s layout and vision in the field of smart healthcare. On May 18, 2018, WeDoctor Cloud, together with Tencent Cloud and the Chinese Society of Health Information and Healthcare Big Data, co-established a national health and medical industry cloud platform. This platform provides various intelligent medical cloud application platforms and medical artificial intelligence solutions to the entire industry, aiming to become the infrastructure and computing engine for China’s healthcare sector.

In this context, an important policy backdrop is that Yuheng Medicine and WeDoctor will join forces to build a primary healthcare cloud, which has also gained support at the national policy level. In April this year, the General Office of the State Council issued the “Opinions on Promoting the Development of ‘Internet + Medical Health,’” proposing the active application of internet and artificial intelligence technologies to accelerate the vertical integration of medical resources, interoperability and sharing of information, and efficient coordination of services.

According to the policy interpretation of the “Opinions on Promoting the Development of ‘Internet + Healthcare’” issued by the State Council Information Office on April 17, the CPC Central Committee and the State Council attach great importance to the work of “Internet + Healthcare.” Both General Secretary Xi Jinping and Premier Li Keqiang have emphasized the need to advance “Internet + Healthcare,” accelerate the development of medical consortia, reduce the need for patients to make multiple trips, enable data to move instead of people, and continuously improve the equity, inclusiveness, and convenience of public services, so that the public can access high-quality medical services close to home.

In light of this, Yuheng Pharmaceutical and Weiyi Cloud have integrated online and offline channels to achieve resource consolidation, jointly building a primary care pharmaceutical cloud platform to upgrade China’s grassroots medical and health services through internet technology.

At the heart of building a healthcare cloud is the interoperability of medical and health information, which is precisely WeDoctor Group’s strength; their collaboration represents a powerful alliance between two industry leaders.

“WeCloud” is one of the two major business segments of WeDoctor Group. Over the years, WeCloud has developed eight major system platforms, including remote diagnosis and treatment, cloud-based laboratory and imaging services, and cloud pharmacy. These platforms enable healthcare institutions to achieve interoperability in data, capabilities, services, payments, and supply chains. The core keywords for WeCloud’s various products are data, matching, prescriptions, diagnosis and treatment, health, pharmaceuticals, and payments.

Against the backdrop of the comprehensive elimination of hospital reliance on drug markups, the outflow of prescriptions is a major industry trend.

In February 2018, WeDoctor Cloud launched the “Prescription Sharing Platform” and subsequently spearheaded the establishment of the National Prescription Sharing Alliance. By fostering collaboration among medical institutions, pharmaceutical companies, retail pharmacy chains, and internet healthcare enterprises across China, and by leveraging technologies such as the internet, big data, and artificial intelligence, the alliance has achieved data synchronization and high-level coordination among healthcare providers, prescriptions, medications, and insurance.

The partnership between Yuheng Pharmaceutical and WeDoctor, China’s most powerful internet healthcare enterprise, is not merely a simple collaboration between a traditional pharmaceutical company and an internet platform, but rather a strategic alliance.

WeDoctor’s largest user base consists of patients with chronic diseases, which can help Yuheng Pharmaceutical’s chronic disease treatment medications gain significant market space. WeDoctor’s partnership with Yuheng Pharmaceutical, a strong player in the pharmaceutical industry, will also further solidify its internet healthcare strategic landscape.

According to public information, through a series of initiatives over the years—including product introduction, collaborative development, and investment and mergers and acquisitions—Yuheng Pharmaceutical has gradually established competitive advantages characterized by broad therapeutic coverage and a diverse product portfolio, particularly boasting a robust pipeline of leading medications in the field of chronic diseases.

Currently, Yuheng Pharmaceutical has established a comprehensive and robust portfolio of chronic disease products through both proprietary development and collaborations. The company maintains an extensive product lineup across multiple therapeutic areas, including cardiovascular and cerebrovascular diseases, diabetes, allergies, chronic kidney disease, and vitamin and mineral supplements.

As of 2017, Yuheng Pharmaceutical achieved rapid growth in the sales volume of its oral products for chronic diseases, which have become a significant component of the company’s performance, accounting for approximately 27% of its gross profit. Yuheng Pharmaceutical indicated that, driven by factors such as channel penetration into lower-tier markets and adjustments to medical insurance policies, the sales volume and contribution rate of its oral chronic disease products are expected to increase substantially. In the future, the company will continue to expand its product portfolio in the chronic disease sector, fully tap into market potential, strengthen its presence at the terminal level, proactively develop county-level and community-based terminal markets, and further enhance its influence in the field of chronic disease management.

According to VCBeat, WeDoctor is deploying its online network of 220,000 experts and 7,400 expert teams to primary care settings. By implementing AI-assisted diagnostic systems for general practice and traditional Chinese medicine, the company aims to enhance primary healthcare services as well as testing and laboratory capabilities. In addition, WeDoctor will partner with Yuheng Pharmaceutical to provide a broader range of medications to primary care institutions, delivering drugs to patients at lower prices and with greater convenience, thereby strengthening medication access and management capabilities at the grassroots level.

Liao Jieyuan, Chairman of WeDoctor, stated, “We chose to partner with Yuheng Pharmaceutical in the offline sector because they have accumulated 18 years of extensive experience in the pharmaceutical industry. Currently, they offer more than 20 product series comprising over 200 pharmaceutical products, and their network covers more than 30,000 medical institutions at all levels across China. In Heilongjiang Province alone, they serve over 1,000 hospitals, including more than 150 tertiary hospitals, over 400 secondary hospitals, and more than 700 primary care and grassroots medical facilities, as well as over 300 independent and chain pharmacies. This partnership will effectively and rapidly enhance our offline promotion and resource integration capabilities, thereby systematically improving the service capacity and quality of grassroots healthcare delivery.”

With the implementation of zero-markup pricing and the tiered diagnosis and treatment system, a greater proportion of prescriptions flowing out of hospitals will be directed to community health service centers in the short term. In terms of prescription drug categories, medications for basic therapeutic areas—primarily chronic disease drugs such as antihypertensives, lipid-regulating agents, and antidiabetic agents—account for the largest share at community health service centers, reaching 44%.

In the future, WeDoctor will deepen its collaboration with Yuheng Pharmaceutical, fully leveraging Yuheng’s advantages in drug portfolio and pharmaceutical manufacturing to enhance the supply capacity for outflowing prescription drugs and promote the development of prescription sharing and outflow.

In partnering with WeDoctor and other “Tencent-affiliated” internet healthcare platforms, 55-year-old pharmaceutical industry leader Zhu Jiman is undertaking a bold transformation of the foundation of Yuheng Pharmaceutical, the company he founded, demonstrating a willingness to make painful sacrifices for long-term success.

Over the past two years, Yuheng Pharmaceutical has focused on advancing its strategic transformation by entering the biologics sector through a partnership with WuXi Biologics and venturing into chronic disease management and general health via collaboration with JD Bangneng, thereby completing initial explorations in these strategic directions. To further accelerate this transformation, Yuheng Pharmaceutical plans to gradually divest or sell certain traditional pharmaceutical businesses that are misaligned with its strategic direction, concentrating resources to expedite its layout in biologics, chronic disease management, and general health.

Furthermore, in 2017, Yuheng Pharmaceutical undertook initiatives to upgrade its sales operations, including consolidating commercial channels, intensifying specialized promotion, and gradually extending its reach to the terminal market, with further results expected in 2018.

In terms of new product portfolio development, Yuheng Pharmaceutical continues to advance its in-licensing initiatives. Under the current national mechanism encouraging pharmaceutical innovation, Yuheng Pharmaceutical has long been driving R&D and innovation within the company. The strategic transformation is beginning to yield results, with an increasingly robust and tiered pipeline of biological drugs.