Why Oral Healthcare, Aesthetic Medicine, and Maternal & Childcare Industries Are So Hot: Understanding the Mega Trends in Consumer Healthcare – 2018 New Year Special
Consumer healthcare, as we define it, encompasses dentistry, medical aesthetics, and the maternal and infant industries. Compared to purely clinical medical services, these three sectors exhibit a significantly higher degree of consumerization.
In 2017, VCBeat (WeChat: vcbeat) listened to the voices of industry changemakers through 231 articles and captured some trends in the industry.
Each time a company completes a financing round, brief news reports paint a picture of accolades and applause. What often goes unnoticed is the immense struggle and relentless efforts behind the scenes, as entrepreneurs forge ahead on their chosen path, leveraging technology, resources, teams, and capital to tackle the pain points in the healthcare industry.
“Crossing the river by feeling the stones” is a most apt metaphor for innovation in the healthcare sector. Fortunately, this industry has never lacked individuals who break through its constraints and transcend its boundaries.
We have observed that the consumer healthcare sector is becoming increasingly transparent, making it progressively more difficult to profit from information asymmetry;
We have seen doctors with a keen sense of smell leap out of the system and devote themselves to their own entrepreneurship, meeting the segmented needs of patients;
We have witnessed capital flowing into offline dental and medical aesthetics clinics, with frequent mergers and acquisitions; chain operations and branding are becoming the trend.
We have observed that online traffic is becoming increasingly expensive. As the focus shifts from expanding into new markets to intensively cultivating existing ones, many companies are making it their strategic priority to transition from online channels to seeking offline traffic entry points, and to pivot from acquiring new customers to retaining existing ones.
We have witnessed technological transformations reshaping efficiency and resource allocation. Regardless of how business models evolve, only enterprises that ultimately meet consumer demands can sustainably share in the dividends.
The changes are so numerous that they defy exhaustive listing. Each time I consult with entrepreneurs, investors, or physicians, engage in discussions with them, and gain firsthand experience at offline hospitals and clinics, I can sense the market’s direction.
Thank you for your support, understanding, and assistance to VCBeat in 2017. In the coming year, we will strive harder, continuously improve our shortcomings, and delve deeper into the industry.
Below, VCBeat will summarize the trend-setting events in the oral care, medical aesthetics, and maternal & infant industries, while also sharing some of our own insights.
Let go of the past; look forward to the future. In 2018, a new year, it is the perfect time to ride the wind and waves.
According to VCBeat statistics, in the offline physical sector, there were over 80,000 private dental hospitals and clinics by 2017, with a compound annual growth rate (CAGR) of 30%. Nowadays, it is easy to find a dental clinic in shopping districts or residential communities; however, many people remain uncertain about which clinics offer better service, superior technology, and more reasonable pricing.
On the consumer side, the high prevalence and low treatment rates of dental caries, periodontal disease, and other oral conditions continue to drive growing demand for oral care. Meanwhile, public acceptance of orthodontics, dental implants, and aesthetic dentistry is steadily increasing. While the adage “a toothache is not a disease” reflects the perception that dental care is not an immediate necessity, cosmetic procedures such as orthodontics are indeed receiving greater attention.
In terms of the size and potential of the niche market, the cake is large enough.
However, from the perspective of monetization capability and profit expectations, dental clinics and hospitals face high costs in terms of physicians, real estate, marketing, and medical devices and consumables. The shortage of dentists is particularly acute: in China, each dentist serves eight times as many patients as in the United States.
Currently, chain enterprises are unable to achieve brand synergy across different regions after expanding into cross-regional chains, resulting in significant losses. The number and proportion of such enterprises are considerable.
Clinic Chain Expansion: The Battle of Business Models
Expansion in the dental clinic and hospital sector continued unabated in 2017. Malo Clinic (Series C, RMB 110 million), Jinsong Dental (strategic partnership, approximately RMB 200 million), and Arrail Group (Series D, USD 90 million) all secured substantial funding rounds.
In early 2018, Youmu Dental (Series B, RMB 65 million) and Moore Dental (Series B, over RMB 100 million) also completed financing rounds, both of which were reported by VCBeat in a timely manner. Of course, the number of dental companies that have secured financing in the market is likely far greater than this figure.
Chain expansion: The asset-heavy model involves building new hospitals, even flagship hospitals, while simultaneously establishing multiple clinics or outpatient departments—known as the “1+N” model—and operating them under a unified brand.
The asset-light model involves directly acquiring local dental clinics, retaining the original management teams to the greatest extent possible, and granting them equity stakes. Meanwhile, business operations are focused on core services such as orthodontics, dental implants, and pediatric dentistry.
In the long run, only the market can validate which model is better suited for the development of chain operations. Both models have their respective advantages and successful regional case studies to draw upon. In the future, the ability to successfully implement the model or take the company public will depend on capabilities in resource integration, cost control, standardized management, and service delivery.
Oral Care CompanyFinancing Report:
Youmu Dental Completes RMB 65 Million Series B Financing, Led by Matrix Partners China
Digital Transformation in Dentistry: Emergence of Market Leaders in Niche Segments
The integration of healthcare and the Internet has had a disruptive impact on changes within the healthcare industry, and the dental sector is no exception. Meanwhile, the development of the dental industry remains heavily reliant on new clinical technologies, as well as advanced equipment and instruments.
For such enterprises—including SaaS providers, patient-referral platforms, e-commerce companies, and digital implantology and orthodontics systems—the primary objective is to leverage digital tools to deliver advantages in efficiency, quality, and cost, regardless of whether the target stakeholders are dentists, clinics, or upstream and downstream players such as consumables suppliers, equipment manufacturers, and dental laboratory processors.
For such enterprises, mastering data is crucial; only by forming a synergy of “data + capital + technology” can they maintain the greatest competitive advantage in future competition.
Leading companies have now emerged to serve each of these distinct segments: patients, dentists, clinic operators, and upstream medical device manufacturers.
Patients demand high-quality services at affordable prices, sustaining a long-term need for health education. Dentists seek training and education to accelerate their professional growth, acquire specialized medical knowledge, or receive entrepreneurial support. Dental clinics need to address operational challenges such as patient acquisition, recruitment, management, digitalization, and procurement. For chain practices, leveraging capital is essential to build and export standardized systems. Meanwhile, dental equipment manufacturers face intensifying competition and must improve their after-sales service.
Compared with Dental Support Organizations (DSOs) in the United States, DSOs can provide clinics with a range of services covering technology, policies, insurance, marketing, and procurement. The largest DSO, Heartland Dental, currently operates more than 750 clinics.
This serves as a highly efficient operational model for reference; however, significant disparities remain between China and foreign countries in terms of dental insurance systems.
In-Depth Report on Digital Dentistry:
How Will Dental SaaS Evolve as Clinics Scale Up? What Are the New Avenues for Profitability?
Aesthetic medicine and plastic surgery have gradually evolved from a private consumption choice into a mainstream fashion trend. Many of the reporter’s friends have undergone hyaluronic acid injections or double eyelid surgery.
Medical aesthetics consumption has penetrated second- and third-tier cities, with higher user engagement and acceptance compared to dental care.
In the past, consumers’ attitudes toward medical aesthetics and plastic surgery were either resistant or characterized by conspicuous consumption. It is now an undeniable fact that, although concerns about safety, efficacy, physician branding, and technical expertise persist, overall acceptance among Chinese consumers has increased, with medical aesthetics gradually evolving into an experience-driven form of consumption.
In 2017, the market size of China's medical aesthetics industry exceeded RMB 200 billion, with a compound annual growth rate (CAGR) of 22%-25% projected for the next five years. In popular regions such as Chengdu and Shenzhen, even non-surgical medical aesthetics clinics have reached saturation. Both large chains and small clinics are continuously expanding their networks, resulting in intense competition.
At its core, only by resolving the dilemma of high gross margins coupled with high costs and returning to the essence of healthcare can enterprises achieve substantial growth.
Traditional medical aesthetics has been dominated by a culture of “individual heroism,” relying on flexible, time-tested practices that are deeply rooted in local realities. As capital investors pursue chain expansion and brand building, they inevitably encounter cultural clashes with these traditional models—challenges that must be addressed in the future.
Transparency Requires In-Depth Operations
Previously, over 50% of marketing expenses at medical aesthetic institutions were allocated to channel partners. The advent of the internet has brought about transformative changes in reshaping traffic rules and driving industry development, primarily manifested in two areas: customer acquisition and patient education. These efforts are dedicated to minimizing information asymmetry to the greatest extent possible and enhancing industry transparency.
Leading platforms have emerged in the medical aesthetics app sector, including So-Young, Gengmei, Yuemei, and Meibei (listed in no particular order), which boast precise user traffic. In 2017, So-Young (Series D-1, RMB 400 million) and Yuemei (Series C, RMB 80 million) both announced the completion of their latest funding rounds.
Medical aesthetics app platforms primarily aggregate users through a model combining content, community, and e-commerce, or via appointment and referral services. They build a bridge for communication between B-side institutions and doctors and C-side customers, thereby improving user decision-making efficiency and reducing marketing costs for institutions. In our analysis of domestic samples, we also benchmarked against the foreign company RealSelf for reference.
Diversified channels have become essential for the survival of medical institutions. Doctors and aesthetic medicine clinics must leverage their resource advantages to maximize the efficacy of the internet, which tests their capabilities in deep operational management.
Medical aesthetics is, in essence, a service industry with medical attributes. Institutions that profit from information asymmetry and treat customers as easy prey will inevitably be eliminated.
Reported by the largest medical aesthetics platform in the United States:
Large Brand Chains and Boutique Institutions: Two Approaches
Beyond the Putian-affiliated medical aesthetics providers, publicly listed capital is also making significant inroads into the sector, disrupting the industry’s established norms and heralding an era of transformation.
Based solely on data from the past five years, the medical aesthetics market has experienced explosive growth. Moreover, the medical aesthetics industry demonstrates strong extensibility, with the potential to penetrate the markets for lifestyle beauty services and skincare products. Currently, the primary entities in the medical aesthetics sector remain clinics, while large-scale chain operations are relatively scarce.
Large-scale medical aesthetics chains feature institutionalized management models, robust technical advantages, and strengths in academic research and resources. In contrast, small, specialized boutique medical aesthetics clinics focus on specific single-service offerings, such as dedicated rhinoplasty, or benefit from the endorsement of renowned physician groups.
These two models, leveraging highly efficient operational strategies, have already secured a certain market share across various regions. Regardless of whether the future chain model adopts a “1+N” structure (flagship hospitals plus outpatient clinics) or a partnership model, building competitive barriers will heavily depend on core internal capabilities.
Medical Aesthetics Industry Review:
The local market for non-surgical aesthetic medicine is saturated, with significant cross-industry operations.
Certain niche segments within the medical aesthetics industry also hold untapped market potential, such as non-surgical medical aesthetic clinics specializing in anti-aging, dermatology, body rejuvenation, and hair transplantation.
The integration or transformation of medical aesthetics with traditional beauty services has become a market-validated success model. While traditional beauty businesses control key traffic entry points, their transition into medical aesthetics faces practical challenges such as lack of medical expertise and differences in operational and service models.
Moreover, today’s consumers have become increasingly discerning. Even upstream manufacturers of medical devices and consumables, facing intense competition, are engaging in consumer education and science popularization not only for business-to-business (B2B) clients but also for end consumers (C2C). Clients from lifestyle beauty services are increasingly migrating to medical aesthetics, as users place greater emphasis on the immediate efficacy of aesthetic treatments, with some even joining the ranks of aesthetic consultants.
The relationship between traditional beauty services and medical aesthetics is nuanced. The honeymoon phase of collaboration and performance growth is giving way to bottlenecks at an accelerating pace. For the foreseeable future, the expansion of branded chain stores in the traditional beauty sector will likely see successful operations predominantly adopting a direct-ownership model, with founders personally engaged in day-to-day management.
Centered on the needs of mothers and infants, continuous fission is occurring and boundaries are increasingly converging across a spectrum that includes women’s and children’s hospitals, brick-and-mortar mother-and-baby stores, e-commerce platforms for maternal and infant products, parenting communities, vertical parenting platforms, as well as assisted reproductive technology (ART) preconception centers, postpartum recovery facilities, and confinement care centers.
Content Monetization
The importance and utility of such content are self-evident; whether in the form of text, video, or paid courses, health science popularization is an essential need for young mothers. In recent years, many individuals have accumulated wealth through maternal and child care self-media platforms.
Content monetization can be broadly categorized into two approaches: one is consumer-focused e-commerce, exemplified by platforms such as Niangao Mama and Xiaoxiao Bao Mama; the other is health science popularization, providing medical-grade knowledge services, as seen with Qinqin Baobao and Yu Xueyuan.
A health science popularization platform that provides medical-grade knowledge services, meeting users’ needs for record-keeping, knowledge acquisition, social interaction, and shopping. The value delivered through its content empowers mothers to make informed choices in healthcare, whether in terms of knowledge or products.
The platform’s revenue model has also expanded to include e-commerce, commissions, and advertising, with major platforms even transitioning from the CPS (Cost Per Sale) to the CPC (Cost Per Click) model.
In 2017, the traffic landscape in the maternal and infant sector underwent significant changes. The conversion of traffic from the “large community + e-commerce” model became increasingly challenging and costly, intensifying the demand for strategies that integrate brand building with performance outcomes. Furthermore, parenting platforms shifted their focus toward acquiring high-quality traffic through precise channels, such as hospitals, maternal and infant stores, and kindergartens. Leading platforms even began to lay out their new retail strategies.
An indisputable fact is that, like other industries, maternal and infant platforms exhibit concentrated traffic and a pronounced "head effect," even necessitating the deployment of professional content operation teams. It is foreseeable that competition in 2018 will become even more intense.
As Duan Tao, founder of Springfield Medical Management Group, stated at the Maternal and Child Health Sub-forum of VCBeat’s “Future Healthcare 100” conference in 2017: “Internet platforms focused on maternal, infant, women’s, and children’s health attract substantial traffic, but such traffic is characterized by fragmentation and vertical specialization, meaning that customer acquisition pain points will persist. There remain numerous avenues for market entry; for instance, women’s and children’s healthcare institutions serve as a super gateway.”
Content Monetization Report:
Online-Offline Integration
The era of leveraging the simple “portal + community + e-commerce” model to harness the massive traffic dividends in the maternal and infant sector during the early days of the internet has passed.
Current maternal and infant platforms ultimately operate under four business models: tools, health education, community, and e-commerce services. These correspond to the four primary needs of mothers: tracking, knowledge acquisition, social interaction, and shopping.
Currently, leading enterprises have emerged in their respective niche sectors. However, from an overall perspective, unique innovations remain scarce. Nevertheless, technologies such as big data and artificial intelligence are poised to penetrate the maternal and infant care industry in the future, particularly by enhancing data processing capabilities, thereby driving corporate development.
In 2017, many platforms expanded into offline operations, establishing a service loop of “online app + offline clinic” to gradually drive online users to offline facilities. Due to the high costs associated with offline clinics, achieving profitability independently is challenging. However, through online-offline integration, these platforms can more effectively acquire customers and facilitate scenario-based consumption, while also extending their revenue models to include membership and annual fees.
The core competitiveness of maternal and infant platforms lies in building sustainable customer acquisition capabilities, establishing themselves as lifestyle service hubs that connect with diverse consumption scenarios. Leveraging precise big data, these platforms drive the application and monetization of targeted advertising, intelligent parenting assistants, e-commerce, and offline services.
From a policy perspective, the state encourages private capital to invest in healthcare to meet the public’s diverse and personalized needs. Particularly given the severe shortage of pediatricians, some high-end private pediatric clinics are able to capture a share of the market.
Opinion Piece:
New Frontiers in Extensibility
The relationship between maternal and infant platforms and consumers is no longer a simple buyer-seller transaction; products and services are now imbued with experiential demands. In the healthcare service industry, users invariably pay for value.
These apps have significant untapped potential for collaboration with postpartum care centers, confinement nannies, prenatal exercise programs (such as yoga and Pilates), postpartum recovery and exercise services, early childhood education, photography, postpartum medical aesthetics, and parent-child entertainment venues.
In terms of expansion and growth momentum, pediatric clinics and postpartum care centers are among the more popular areas for extension this year; however, hospitals remain the largest super-traffic entry point.
Additionally, we have provided special coverage of the assisted reproductive technology (ART) sector, an industry driven by a licensing-based economy. Due to factors such as the relaxation of the two-child policy and domestic regulatory frameworks, this sector has exhibited unique development trends.
The supply-demand dynamics in the field of assisted reproductive technology (ART) are undergoing changes. Previously, demand outstripped supply; however, with the establishment of ART centers across various regions, licensing is no longer the sole critical barrier to entry. Public ART centers lacking strong brands, possessing limited technical capabilities, and having weak overall competitiveness face significant pressure in attracting patients.
At CITIC-Xiangya Hospital, the number of assisted reproductive treatment cycles reached 44,596 in 2017. Despite this substantial volume, the average pregnancy rate for in vitro fertilization (IVF) remained as high as 62.4% (January–November). In contrast, some hospitals performed fewer than 800 cycles, indicating a pronounced polarization in the field.
The current landscape of the industry is dominated by fertility hospitals, while internet companies are rapidly establishing preconception care centers. Overseas IVF services have emerged as a popular supplementary option, gaining traction among certain groups trying to conceive. The future development of enterprises in this sector will depend significantly on factors such as policy regulations, technological advancements, cost structures, and resource integration.
Sub-sector Coverage: