CDH Investments Leads 2018's First AI Healthcare Investment with Huiying Medical, Highlighting Commercialization as Key to AI in Medical Imaging

AI has undoubtedly become the protagonist across global industries in recent years, with an AI war now unfolding. Capital is never absent from this feast; CDH Investments, for instance, has long been deeply engaged in the AI sector, strategically deploying investments in security, finance, and industrial applications. It has backed AI star companies such as SenseTime, BBD (Shu Lian Ming Pin), and EFORT Robotics, striving to build a comprehensive business ecosystem spanning the upstream and downstream of the AI industry. In 2017, CDH Investments made another move, planning to raise RMB 3 billion to establish an AI fund dedicated to investing in high-growth AI scenario-based enterprises.

At the beginning of 2018, CDH Investments made another strategic move in the AI sector by making a significant investment in HY Medical, a leading company in AI applications for healthcare and medical services. According to VCBeat (WeChat ID: vcbeat), this marks the first investment deal in the AI field this year. As one of the companies with the highest degree of technological commercialization in the field of AI medical imaging, HY Medical made remarkable achievements in 2017: its solutions were deployed in over 700 hospitals, providing intelligent auxiliary diagnosis and quantitative reports covering up to ten different body parts and several disease types, including the lungs, prostate, breast, fractures, and head. In October 2017, HY Medical secured hundreds of millions of yuan in financing led by Data Capital, setting a historical record for the largest single investment amount in the industry.

In September 2015, the General Office of the State Council issued assessment and evaluation criteria for pilot programs on tiered diagnosis and treatment. The tiered diagnosis and treatment policy has driven the downward shift of healthcare demand, unlocking primary care needs and creating new incremental growth opportunities.

On one hand, the demand for medical imaging is growing rapidly, resulting in a significant shortage of radiation oncologists, particularly those with extensive clinical experience. Data shows that the annual growth rate of medical imaging data in the United States has reached 63.1%, while China’s growth rate has also hit 30%. In contrast, the annual growth rates of radiologists in the United States and China are only 2.2% and 4.1%, respectively, far lagging behind the growth of imaging data, thereby widening the supply-demand gap.

On the other hand, the shortage of physicians has led to increased rates of misdiagnosis and missed diagnosis. According to misdiagnosis data released by the Chinese Medical Association, the overall clinical misdiagnosis rate in China is 27.8%, with an average misdiagnosis rate of 40% for malignant tumors. These misdiagnoses occur primarily at primary healthcare institutions.

Moreover, the increasingly robust AI support policies have created more development opportunities for these imaging platforms that are deploying new technologies. Starting from 2016, when the State Council issued a series of policy directives calling for the development of artificial intelligence, to March 2017, when “artificial intelligence” was included in the Government Work Report for the first time during the Two Sessions; followed by the State Council’s release of the Development Plan for New-Generation Artificial Intelligence in July and the designation of the first batch of national AI open innovation platforms—including Baidu, Alibaba Cloud, Tencent, and iFlytek—in November; and culminating in December with the issuance of the Three-Year Action Plan to Promote the Development of New-Generation Artificial Intelligence Industry (2018–2020), which is regarded as the inaugural roadmap outlining “the direction and approach” for implementation.

The sustained benefits from favorable policies and the continuous growth in demand have not only created significant room for industry expansion and value realization but also provided many innovative startups with opportunities to overtake competitors. HY Medical stands out as a prime example and major beneficiary of this trend; in 2017 alone, it deployed its solutions in more than 500 hospitals, more than double the number achieved in 2016.

Guo Na, co-founder of HY Medical, stated, “The healthcare sector is worthy of sustained investment. The scarcity and insufficiency of high-quality medical resources constitute a fundamental contradiction. Healthcare institutions such as township hospitals and community health centers are not lacking in equipment, but rather in diagnostic capabilities. AI has already achieved significant breakthroughs in screening; the image interpretation efficiency of HY Medical’s intelligent diagnostic system averages five seconds, with accuracy comparable to that of senior radiologists.”

Currently, among the 700 hospitals collaborating with HY Medical, more than 500 are primary care institutions. In Guo Na’s view, artificial intelligence (AI) is an essential driver for the implementation of tiered diagnosis and treatment, enabling people at the grassroots level to access equitable, high-quality resources through AI and big data platforms. “AI can effectively free up the time of top-tier physicians, allowing them to focus on scientific research, share their experience and knowledge, and mentor more young, talented doctors. Meanwhile, the general public can enjoy high-quality medical services without leaving their counties. This creates a virtuous cycle and achieves win-win outcomes for all stakeholders. The explosive growth of technology has made this possible, while addressing critical issues concerning national livelihood and people’s well-being.”

CDH Investments stated: CDH has been closely monitoring the application of artificial intelligence across various industries. AI companies previously invested in by CDH, such as SenseTime, BBD (Shu Lian Ming Pin), and EFORT Robotics, have achieved notable breakthroughs and performance in sectors including security, finance, and industrial manufacturing. The healthcare industry is a key focus of CDH’s investment strategy and represents one of the areas where AI is likely to achieve near-term breakthroughs. Within healthcare, medical imaging stands out as a field with abundant data accumulation, relatively mature AI technology applications, and significant clinical value.

According to Zhou Ming, Deputy Director of the Education and Examination Center under the Ministry of Industry and Information Technology, China faces a shortage of more than 5 million AI professionals. Demand for AI talent continues to grow in both R&D and practical application sectors, becoming the most significant bottleneck constraining current AI development. Amid widespread anxiety over talent scarcity, the competition for and cultivation of AI professionals has become a new “Long March.” This is particularly true in the interdisciplinary field of medical imaging AI, where there is a severe shortage of professionals with combined expertise in medicine and engineering. In this round of unicorn investments, founding teams with strong academic and technical backgrounds are highly favored by capital. Chai Xiangfei and his team, with their solid academic and technical track records, undoubtedly possess distinct advantages.

HY Medical’s CEO Chai Xiangfei, Chief Scientist and Stanford University tenured professor Xing Lei, and COO Guo Na have formed a formidable leadership trio. Chai Xiangfei holds a Ph.D. in Medical Imaging from the University of Amsterdam and completed his postdoctoral research at Stanford University. With over a decade of interdisciplinary research and engineering experience in AI for medical imaging, image processing, and data analytics, he oversees AI scenario integration and product definition. Xing Lei, Director of the Stanford Center for Medical Physics and a tenured professor, brings substantial academic and talent resources to HY Medical. As Chief Scientist, he leads the team in AI technological innovation and technology transfer. Guo Na, a Tsinghua University graduate with more than ten years of experience in the TMT sector, is responsible for commercial implementation. Under her leadership, HY Medical has established a comprehensive commercial network across eight key provinces in China, deploying its solutions in over 700 hospitals.

CDH Investments’ investment in HY Medical is driven by the highly complementary strengths of its founders, Dr. Chai Xiangfei and Guo Na, in technological foresight and commercial execution, respectively. It also recognizes the value of Professor Xing Lei, Chief Scientist, whose decades of accumulation at Stanford University have yielded cutting-edge research achievements and talent resources in medical imaging. Having previously invested in dozens of healthcare companies, CDH believes that the integration of capital and technology will unlock greater value and momentum.

Furthermore, HY Medical is actively pursuing a global strategy for interdisciplinary talent acquisition. Taking the technical team as an example, more than 30 of its over 60 members possess backgrounds in medical-engineering integration, including expertise in medicine, cloud architecture, and artificial intelligence. Among them, nearly 20 hold doctoral degrees from overseas institutions, including five AI PhDs recruited from Stanford University, all boasting more than five years of extensive theoretical and practical experience.

In the United States, a large number of AI startups and innovative ventures are concentrated around Stanford University. Leveraging academic institutions such as Stanford as their scholarly foundation, these entities have fostered a clustering effect of AI talent at Stanford. Under the leadership of Chief Scientist Xing Lei, HY Medical has established Stanford University as a hub for top-tier talent. On one hand, the company implements a Global AI Talent Excellence Program, sending outstanding professionals with medical backgrounds to Stanford for advanced study and exchange. This initiative is dedicated to cultivating exceptional interdisciplinary talents in China who possess combined expertise in medicine and engineering, thereby narrowing the technological gap between China and the United States. On the other hand, leveraging its robust academic resources from both Stanford University and Tsinghua University, HY Medical is actively pursuing industry-academia collaborations. It has established joint innovation laboratories with Stanford University and Tsinghua University, focusing on the cultivation of top-tier AI talent, as well as technological innovation and translation.

In Chai Xiangfei’s view, competition in the AI industry ultimately boils down to a contest of talent and knowledge reserves. Currently, the most significant bottleneck for medical AI is the severe scarcity of interdisciplinary talent.Physicians often have limited understanding of technology, while technical talent struggles to gain in-depth knowledge of the medical field. HY Medical places great emphasis on identifying and cultivating interdisciplinary talent, which is one of the key factors contributing to its rapid growth. By bringing together professionals with diverse knowledge and experiential backgrounds and integrating wisdom from various fields, the company ultimately creates a closed-loop productivity system that overcomes the limitations of single-discipline approaches.

According to relevant research reports on China’s AI investment market, the total AI investment in the first three quarters of 2017 had already surpassed the full-year investment of 2016, with AI “attracting capital at a frenzied pace.” Industry insiders believe that application-layer companies focusing on product development in specific niche segments will be more favored by capital. The field of artificial intelligence in medical imaging is regarded as the biggest dark horse of 2017; application-driven enterprises that are technology-focused and committed to technological innovation and the practical implementation of medical imaging scenarios demonstrate clear advantages.

HY Medical applies AI to specialized medical scenarios, focusing on enhancing efficiency and accuracy to address two key industry pain points. By leveraging image recognition to identify lesions in medical images, it improves diagnostic reading efficiency, particularly overcoming the challenge of localizing small lesions within large organs. For instance, in detecting breast masses, HY Medical achieves an accuracy rate exceeding 91% and boosts efficiency by at least 40%. Furthermore, by building full-process predictive models that incorporate temporal data, the system enables machines to generate diagnostic conclusions. This facilitates qualitative and quantitative lesion assessment, provides quantified reports with accuracy comparable to that of senior radiologists, and assists physicians in developing personalized treatment plans.

Commercialization is what determines a company's successThe key to success. In Chai Xiangfei’s view, productization is the foundation for commercial implementation, and the usability and user-friendliness of medical AI products are the gold standards for evaluating their value and prospects. HY Medical has consistently adhered to a collaborative development model with hospitals, ensuring that requirements originate from clinical settings and are applied back to clinical practice, thereby returning value to hospitals. While enhancing product usability and user-friendliness, HY Medical continuously improves product efficacy, promoting its application from single-center to multi-center clinical settings, thus establishing a closed loop of application optimization and service within hospitals.

Good products speak for themselves. According to Guo Na, co-founder of HY Medical, by the end of December 2017, the company—established just over two years prior—had been deployed in more than 700 hospitals, including over 200 Grade A tertiary hospitals and more than 500 primary care facilities.

Guo Na stated, “HY Medical’s core competitiveness lies in technological innovation and the integration of medical scenarios. HY Medical will actively promote the national tiered diagnosis and treatment system, build a multi-party win-win ecosystem, and serve as an enabler and guardian of health, ensuring that high-quality medical resources benefit every patient.”