Taikang Deepens Equity Investment in Healthcare and Consumer Sectors to Build an Integrated Industrial Ecosystem

Recently, the “Taikang 2017 Annual Equity Investment Forum,” themed “Navigating Cycles, Leading with Value, and Jointly Building an Industrial Ecosystem,” was held in Beijing. At the main forum held that morning, Chen Dongsheng, Chairman and CEO of Taikang Insurance Group, shared with nearly 400 representatives from portfolio companies and partner organizations Taikang’s life-respecting values, its practices in integrating medical care with eldercare, and its strategic vision for co-building a comprehensive health industry ecosystem. Duan Guosheng, Executive Vice President and Chief Investment Officer of Taikang Insurance Group, as well as CEO of Taikang Asset Management, disclosed that to support the development of the real economy, Taikang has continued to expand its alternative investment management scale. Currently, the total size of its alternative investments has exceeded RMB 290 billion, with equity investments accounting for over RMB 55 billion.

That afternoon, the sub-forum on equity investment in the “Grand Healthcare” and “Grand Consumer” sectors continued in the lecture hall. Building on the main forum’s macro-level overview of Taikang’s alternative investment landscape, the session focused on sharing multiple investment cases undertaken by Taikang in the Grand Healthcare and Grand Consumer fields.

Tan Zuyu, General Manager of Beijing Taikang Investment Management Co., Ltd.

Tan Zuyu, General Manager of Beijing Taikang Investment Management Co., Ltd., first elaborated on the natural synergies between Taikang’s three core segments—insurance, asset management, and medical care & eldercare—and the broader healthcare and consumer industries, noting that Taikang and its portfolio companies can share advantageous resources and achieve mutual growth.Guests from eight portfolio companies and partner enterprises successively shared insights on industry developments, their respective corporate statuses, and the synergistic collaboration with Taikang Investment following the investment.

Chen Guoli, Deputy Secretary-General of the Insurance Asset Management Association of China

Mr. Chen Guoli, Deputy Secretary-General of the Insurance Asset Management Association of China (IAMAC), first extended warm congratulations on behalf of Mr. Cao Deyun, Vice President of the Association, on the convening of the Equity Investment Forum. According to Mr. Chen, the insurance asset management industry has been developing rapidly. In the first half of this year, the total assets of the insurance industry reached RMB 16.43 trillion, an increase of 8.69% from the beginning of the year. The balance of funds employed amounted to RMB 14.5 trillion, up by 8.28% from the beginning of the year. In line with the goals set forth in the insurance industry’s 13th Five-Year Plan, the total asset scale is projected to exceed RMB 25 trillion by 2020. The industry is characterized by a diverse range of institutional types, broad investment scopes, and a high degree of marketization. Equity investment is playing an increasingly important role in the utilization of insurance funds. By the end of 2016, although long-term equity investments accounted for less than 10% of the balance of insurance funds employed, they contributed more than 20% of the investment returns, thereby becoming a significant investment channel and source of income for insurance fund utilization.

Chen Guoli believes that, under the premise of controllable risks, insurance funds should make their due contributions to serving national strategies and the real economy. Taking private equity investment as an example, in 2015, the China Insurance Regulatory Commission (CIRC) issued the Notice on Matters Concerning the Establishment of Insurance Private Equity Funds, allowing insurance funds to establish private equity funds with investment directions focused on industries and sectors key supported by the state. On June 8, 2016, Taikang Investment, as one of the first batch of insurance-funded private equity fund managers, collaborated with Shandong State-owned Assets Investment Holding Co., Ltd. to establish the Shandong State Holdings-Taikang Industrial Development Fund. The fund focuses on investments in areas such as big health and mixed-ownership reform of state-owned enterprises. This innovation has fully leveraged the unique advantages of insurance funds for long-term investment and the industrial expertise of its partners, playing a positive role in promoting the service of insurance funds to national strategies and support for the real economy.

Paul Gregersen, President of Greater China at Parkway Health, delivered a speech on the healthcare industry. Parkway Health is the medical group established in China by IHH Healthcare Berhad, the world’s second-largest healthcare management group. Taikang is the second-largest shareholder and most important strategic partner of Parkway Health. Mr. Gregersen believes that with the growing number of expatriates in China and the rise of the local middle class, private hospitals in China are poised for rapid development. Parkway Health has already built hospitals in Shanghai, Chengdu, Nanjing, and other cities, and will join forces with Taikang to provide high-quality healthcare services to its target customers.

Mr. Hu Zhengguo, Chief Financial Officer and Chief Investment Officer of WuXi AppTec, shared his insights on medical care and health from the perspective of pharmaceutical R&D. WuXi AppTec is a star enterprise in China’s pharmaceutical R&D sector. Starting with the NASDAQ Biotechnology Index, Mr. Hu pointed out that the acceleration in global new drug development and approval processes has been facilitated by platform-based companies like WuXi AppTec, which provide entrepreneurs with integrated resources ranging from genetic engineering to clinical trials. This support has enabled more new drug candidates to move more rapidly from theoretical concepts to market launch. Meanwhile, Mr. Hu also emphasized that innovative drugs do not necessarily mean patients can afford them; only when insurers such as Taikang drive breakthroughs in insurance payment mechanisms can patients truly benefit from access to new medications.

Scott Barrack, CEO of Colony Northstar China, subsequently took the floor. As the fifth-largest healthcare and senior living real estate management company globally, Colony Northstar holds a portfolio of over 400 medical and elderly care properties in the United States and the United Kingdom, including hospitals and senior nursing centers. Taikang’s investment in Colony Northstar has drawn significant industry attention, not only delivering stable, long-term cash returns to investors but also creating a platform for in-depth cooperation between the two parties in the healthcare and senior living sectors. Mr. Barrack also shared his expectations for China’s elderly care market.

Lin Yuming, Founder, Chairman of the Board, and President of Hemei Medical, shared insights on the development trends of the private maternal and child healthcare industry. Lin Yuming believes that the driving force behind the growth of private maternal and child healthcare lies in differentiated competition, with greater demand for mid-to-high-end medical services than for low-end ones. Private hospitals should focus not on breadth but on specialization; in the case of maternal and child care, this entails integrating medical care with elderly care, as well as combining rehabilitation with diagnostic services, to deliver personalized, high-end services. Following Taikang’s acquisition of a second-largest shareholder stake in Hemei, Hemei will provide high-quality medical services to a broader base of Taikang Insurance customers.

Duan Chenghui, CEO of Neusoft Wanghai Technology Co., Ltd., outlined the opportunities and challenges for medical big data brought about by changes in payment methods. Neusoft Wanghai currently provides refined management and medical data services to more than 1,600 healthcare institutions across China. Duan believes that China will inevitably enter a new era of comprehensive health driven by commercial health insurance. Payment reform will be a key driver of future industry development, fostering a tightly integrated relationship between payment mechanisms and healthcare delivery, rather than keeping them siloed. The Hong Kong region, which boasts the highest efficiency in global healthcare services, offers valuable lessons, as does the well-developed commercial health insurance sector in the United States. Duan praised Taikang Insurance Group for its foresight in strategically positioning itself early in the integrated medical and elderly care model, and expressed hope that commercial insurance, as a new payment force, will promote the healthy and sustainable development of the healthcare ecosystem.

Zhao Pingyuan, CEO of COFCO Womai.com, approached the topic from the perspective of dietary health, outlining the development prospects and business models of food e-commerce. Zhao believes that the e-commerce penetration rate in China’s food sector remains relatively low, and compared to developed countries, there is still insufficient coverage of high-end dietary demands. Leveraging its supply chain advantages, COFCO Womai.com can provide greater assurance of dietary health for a broader consumer base. As the lead investor in COFCO Womai.com’s Series C financing round, Taikang established a joint customer referral and conversion platform with COFCO post-investment, making it one of COFCO Womai.com’s most important partners.

Qiu Xichun, Vice President of Taikang Insurance Group and Managing Director of Taikang Health

Qiu Xichun, Vice President of Taikang Insurance Group and Managing Director of Taikang Health, took the stage last to introduce the market opportunities driven by the rapid growth of commercial health insurance. Taikang has achieved data integration with nearly 600 public hospitals, enabling customers to receive claim settlements directly at the hospital. Currently, Taikang serves over ten million paying customers for commercial health insurance, and this customer base is projected to reach the hundred-million level in the future.At that time, Taikang’s health insurance, medical network, and health services will join forces to build a comprehensive health ecosystem, enabling resource sharing and collaborative win-win outcomes with portfolio companies and partners.

Subsequently, during the roundtable session, panelists engaged in an in-depth interactive discussion on the difficulties and challenges facing the healthcare and elderly care industry. Attendees were also given the opportunity to ask questions and exchange ideas. The sub-forum concluded successfully amidst a vibrant atmosphere of interaction.