Jianke Expands into Internet Hospitals to Capture the Prescription Drug Spillover Market

VCBeat (WeChat: vcbeat) reported on March 7.Recently, the pharmaceutical e-commerce platform Jianke announced that it would collaborate with Jingtai Hospital in Baiyun District, Guangzhou, to explore the internet hospital model and prepare for the outflow of prescriptions from hospitals. Starting in 2017, the company will focus on expanding its presence in internet hospitals and mobile healthcare.

Exterior View of Jingtai Hospital, Baiyun District, Guangzhou

As policies such as the separation of prescribing and dispensing, reduction of the drug revenue share, and the “two-invoice system” for pharmaceutical distribution are implemented one by one, the outflow of prescriptions from hospitals has become an inevitable trend, potentially unlocking a market worth hundreds of billions of yuan.

For years, pharmaceutical e-commerce platforms have been constrained by the prohibition on direct sales of prescription drugs, prompting them to explore indirect strategies. In addition to Jianke, companies such as 1 Drug Network and Alibaba Health have extensively developed online hospital and clinical consultation services, which have significantly driven prescription traffic.

At the beginning of this year, the “13th Five-Year Plan for Deepening the Reform of the Medical and Healthcare System” issued by the State Council explicitly stipulated that medical institutions shall prescribe medications using their generic names, proactively provide prescriptions to patients, and shall not restrict the outflow of prescriptions.

“One of the future trends is for pharmaceutical e-commerce platforms to collaborate with major hospitals in exploring internet hospital models, thereby facilitating the outflow of prescriptions,” said Xie Fangmin, CEO of Jianke. “The boom period for pharmaceutical e-commerce will last another three to four years. Industry consolidation has already begun, making it difficult for late entrants to build up traffic and supply chain capabilities. In the future, hospitals will account for 40% of pharmaceutical retail, online channels 30%, and the remainder will come from offline channels.”

“Pharmaceutical e-commerce platforms possess advantages in supply chain management and user base, positioning them to explore the acceptance of outpatient prescription outflows,” revealed Xie Fangmin. Jianke began venturing into online consultations in 2011 with the launch of its “Palm Doctor” app, which was rebranded as “Jianke Doctor” last year. Currently, Jianke has partnered with several of China’s top ten hospitals to explore pathways for managing prescriptions issued outside hospital settings.

According to VCBeat (WeChat ID: vcbeat), the hospital partnering with Jianke is Guangzhou Baiyun Jingtai Hospital, a non-profit medical institution approved by the Guangzhou Municipal Health Bureau in 1997. It is a comprehensive primary-level community hospital integrating community medical care, prevention, healthcare, rehabilitation, and scientific research.

Currently, the hospital’s clinical departments include Internal Medicine, Surgery, Gynecology, Traditional Chinese Medicine (TCM), Stomatology, Ophthalmology, Otorhinolaryngology (ENT), TCM Rehabilitation, Dermatology, Acupuncture and Tuina (Massage), Medical Imaging, and Medical Laboratory Services. The hospital is a designated medical insurance provider under the Guangzhou Municipal Medical Insurance Program, serving over 6,000 enrolled patients. It handles nearly 100,000 outpatient visits annually on average and was previously awarded the title of “Hospital with Best Service Reputation” by the Health Bureau among private hospitals in Baiyun District.

Regarding the rationale for selecting a community hospital as the inaugural site for Jianke’s exploration of internet hospitals, Xie Fangmin stated that community hospitals constitute a critical component of primary healthcare. In alignment with the national advancement of tiered diagnosis and treatment policies, the aim is to leverage this partnership to explore the internet hospital model and deliver internet-based medical services more directly to community residents.

Xie Fangmin stated that, in addition to preparing for the outflow of prescriptions from hospitals, the purpose of cooperating with hospitals is to improve the layout of the health industry chain and simultaneously focus on developing internet-based mobile healthcare. Jianke, which has consistently remained profitable in the pharmaceutical sector, has actually been nurturing its mobile healthcare business under the model of “using drug sales to support medical services.”

In January last year, Jianke secured $100 million in Series A financing from the U.S. dollar fund “Kaixin Capital,” becoming the pharmaceutical e-commerce company with the largest single funding round at that time. Meanwhile, 2016 marked the inaugural year of the explosive growth of internet hospitals; by November 2016, the number of internet hospitals across China had expanded to approximately 36.

Industry analysts suggest that, with the profitability model for lightweight mobile medical consultations still unclear, internet hospitals may become the breakthrough point for monetizing mobile healthcare. Xie Fangmin revealed that Jianke plans to establish multiple internet hospitals across China in the future.