Q4 2016 Digital Health Investment Report: Record Transaction Volume with Global Focus on Genomics, Chronic Disease Management, and Maternal & Child Health

Trading volume rose, while financing amounts saw a slight month-on-month decline; investment enthusiasm in digital health remains strong.

StillEarly StageProject-focused, early-stageThere is a trend of increasing transaction volume for projects.

In China, Genomics, Fitness, and Maternal & Infant Care Have Become Key Investment Targets.

The number of investments in the O2O model has declined significantly, while the number of investments in the B2B model has seen a slight increase.

126 investment institutions entered the market, with Oriental Haifu and Matrix Partners China among the most active in this period.

Focusing simultaneously on genetic services, chronic disease management, and maternal and child health in both domestic and international markets.

Judging from the transaction volume of investment and financing in recent years, it has maintained a growth trend. Since 2014, digital health entrepreneurship and innovation have begun to explode, and the capital market has continued to inject funds.

Q4 2016 financing amounted to $517.74 million, a 33% year-on-year increase and a 10% quarter-on-quarter decrease.

Compared with other periods of the year, Q4 is a low season for investment.

As of the fourth quarter,2016Investment trends in the year remained focused on early-stage projects, totaling201Starting from , the transaction volume of early-stage projects has gradually increased. It is expected that2017The growth in the number of early-stage financing deals will slow down, while the total amount of financing will continue to rise.

In 2016, transaction volume rose steadily, peaking in Q4 with 85 financing deals.

Transaction volume in Q4 2016 increased by 73.5% year-over-year and by 16.4% quarter-over-quarter.

Medical projects dominated, with a total of 57 cases, accounting for approximately 66%; sports and health projects ranked second, with 14 cases, representing 17%.

Healthcare projects raised $456.44 million, accounting for 61% of the total domestic financing amount this quarter. Among these, genetic services, smart hospitals, and pharmaceuticals were the top-funded sectors, contributing 75% of the total financing for healthcare projects.

There were seven active vertical segments in Q4 2016.

The total financing amount of the top 10 sub-sectors accounted for 87.7% of the total financing.

The gene services sector attracted the highest investment amount, with Novogene securing the largest single funding round this quarter, completing a RMB 500 million Series B financing in November.

In terms of average transaction value, the pharmaceutical sector saw relatively high financing amounts, primarily driven by Dingdang Kuaiyao’s RMB 300 million Series A funding round completed in December.

There are four main business models, with B2C projects accounting for 58%. The target populations include patients, consumers, children, the elderly, and women.

The number of B2B projects has seen a significant year-on-year increase. While competition in the consumer market continues to intensify, the business sector remains a growth market, with capital investment in this area steadily strengthening.

This quarter, the funded projects encompassed eight product forms, primarily websites and mobile platformsAppas the main focus.

Conventional software primarily consists of healthcare information systems.

In the field of smart hardware, the integration of software and hardware has become the mainstream direction of development.

Service recipients are categorized into six major user segments, with consumers and medical institutions emerging as the primary target groups for strategic deployment this quarter.

Consumer-facing sectors are dominated by consumer-grade digital health, encompassing areas such as maternal and child care, health management, elderly care, medical aesthetics, and oral health.

The target audience primarily consists of healthcare institutions in the field of medical informatics, followed by those in genetic services.

A total of 126 investment firms participated in digital health project investments, representing a 46.5% increase compared to Q3. Additionally, nine individual investors participated in digital health investments during Q4.

There are five active investment institutions, namely Orient Hifu, Matrix Partners China, Puhua Capital, CMB International, and Chongshan Capital, with their participation focused on the early to mid-stages.

In terms of transaction volume, Beijing continues to lead with 32 deals.

The top ten deals in Q4 2016 accounted for approximately 63% of the total financing amount.

Of these, five transactions occurred in the field of genetic services, while the remaining deals were distributed across smart hospitals, pharmaceuticals, rare diseases, maternal and infant care, and fitness.

This quarter, 101 investment deals were recorded in mainstream domestic and international healthcare markets, with total financing reaching $2.18 billion.

A comparison of the distribution of investment rounds for funded projects in China and the United States reveals that U.S. funded projects are relatively evenly distributed across early and mid-stage rounds, whereas Chinese funded projects are primarily concentrated in the early stage.

The most active regions for investment in the medical and healthcare sector abroad are the United States, India, and the United Kingdom.

In Q4, overseas investment deals in the healthcare sector were predominantly Series A and Series B rounds, totaling 49 transactions and accounting for 59.8% of the total number of investments (excluding strategic investments).

Excluding the angel round, the average funding amount for all other rounds exceeded $10 million, with Series D recording the highest average at $52 million.

There were 60 financing events in the digital health sector, accounting for 59.4% of the total number of transactions. However, as digital health companies predominantly operate under an asset-light model, the total financing amount in this sector was lower than that in the traditional healthcare sector.

The average financing amount in the field of therapeutic technology R&D stands at $50 million, with frontier medical technologies remaining highly sought after by capital.

Q4: Overseas digital health funding accounted for 35.7% of total healthcare funding.

The health management sector recorded 11 transactions, with a total transaction value of $176 million, making it the sub-sector with both the highest number of deals and the largest amount of investment.

Genetic services, chronic disease management, and maternal and child health are the areas of simultaneous focus both domestically and internationally in Q4.

In Q4, the digital health project with the highest funding amount was Kernel. Among the top 10, there were two projects each in the fields of health management, medical informatization, and genetic services.

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