Inflection Point Reached: Qixun Medical's Strategic Shift and IPO Filing
In recent days, news of successive layoffs at 91360 and XYWY has flooded WeChat Moments. Previously, VCBeat reported on and analyzed the layoff incident at 91360. Various adjustments are inevitable during a company’s development; workforce restructuring due to business development is one of the most common phenomena in large corporations. What VCBeat focuses on is,What is XYWY Doing? Why Is It Doing So?
It has been twelve years since the founding of XYWY in 2004. Yet, for over a decade, the company has rarely appeared in the media spotlight. Maintaining a low profile seems to have become its consistent style. Through years of accumulation, XYWY has developed its own strategic roadmap, though it has never been publicly disclosed. Seizing this opportunity, VCBeat has conducted an in-depth study of XYWY, aiming to present an authentic portrait of the company.
In recent years, Xunyi Wenyao has maintained a compound annual growth rate (CAGR) of over 50%, with a net profit margin exceeding 20%. In 2011, Xunyi Wenyao received strategic investment from Yunfeng Capital. In 2014, it secured $60 million in strategic investment from investors including Legend Holdings Corporation and CCB International.
According to a survey by VCBeat, the two primary sources of core revenue for XYWY (Xun Yi Wen Yao) are membership-based value-added services and its online pharmaceutical marketplace, which together account for the vast majority of its income. The membership-based value-added services mainly refer to paid telephone consultations with medical experts, available on both PC and mobile platforms. As for the marketplace business, XYWY primarily operates on a traffic-referral model. Since XYWY has not yet obtained an “A License,” it is ineligible to participate in the pilot program for third-party retail of pharmaceuticals. Previously, the China Food and Drug Administration (CFDA) issued A Licenses only to three companies—95095, Yihaodian, and 800 Fang—as pilot third-party B2C platforms for pharmaceuticals, and has not approved any other entities for B2C platform operations since then.
Recently, the China Food and Drug Administration (CFDA) issued a ban on the pilot program for online retail of pharmaceuticals via third-party platforms such as Tmall Pharmacy. This move has directly impacted Tmall Pharmacy, which handles the largest transaction volume in this sector. As XYWY has not yet obtained an A-class Internet Drug Information Service Qualification Certificate, it was ineligible to apply for the pilot program. Furthermore, since XYWY’s business model is limited to online traffic referral, VCBeat believes that this regulatory adjustment will not have a direct impact on XYWY.
The two core revenue-generating businesses of XYWY are directly tied to traffic volume; therefore, capturing user traffic in the era of mobile healthcare is a central challenge for XYWY. Positioning itself as China’s largest entry point for internet-based medical services, XYWY not only leverages its own substantial traffic but also actively integrates with membership-based platforms such as Alipay and WeChat, as well as sectors like music and dining. Through these platforms, XYWY embeds its health education content and internet medical services.
Whether it is the long-term partnership established with Samsung or the “Ask a Doctor” entry point opened for Alipay’s city services, both are strategies employed by XYWY (Xunyi Wenyao) to maximize traffic. However, in recent years, various mobile healthcare platforms have emerged in large numbers. Maintaining its competitive edge within a limited market space has not been easy for XYWY. Therefore, to sustain rapid profit growth, XYWY must expand into other business areas in addition to maximizing its exploitation of the traffic market.
Earlier, Zheng Zaoming, Chairman of Wenkang Group and founder of XYWY.com, proposed a new strategic concept within the group called “Two Lines, One Chain.” The “Two Lines” refer to the service line and the data line, while the “One Chain” denotes the entire pharmaceutical and healthcare industry chain. By building these two lines, the aim is to drive the underlying industry chain as a whole.
The service lines are divided into two: one centered around physicians, and the other patient-centric.
Patient-centric services have constituted the closed-loop service ecosystem that Xunyi Wenyao has been building over the past decade, spanning from initial symptom onset, self-diagnosis and self-assessment, online consultation, appointment registration, in-hospital accompaniment, post-discharge follow-up, and medication procurement, to health management. This entire service chain encompasses the full course of illness, forming the patient-level services provided by Xunyi Wenyao.
Physician-level services: Focusing on physicians’ needs in areas such as brand building, revenue generation, case discussions, and academic research, Xunyi Wenyao has developed business models tailored for high-end physicians, such as Wenkang Yidao. Additionally, for primary-care physicians, Xunyi Wenyao has launched Yimai, which currently boasts nearly 200,000 registered users and tens of thousands of monthly active users, positioning it among the top-tier mobile applications for physicians.
In addition to its online operations, Xunyi Wenyao has expanded its offline presence in regions such as Hebei and Henan. To align with the national policy on tiered diagnosis and treatment, Xunyi Wenyao has deployed staff to grassroots health stations and self-established grassroots service points, collaborating with local Health and Family Planning Commissions to implement and deploy internet-based healthcare services.
In addition to primary care services, Xunyi Wenyao has integrated with the public health system in a certain region and established an internet hospital. Currently, Xunyi Wenyao has deployed related services in Hebei, Inner Mongolia, and Guizhou. All of these constitute Xunyi Wenyao’s service lines.
The competitive edge of internet healthcare enterprises stems from their data reserves. Purely online data collection has certain limitations, whereas Xunyi Wenyao has accumulated a massive volume of data over the past decade through its online services, including consultations, appointment scheduling, and medication management. Consequently, the company has introduced the concept of a "data line."
In response, Xunyi Wenyao is actively pursuing data integration with public health systems, hospitals, health examination companies, and insurance providers, thereby establishing a database matrix to lay the foundation for converting its data into value.
In addition, health management is a critical focus for Xunyi Wenyao. As a flagship big-data product of Xunyi Wenyao, Cloud Health constitutes a vital component of the company’s health management services. Currently, Cloud Health operates on a B2B2C business model, leveraging its B-side platform to deliver diversified medical and healthcare services to members of partner enterprises. At present, Cloud Health’s partners include China Telecom, Samsung, Coolpad, and JD.com, among others.
As the spearhead of the “Two Lines, One Chain” framework, the industrial chain is the top priority for seeking medical care and medication. VCBeat consulted an insider on this issue. According to his understanding: “Medical service institutions, pharmaceutical manufacturers, pharmaceutical distributors, and insurance companies are all closely related to internet healthcare. By centering on the service line and data line to drive the broader industry and integrate with online platforms for medical consultation and drug procurement, we can stimulate the development of all stakeholders across the industrial chain. This constitutes the overall layout for seeking medical care and medication, which can be summarized as ‘Two Lines, One Chain.’”
As a well-established internet healthcare company with over a decade of history, Xunyi Wenyao is transitioning from a traffic-driven model to one focused on business deepening and supply chain collaboration. With more than 100 million registered users, Xunyi Wenyao currently ranks among the top tier in China’s internet healthcare market. However, the diversity of mobile entry points and the regional nature of healthcare services have hindered the emergence of a Matthew effect among internet healthcare companies. Therefore, in a market landscape where explosive growth is difficult to achieve, identifying new profit growth drivers has become an urgent priority for enterprises.