Investment Opportunities in 'TCM + Internet' from a Policy Perspective
After thousands of years of inheritance and development, Traditional Chinese Medicine (TCM) has faced fierce attacks over the past century, alongside equally vigorous but increasingly shrinking efforts to defend it. The debate surrounding TCM is no longer confined to standards of medicine, science, and truth; it has escalated to encompass cultural sentiments and even spiritual beliefs. Nevertheless, regardless of the intensity of the controversy, the state’s determination to promote the development of TCM is unequivocal. For the venture capital and investment community, the immediate priority may be to adopt a value-neutral perspective to identify entrepreneurial opportunities in “TCM + Internet” amid successive waves of policy initiatives, and to determine which sectors hold the most promising prospects.
The Primary TCM Diagnosis and Treatment Market May Exceed RMB 120 Billion
In accordance with relevant national policies and plans, traditional Chinese medicine (TCM) will experience rapid development at the primary healthcare level. This will be reflected in a substantial increase in the number of primary healthcare institutions capable of providing TCM services, as well as a significant rise in the proportion of TCM consultations within total primary care visits. The Outline Plan for the National Healthcare Service System (2015–2020), released in March 2015, set forth the goal that by 2020, all community health service institutions, township health centers, and 70% of village clinics should have TCM service capabilities commensurate with their respective functions.
Over the past year, local governments across various regions have established corresponding policy implementation targets. Overall, 70%–100% of all urban and rural primary healthcare institutions should be capable of providing traditional Chinese medicine (TCM) services, with TCM consultations accounting for 25%–30%, or even up to 40%, of total primary care visits.
Hebei: Community health service centers, township health centers, community health service stations, and village clinics providing traditional Chinese medicine (TCM) services accounted for 100%, 100%, 85%, and 70% of their respective institution types; TCM consultations at primary healthcare institutions accounted for ≥30% of the total consultations at such institutions.
Chongqing: Community health service centers, township health centers, community health service stations, and village clinics providing traditional Chinese medicine (TCM) services accounted for 100%, 100%, 85%, and 70% of their respective institution types; TCM consultations at primary healthcare institutions accounted for ≥30% of the total number of consultations at such institutions.
Gansu: The proportion of township health centers (community health service institutions) and village clinics providing traditional Chinese medicine (TCM) services reached 100% and 85%, respectively, with the proportion of TCM diagnoses and treatments exceeding 40%;
Fujian: The proportion of TCM consultations at primary care institutions accounts for ≥25% of the total consultations at similar institutions;
Jiangsu: The proportion of traditional Chinese medicine (TCM) consultations in primary healthcare institutions accounts for more than 30% of the total number of consultations in similar institutions;
Shenzhen: The proportion of traditional Chinese medicine consultations at primary healthcare institutions accounts for over 40% of their total patient visits.
Based on a rough estimate using data from the 2014 Statistical Bulletin on the Development of Health and Family Planning in China, the volume of traditional Chinese medicine (TCM) consultations at primary care levels was approximately 130 million in 2014. If this figure were to reach 30% of the total primary care consultation volume (which stood at 4.36 billion in 2014), it would amount to 1.3 billion visits. Assuming an average cost of RMB 92.3 per outpatient visit at primary healthcare institutions in 2014, the market size for TCM services at the primary care level is conservatively estimated to reach RMB 121.3 billion.
Policy Deregulation May Drive Explosive Growth in Traditional Chinese Medicine Clinics
The numerous policies and regulations promulgated since the beginning of this year have clarified the reform of the qualification access system for TCM physicians, relaxed the eligibility requirements for entities establishing TCM clinics, and implemented a filing-based administration system for TCM clinics. These measures are expected to remove bottlenecks in the supply of human resources for TCM practitioners and the establishment of TCM clinics.
The draft Traditional Chinese Medicine Law under consideration proposes that individuals who study traditional Chinese medicine (TCM) through apprenticeship or who have developed specific expertise through years of practice may obtain TCM physician qualification upon passing practical skills and efficacy assessments organized by the provincial, autonomous regional, or municipal health authorities responsible for TCM. The Outline of the Strategic Plan for the Development of Traditional Chinese Medicine (2016–2030), issued in February this year, calls for reforming the access qualifications, scope of practice, and practice management systems for TCM practitioners, and exploring classified management based on professional competencies.
Regarding clinics, the “Outline of the Strategic Plan for the Development of Traditional Chinese Medicine (2016–2030),” issued in February this year, explicitly stipulates that the establishment of TCM clinics shall be subject to record-filing management in accordance with the law, and allows individuals proficient in specific TCM techniques who hold rural doctor practice certificates to open TCM clinics in townships and villages.
Local governments have responded positively to the establishment of Traditional Chinese Medicine (TCM) clinics from the perspectives of encouraging the development of TCM and promoting privately run medical institutions. On May 16, Shanxi Province issued the "Implementation Opinions on Promoting the Accelerated Development of Privately Run Medical Institutions," which encourages qualified TCM professionals, particularly renowned and experienced TCM practitioners, to establish TCM clinics. It also encourages the establishment of TCM outpatient departments and TCM clinics that provide only traditional TCM services, guiding them toward large-scale and multi-tiered development. Furthermore, it permits individuals with specialized TCM skills who hold a "Rural Doctor Practice Certificate" to open TCM clinics specializing in their specific skills, or to practice in TCM outpatient departments or TCM clinics established in townships and villages, provided they offer only traditional TCM diagnostic and treatment methods that have passed assessment.
On May 21, Hebei Province issued the "Implementation Plan for Carrying Out the Outline of Strategic Development Planning for Traditional Chinese Medicine (2016-2030)," which sets forth comprehensive and detailed policies to encourage the establishment of TCM clinics. The Plan proposes to implement a record-filing management system for establishing TCM clinics in accordance with the law, and allows individuals with expertise in traditional Chinese medicine who hold rural doctor practice certificates to open TCM clinics in townships and villages. It encourages social forces to establish TCM medical institutions, supports qualified TCM professionals—especially renowned senior TCM practitioners—in opening TCM outpatient departments and clinics, and encourages pharmaceutical trading enterprises to operate in-clinic TCM practices. For TCM outpatient departments and clinics funded by private capital that provide only traditional TCM services, there shall be no layout restrictions under healthcare institution setting plans or regional health development plans. Equal rights are guaranteed for privately-run and government-run TCM medical institutions in terms of market access, licensing, and other aspects.
The “Outline of the Strategic Plan for the Development of Traditional Chinese Medicine (2016–2030),” issued in February this year, has charted the course for the development of Traditional Chinese Medicine (TCM) over the next fifteen years. So, which areas are most suited to the integration of TCM and the Internet? In summary, there are four main categories:
Priority Area 1: Informatization of Traditional Chinese Medicine
The Outline proposes:
Promote “Internet Plus” Traditional Chinese Medicine (TCM) healthcare. Vigorously develop new models of TCM medical services, such as telemedicine, mobile healthcare, and smart healthcare, and gradually establish a standardized system for cross-hospital sharing and exchange of TCM medical data. Explore the application of online TCM medical services, including extended internet-based medical orders and electronic prescriptions; leverage information technologies such as mobile internet to provide convenient services, including online appointment scheduling, waiting reminders, pricing and payment processing, access to diagnostic and treatment reports, and medication delivery.
Strengthen the application of big data in traditional Chinese medicine (TCM). Enhance the construction of information infrastructure in TCM hospitals and improve their information systems. Establish an online verification mechanism for the authenticity and validity of patient prescriptions, achieving vertical integration with population health information and horizontal interoperability across systems. Improve the statistical information system for TCM and establish a national direct-reporting network for comprehensive TCM statistics.
Encouraged Area 2: Chronic Disease Management
The Outline proposes:
Establish a comprehensive chronic disease prevention and control network and working mechanism featuring division of labor and collaboration among TCM hospitals, primary healthcare institutions, and disease prevention and control agencies, so as to accelerate the formation of a tiered diagnosis and treatment order with separate management of acute and chronic conditions;
Promote the establishment of community health management models that integrate traditional Chinese medicine (TCM), carry out TCM-based health interventions for high-risk populations, and enhance the level of primary-care TCM health management;
Vigorously develop non-pharmacological therapies in Traditional Chinese Medicine, and fully leverage their unique role in the prevention and treatment of common, frequently occurring, and chronic diseases.
Encouragement Direction 3: Traditional Chinese Medicine Health Preservation and Wellness Services and Products
The Outline proposes:
Support social forces in establishing TCM wellness and healthcare institutions, achieving group-based development or chain operations, and exploring a TCM health assurance model that integrates health culture, health management, and health insurance;
Encourage traditional Chinese medicine (TCM) hospitals and TCM practitioners to provide technical support, such as health consultations, conditioning services, and medicated diet recommendations, to TCM wellness and healthcare institutions. Promote the widespread dissemination of TCM wellness knowledge and popularize easy-to-master TCM wellness techniques and methods, including physical therapy and tuina massage.
Encourage traditional Chinese medicine (TCM) institutions to fully leverage modern scientific and technological advances, such as biotechnology, bionics, and artificial intelligence, to develop a range of health foods, health products, and healthcare devices and equipment. Accelerate the development of both the technical system and the industrial framework for TCM preventive treatment (“Zhi Wei Bing”). Promote healthy work and lifestyle practices that integrate the TCM concept of preventive treatment.
Encouraged Direction 4: Traditional Chinese Medicine for Elderly Care
“The Outline” proposes:
Promote the integrated development of traditional Chinese medicine (TCM) and elderly care, facilitating the entry of TCM medical resources into elderly care institutions, communities, and households. Support cooperation between elderly care institutions and TCM medical institutions to establish fast-track green channels for medical consultations; encourage TCM medical institutions to provide home-based services for the elderly, including clinical visits, health examinations, and healthcare consultations.
Encourage TCM practitioners to provide health consultation and conditioning services in elderly care institutions. Encourage private capital to establish new nursing homes and sanatoriums primarily focused on TCM-based healthy aging, explore the establishment of medical-nursing combined institutions with TCM characteristics, and develop a batch of demonstration bases for integrated medical and elderly care.
Overall, entrepreneurial opportunities in “Traditional Chinese Medicine (TCM) + Internet” are likely to concentrate on two main areas: first, services related to informatization, as the overall level of digital integration in TCM remains low; second, services and products centered on preventive care (“treating disease before it arises”), such as chronic disease management, sub-health regulation, and wellness and health maintenance. These offerings place relatively modest demands on individual physicians’ expertise and are amenable to standardization and large-scale replication.
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