Ebet Pharma Establishes Doctor Groups to Accelerate Its Integrated Oncology Ecosystem

Text | Bu Yan, Hao Xueyang

On April 9, the Anhui Oncologist Group of Yibai Pharmaceutical (hereinafter referred to as “Yibai”) was officially established. Approximately 700 physicians attended the inauguration ceremony, most of whom held chief physician positions or above. Reportedly, all participants attended voluntarily. The physician group comprises ten core members, including Professor Qin Shukui, a leading figure in oncology academia and treatment. It has also entered into contractual partnerships with eleven hospitals in Anhui Province, including Fuyang People’s Hospital.

As a pioneer and explorer among A-share listed companies in establishing physician groups, Yibai has built a chain platform model combining “hardware” (oncology hospitals) with mobile “software” (oncologists). The establishment of this physician group represents a comprehensive strengthening of the “software” (oncologist) component within the platform.

As planned, in addition to Anhui, Yibai will also facilitate the establishment of nine physician groups this year, including those in Heilongjiang, Sichuan, Henan, and Fujian. Meanwhile, it aims to build 50 hospitals/cancer treatment centers, comprising 20 self-built facilities, 20 acquired through mergers and acquisitions, and 10 established via partnerships.

For a long time, Guizhou Yibai Pharmaceutical was perceived by the public as a traditional manufacturer of traditional Chinese medicine (TCM). Starting in 2015, Yibai began to transform its strategic positioning into an oncology healthcare platform, embracing the internet and gradually building its own oncology ecosystem, which has already yielded significant results. Why did Yibai undergo this transformation? What was the path of its transformation? Why did it choose to establish a medical service platform in the field of oncology? What are its future strategic plans? VCBeat attempts to analyze these questions from several perspectives, including the broader healthcare industry environment, the commercial market, and Yibai’s inherent advantages.

Why is Yibai Transforming?

1- Adverse macroeconomic environment and business disruptions:Prior to 2011, the pharmaceutical industry entered a golden age driven by the expansion of medical insurance coverage and substantial initial investments under the new healthcare reform. Yibai Pharmaceutical, as a drug manufacturer, also rode this wave. However, with rising raw material costs and declining drug prices due to centralized bidding, profit margins for pharmaceutical companies continued to shrink, leading to a slowdown in Yibai’s performance. Transformation became an imperative challenge that Yibai Pharmaceutical had to confront.

Thus, Yibai began to entertain the idea of cross-industry expansion.

2、The Gains and Losses of Cross-Boundary Expansion:From 2008 to 2010, the company began diversifying its investments, entering multiple sectors including hygiene products, coal mines, and hospitals. During this three-year period, the compound annual growth rate (CAGR) of revenue reached 13%, while the CAGR of net profit was 41%. From 2011 to 2014, due to continuous losses by subsidiaries, the company successively divested Yibai Shuting and Qiande Investment, refocusing on its core pharmaceutical business. Over these three years, the revenue CAGR reached 18%, and the net profit CAGR was 22%. In 2015, under increased pressure from price reductions, the company ramped up marketing expenditures; revenue grew by 18% from Q1 to Q3, while net profit declined by 47%.

3. Strategic Layout of Oncology Medical Services:In 2009, after Yibai acquired Shanghai Hongfei (Introduction to Shanghai Hongfei) to expand its footprint in the healthcare services sector, management diverged on the company’s strategic direction, causing Yibai’s healthcare services expansion plans to be temporarily shelved. In 2011, with the gradual liberalization of policies allowing physicians to practice at multiple institutions, the progressive inclusion of private hospitals into the medical insurance system, and state encouragement of social capital investment in healthcare, Yibai once again considered expanding its healthcare services business.

Why Choose the Oncology Field?

1. Yibai has deeply cultivated the oncology field20Year

Yibai has been deeply engaged in the field of oncology treatment for 20 years, with anti-tumor medications accounting for 60% of the company's total revenue. Owing to the nationwide coverage of Yibai's core products, the company has maintained strong relationships with over 1,100 major tertiary hospitals, more than 2,000 secondary hospitals, over 600 primary hospitals, and 5,000 other medical institutions across China, as well as with 20,000 oncology prescribing physicians.

2. The enormous demand in the oncology market.

Driven by factors such as an aging population, severe environmental and air pollution, and changes in lifestyle and habits, cancer incidence rates have been rising year by year. According to the WHO’s Global Cancer Report 2014, China ranks first worldwide in both new cancer cases and cancer-related deaths. The 2015 Annual Report of China’s Tumor Registry indicated that there were 3.372 million new cancer cases and 2.213 million cancer-related deaths annually in China. According to the 2014 Health Statistics Yearbook, the mortality rate from malignant tumors among urban residents reached 157.77 per 100,000 people, ranking first among all causes of disease-related death in China.

As a disease characterized by prolonged treatment cycles and high costs, cancer therapy exhibits four key features: extended treatment duration, wide geographic reach for care, strong doctor-patient stickiness, and high ARPU (Average Revenue Per User). Precisely due to these four characteristics, coupled with its vast market potential (according to statistics, the cost of a single hospitalization for cancer treatment is RMB 15,000. Based on the 3.372 million new cancer cases reported in 2011, the annual market size for tumor treatment exceeds RMB 500 billion!), cancer treatment is highly suitable for developing into a deeply specialized vertical ecosystem.

Yibai’s Path to Transformation

1. Establish an industrial M&A fund.

On July 12, 2015, Yibai Pharmaceutical announced its plan to invest RMB 150 million to jointly establish an oncology healthcare M&A fund with Zhongyu Capital, an industry pioneer specializing in healthcare investments. The M&A fund, with a total investment scale of RMB 3 billion, will be funded in three tranches. The fund will focus on investing in oncology hospitals aligned with Yibai’s strategic development plans. To minimize the risks associated with hospital investments, Yibai opted to partner with a private equity firm to set up an industrial M&A fund, thereby positioning itself in the oncology healthcare services sector. In recent years, Zhongyu Capital has collaborated with nearly ten listed companies to establish healthcare industry funds of varying sizes, including prominent industry leaders such as Aier Eye Hospital and Yixintang.

In October 2015, Yibai entered into a framework agreement with natural person Yin Hong to jointly establish Shanghai Yibai Oncology Medical Investment Management Co., Ltd., committing to acquire or take over no fewer than three oncology medical projects within one year.

Three Models of Yibai Oncology Hospital:The first type is independent oncology hospitals, established through direct acquisition of specialized oncology hospitals, converting acquired hospitals into oncology facilities, or greenfield development. The second type involves co-establishing oncology centers with oncology hospitals. The third type is hospital trusteeship, encompassing single-specialty and multi-specialty collaborative trusteeship arrangements for both public and private hospitals in the field of oncology.

2. A tumor treatment ecosystem centered around physician groups.

Yibai Pharmaceutical's oncology platform comprises two core components, one of which isOncologist Group,One is the asset-heavy “hardware” centered on oncology hospitals.

Physician Group Comprises Three Tiers:

Tier 1: National Physician Group, bringing together renowned oncology experts across China to provide technical support and treatment plans;

Level 2: Provincial physician groups, which operate within individual provinces and municipalities and are affiliated with the physician group network, provide technical and personnel support to lower-tier entities.

Level 3: Partnership enterprises, established and operated by individual physicians to undertake business activities, are also affiliated with the physician group.

Li Gang, Board Secretary of Yibai Pharmaceutical, told VCBeat: “With national policies relaxing restrictions on physicians’ multi-site practice, free practice and marketization have become industry trends. The key difference between the Yibai Physician Group and physicians performing ‘flying knife’ surgeries lies in resource integration. By optimizing operations and services, the physician group enhances physicians’ utilization efficiency. For instance, it assigns the most suitable physicians to carry out work based on the specific characteristics of each hospital, thereby delivering multi-tiered services and maximizing the efficiency of physician resources.”

It is not easy for individual physicians to break away from hospitals and independently undertake clinical practice; in many cases, they can only rely on personal connections. Physician groups, however, can significantly reduce the difficulty for individual physicians in accessing treatment opportunities, which is a welcome development for doctors. Meanwhile, physician groups enable previously fragmented independent practitioners to unite into a cohesive force, collaborating with hospitals through market-oriented mechanisms to secure greater benefits for physicians.

Physician groups assemble doctors with diverse specialties and expertise to develop multi-tiered service offerings, which are then aligned with hospitals of varying levels and specializations. This model enables physician groups to deliver more precise and higher-quality services than individual practitioners can provide.

“Hardware” Centered on Cancer Hospitals:

Establishing a physician group alone holds limited value, as physicians require a physical, asset-heavy healthcare system as their practice platform; otherwise, a standalone physician organization will inevitably face constraints. However, pure physician groups generally struggle to secure sufficient capital to develop such asset-heavy medical infrastructure. Therefore, Yibai Pharmaceutical’s cooperative model with oncology hospitals addresses this challenge.

Yibai Pharmaceutical has acquired, taken over the management of, or partnered with oncology hospitals and treatment centers through various models to address the issue of clinical practice venues for physicians. Under this model, physician groups can even engage directly with hospitals in project management contracts. For instance, if an oncology department at a hospital is constrained by its own technical limitations, it may fully delegate its management and operations to a physician group, which then generates profits through revenue-sharing arrangements.

Li Gang stated, “Oncology treatment is fundamentally different from procedures in specialties such as ophthalmology and dentistry; its inherent complexity makes standardization difficult. Therefore, the aspects that physician groups can standardize primarily fall into two categories: First, clinical pathways—for instance, defining the specific therapeutic interventions required for a particular disease entity—which can be standardized and streamlined to reduce misdiagnosis rates. Second, the operational model and revenue generation strategies of physician groups, which are also amenable to standardization.”

Yibai Oncology Medical Services Ecosystem: Grand Strategic Plan

Yibai has formulated the business strategy of “Embracing the Internet, Focusing on Major Cancers,” and plans to gradually expand its core business from traditional pharmaceuticals to patient-centric medical services with a focus on oncology. The company aims to provide patients with a one-stop cancer management system encompassing diagnosis, prevention, treatment, remote consultation, and chronic disease management, thereby building a highly specialized, vertically integrated, closed-loop medical platform in the anti-cancer sector and achieving a strategic transformation from pharmaceutical manufacturing to medical services.

In terms of social services, Yibai explored the feasibility of standardizing cancer treatment through the “International Conference on Standards for Cancer Treatment” and shared its research findings in oncology by releasing the “Yibai Comprehensive Anti-Cancer Report.”

It is understood that international and domestic remote consultations for oncology will be Yibai’s core future project. Leveraging Yibai’s extensive resources of cancer hospitals and its physician group, the implementation of a domestic remote diagnosis and treatment system will be facilitated. At that time, patients will be able to access medical services such as online remote consultations and offline referrals through the remote system.

VCBeat also learned that Yibai is accelerating its strategic layout across diagnostic and therapeutic equipment, as well as patient services. Through domestic and international collaborations, Yibai has participated in the development of multiple products, and a psychological counseling platform is currently under construction.

(Parts of this article are edited from “The Radiotherapy Industry Chain in Cancer Treatment: From Equipment to Services” by Guojin Securities; “In-Depth Report: Deploying New Medical Services to Build an Oncology Healthcare Ecosystem” by China Galaxy Securities; and “Follow-Up Commentary on Yibai Pharmaceutical: Actively Transforming into Service Provision to Construct an Oncology Ecosystem” by Changjiang Medicine)