Jinma Yangming: How a Regional Leader Gradually Conquered the National Market
If all goes well, Jiangsu Jinma Yangming Information Technology Co., Ltd. (hereinafter referred to as “Jinma Yangming”) will be listed on the New Third Board by the end of this year. Jinma Yangming began preparing for its entry into the New Third Board in 2015. It has now signed contracts with an accounting firm, a law firm, and a securities company. At present, Jinma Yangming’s PACS system has been deployed in more than 1,000 hospitals across China, including 143 tertiary hospitals and 583 secondary hospitals.
However, for a long period, Jinma Yangming’s business reach was confined to Changzhou City. Among PACS system vendors serving hospitals in Changzhou, Jinma Yangming held an absolutely dominant position, with its systems deployed in over 90% of local hospitals.
However, this state of complacent modest prosperity faced severe challenges in the wake of the 2009 financial crisis. On one hand, there was a significant decline in the procurement of PACS software by hospitals; on the other, Jinma Yangming’s hospital market in Changzhou City began to reach saturation.
Expanding business into other provinces became an inevitable choice for Jinma Yangming, marking a significant strategic turning point for the company.
From Changzhou to China
Bai Xiaobao, General Manager of Jinma Yangming, told VCBeat that prior to expanding its business into other provinces, the company conducted direct sales exclusively in Changzhou, with a direct sales team of approximately a dozen people. In 2011, Jinma Yangming began to expand into markets outside Jiangsu Province, seeking collaborations with agents and distributors to boost sales volume. At that time, the Chinese government initiated IT infrastructure support for primary-care hospitals, providing substantial subsidies. Leveraging this favorable policy environment, Jinma Yangming’s products entered the nationwide market.
To incentivize distributors, Jinma Yangming has reserved a 10% equity stake for its core distributors and agents. Bai Xiaobao stated, “Equity serves as both the driving force for achieving targets and a form of incentive. While granting equity to agents is relatively common in the software industry, it is rare for companies in the healthcare sector to adopt such practices.”
Jinma Yangming’s direct sales team initially consisted of only a dozen members, all based in Changzhou. Since channel development requires a certain level of brand recognition, Jinma Yangming’s products were largely unfamiliar to customers outside Jiangsu Province. Consequently, sales in regions beyond East China were primarily handled by distributors and agents, who exclusively represented Jinma Yangming’s imaging software.
According to Bai Xiaobao, when Jinma Yangming launched its regional imaging center services, few domestic companies offered similar solutions. To date, Jinma Yangming has expanded to more than ten regional imaging centers across China, including the Pingdu Regional Imaging Center, Lanzhou Regional Imaging Center, Weifang Regional Imaging Center, and Wujin Regional Imaging Center.
Regional Impact Center services enable connectivity among all hospitals within a given region, allowing for mutual access and viewing of medical images.
The Wujin District Remote Imaging Center System is the first initiative in Jiangsu Province to achieve regional imaging interconnectivity and data sharing. The entire project was implemented in two phases. Phase I was launched in 2009 and completed in September, connecting radiology imaging equipment from 16 township health centers. Through the Wujin Health Private Network, remote sharing of imaging data was realized. Leveraging this system, the consultation centers at Wujin People’s Hospital and Wujin Traditional Chinese Medicine Hospital can access patients’ imaging reports and images from township health centers. The system offers functionalities including remote consultation, remote teaching, and online appointment scheduling.
Phase II construction commenced in early 2013, achieving the integration of 106 imaging devices across 28 township health centers in the Wujin district, including radiology, ultrasound, and endoscopy equipment. It was seamlessly integrated with the Wujin regional healthcare information software and regional electronic health records.
Through the implementation of Phase I and Phase II projects, the Wujin Regional Remote Imaging Center has achieved remote consultations between primary healthcare institutions and the central hospital in Wujin District, prioritized appointment scheduling for imaging examinations for patients from primary healthcare institutions, real-time tele-teaching for imaging education, centralized storage of imaging data across the region, establishment of a regional reading center, centralized drafting of diagnostic reports within the region, and seamless integration of the imaging system with residents’ electronic health records.
Moreover, Jinma Yangming has established a nationwide after-sales service network, with service partners in 23 provinces. Regular training is provided to these partners, ensuring that customers receive high-quality services promptly. “Typically, we train the installation and service teams, enabling many orders to be handled by distributors and agents,” explained Bai Xiaobao. If after-sales services were directly managed by our own team, costs would increase; therefore, Jinma Yangming adopts this model to reduce expenses. To ensure service quality, Jinma Yangming arranges examinations after training. For issues that agents cannot resolve, Jinma Yangming’s own staff will step in to provide solutions.
Open 2C Services
Generally, it is ideal for patients to receive normal results after undergoing imaging examinations at a hospital. However, if a physician diagnoses a serious condition, seeking a confirmatory diagnosis at a major medical center by reviewing the imaging data becomes a necessary step. The mobile remote consultation system currently under development by Jinma Yangming is designed to facilitate the circulation of medical images among hospitals and, more importantly, to meet patients’ needs for remote consultations.
The mobile remote consultation system is essentially an extension of Jinma Yangming’s traditional imaging PACS business. The operation of this system relies on hospitals’ imaging data resources. To ensure the diagnostic value of medical images, the images used must be the original, complete data. Currently, patients cannot obtain these data themselves; therefore, direct upload by hospitals is the optimal approach.
Jinma Yangming’s decision to launch its B2C services stems from its vast user base. Bai Xiaobao explained that although Jinma Yangming’s B2C services are currently available only to patients of its hospital clients, the company serves over 1,000 hospitals across China. By integrating these more than 1,000 hospitals onto its mobile remote consultation platform, their patients would be converted into users of the platform, resulting in a user base exceeding 60 million people.
We have the users and the data; the only remaining challenge is how to persuade hospitals to willingly share their data.
Bai Xiaobao stated that if hospitals could derive financial benefits from the use of their imaging data by Jinma Yangming, they would be more willing to open up their data. For instance, a hospital might provide its data to a company in exchange for waiving one year’s software maintenance fees, thereby saving hundreds of thousands of yuan in annual expenses. Currently, several hospitals in Changzhou are assisting Jinma Yangming with testing free of charge by providing access to imaging data, serving as pilot sites for the mobile remote consultation system.
Furthermore, following collaboration with hospitals, patients can directly upload their data to the cloud via the hospital for storage and utilization.
To this end, Jinma Yangming has also developed a health management system that aggregates patient data from wearable devices to the cloud for user health management. “We currently serve over 1,000 clients. Our future plan is to onboard all of these clients onto our consultation platform, where patients can directly upload medical images for expert interpretation and diagnosis, with payments facilitated through mobile channels. This represents a business-to-consumer (B2C) service model,” stated Bai Xiaobao. He added that Jinma Yangming will continue to develop diverse platforms in the future, including mobile apps and H5 applications.
Under Jinma Yangming’s plan, its wholly-owned subsidiary, Shanghai Kangtong Information Technology Co., Ltd., is responsible for the sales of Jinma Yangming software and the operation of the health management platform. Meanwhile, its controlled subsidiary, Changzhou Yiruida Biotechnology Co., Ltd., handles the domestic sales of hardware bundled with Jinma Yangming software.
Two Major Patents
Jinma Yangming is the first company in China to independently develop its entire imaging product line, with offerings spanning radiology, ultrasound, endoscopy, pathology, remote consultation, and regional imaging centers. It is also the first company in China to independently develop all underlying DICOM communication protocols.
The company has currently filed two patents: “Method and System for Accelerated Reading of Large-Scale Medical Image Files” and “Method for Ensuring Business Continuity in Picture Archiving and Communication Systems (PACS).”
“Method and System for Accelerating the Reading of Large Volumes of Medical Image Files” ensures that hospitals can retrieve 6,000 CT images in just 6 seconds. Products from other domestic companies require more than one minute to retrieve the same number of images.
“Methods for Achieving Business Continuity in Picture Archiving and Communication Systems (PACS)” refers to imaging software that supports power-failure image protection and network-outage protection, ensuring that physicians’ normal workflow remains unaffected even under adverse conditions.
In 2007, the collaboration between Jinma Yangming and Philips facilitated the research and development of these two patented technologies.
Bai Xiaobao recalled that prior to 2007, hospital equipment was not as advanced as it is today, with each patient examination generating only a few dozen images. At that time, Jinma Yangming’s software ensured that physicians’ workflow remained unaffected by speed issues. However, as equipment underwent upgrades, complaints against Jinma Yangming from hospitals increased. The volume of images generated per examination grew substantially, causing it to take over a minute for physicians to retrieve a single patient’s data, which significantly impaired their work efficiency. Due to these complaints, Philips terminated its bundled sales partnership with Jinma Yangming. Philips stated that the collaboration could be resumed only if Jinma Yangming improved its system’s performance speed.
In response to demands from clients and partners, and with a clear recognition of the underlying issues, Jinma Yangming made a firm decision to invest six months in research and development, ultimately securing a patent for speed enhancement technology.
Following the development of the technology, Philips dispatched a four-member team to evaluate the new solution. Shortly thereafter, both parties resumed their collaborative partnership, with Jinma Yangming becoming a long-term software supplier for Philips. Furthermore, Jinma Yangming’s software is developed in accordance with CMMI Level 3 certification standards. CMMI (Capability Maturity Model Integration) is a software development model that defines standardized processes; adherence to these processes enhances software maturity and reduces the likelihood of defects. Additionally, the software complies with the IHE (Integrating the Healthcare Enterprise) technical framework and has passed all IHE-Connectathon (IHE-C) tests—a connectivity testing initiative launched by various manufacturers in the United States—thereby ensuring seamless communication and interoperability with any interface.
Jinma Yangming places great emphasis on technological research and development (R&D). Each year, the company allocates 15% of its annual operating revenue to R&D, a level of investment comparable to that of global multinational corporations in the same sector. According to Bai Xiaobao, in Jinma Yangming’s post-financing fund allocation plan, the majority of the capital will be directed toward R&D, with the remainder allocated to human capital, market expansion, and corporate promotion expenses.
Original Intention for Founding the Startup
Jinma Yangming was established in 2004, when the overseas medical imaging market was already well-developed, while there was little activity in China.
On the one hand, the progress of medical informatization in China was relatively slow, with only a few hospitals introducing Hospital Information Systems (HIS) in the 1990s. On the other hand, standards for medical imaging were largely controlled by foreign entities at that time; domestic enterprises lacked access to these standards and were unable to develop independent solutions. Furthermore, the high cost of foreign software discouraged most hospitals from investing in its adoption.
It was not until 1996, when relevant R&D standards were publicly released internationally, that domestic manufacturers began to enter the market. However, due to the lengthy research and development cycle, the first version of the product was not developed until 2000. At that time, physicians had little awareness of Picture Archiving and Communication Systems (PACS), and most lacked computer literacy, resulting in slow adoption of PACS in hospitals.
Before the adoption of PACS, most hospitals operated in a largely manual manner. If physicians needed to review images generated by medical equipment, the films had to be chemically processed into physical slides. Diagnoses were handwritten on pre-printed hospital report forms, which were then handed directly to patients, with no capability for electronic archival.
Bundling sales with imaging equipment is the most commonly used strategy by software vendors, and PACS systems are no exception. After 2000, hospitals purchasing medical devices would receive bundled software directly included with the equipment.
Subsequently, physicians found that the PACS system genuinely improved work efficiency during its use, leading to its formal promotion and adoption across China.
Foreign manufacturers, such as GE, Philips, and Siemens, have long dominated the Chinese market for medical imaging equipment. However, their PACS solutions have failed to capture significant market share. On one hand, foreign systems are substantially more expensive than domestic alternatives. On the other hand, the management workflows of foreign hospitals are largely inapplicable in China, and foreign vendors have not made personalized adjustments to their software systems to align with local conditions. Consequently, the overall market share of imported PACS products in China remains low.
In 2004, Bai Xiaobao and Lv Jiang, the current CEO of Jinma Yangming, met at the China PACS Forum. Their shared vision for PACS product development led them to embark on an entrepreneurial journey together.
At that time, Lu Jiang’s wife worked in the radiology department of a tertiary hospital in Changzhou. Her routine descriptions of work helped Lu Jiang recognize the importance of Picture Archiving and Communication Systems (PACS). Previously, Lu Jiang had served as an agent for a PACS system from a Beijing-based company, but their product had numerous vulnerabilities and slow software patching and update cycles. This experience solidified his resolve to develop a fully independent PACS system, enabling rapid improvements whenever issues were identified in the software.
It is precisely this belief that has enabled Jinma Yangming to leverage the power of technology to develop its own market. Currently, Lv Jiang is responsible for external resource expansion, while Bai Xiaobao primarily oversees technical research and development as well as corporate management.
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