Weekly Highlights of Internet Healthcare: June 1, 2015

Today is International Children’s Day. VCBeat first wishes all the “overage children” a happy holiday and may your dreams come true. Next, join Weekly Report Editor as we review the specific details of financing and strategic layouts in the internet healthcare startup sector from last week.

Events & Perspectives

Last week, the most sensational event in the internet healthcare sector was Alibaba Health’s issuance of a profit warning.

Alibaba Healthstated that, following an inventory of the financial position for the period from April 1, 2014, to March 31, 2015, compared with the annual loss of RMB 34.6 million for the year ended March 31 of the previous year,Expected to incur a huge loss of 100 million yuan by the same period this year. The announcement pointed out that,The significant loss was primarily driven by a substantial increase in employee costs, sales, and marketing expenses in the fourth quarter of the fiscal year. Additionally, losses from the write-off of intangible assets and provisions for bad debts were also major contributing factors to the significant loss.. However, industry insiders believe that incurring losses at the current stage is quite normal.

From the perspective of internet healthcare last week, it was not affected at all; on the contrary, the market continued to boom, with frequent strategic moves being made.

First, in the collaboration segment, there are internet giants such as Baidu and Tencent, as well as pharmaceutical companies like Kangmei Pharmaceutical and Fosun Pharma.

Last week,Baidu DoctorAchieving breakthroughs simultaneously across multiple fronts in internet healthcare, not onlyLaunched doctor appointment services in Shaanxi and Anhui provinces within a single day, and signed an agreement with Guizhou Langma Information to jointly enter the healthcare market.. In just four months since its launch, Baidu Doctor has comprehensively expanded its services across multiple provinces and cities, onboarded top-tier public hospitals, and integrated resources from third-party platforms, making its strategic layout in mobile healthcare increasingly clear.

TencentLast week, frequent visits were also made to the western region to lay out a major strategy. First,Strategic Partnership with Guizhou Bailing to Advance “Internet + Chronic Disease Medical Services”Both parties will leverage Tencent’s extensive user data foundation, mature cloud computing capabilities, and powerful social and media platforms to advance the application of “Internet+” in chronic disease medical services, while exploring new models for chronic disease information management and healthcare delivery. As the first smart blood glucose monitor launched by Tencent Dreamworks Incubator, Tangdaifu (Sugar Doctor) will also support the integration of “Internet+” into chronic disease medical services, further fueling industrial upgrading.

Furthermore, TencentSigned a Strategic Cooperation Agreement with Sichuan Province in Chengdu to Achieve Comprehensive and In-Depth Collaboration on “Internet+”。

In the internet healthcare strategies of pharmaceutical companies, two firms were reported to have encountered issues last week.

One isKangmei Pharmaceutical, the announcement stated,With Youbo PharmaceuticalSigned a strategic cooperation agreement. Both partiesPropose to carry out comprehensive strategic cooperation in areas such as supply chain management services for traditional Chinese medicine (TCM) raw materials and product channel services.In addition, a “Cooperation Agreement on Internet Medical and Health Services” was signed with the People’s Government of Puning City to jointly promote the integration of public hospitals in Puning City into the internet-based healthcare service platform system, thereby enhancing the overall service level of the medical and health sector in Puning City.

Another one isFosun Pharma，with Guahao.comSigning of a Strategic Cooperation Agreement: Both parties will fully leverage their respective advantageous resources in the fields of technology, platforms, market, and media in the future.Comprehensively deepen strategic cooperation to establish a tightly integrated online-to-offline (O2O) alliance.. Based on the content of this strategic cooperation, both parties will comprehensively launch a long-term and sustained strategic partnership centered around areas such as “pharmaceutical e-commerce, medical services, and investment collaboration.” Among these, cooperation in pharmaceutical e-commerce and medical services represents the key focus for both parties.

In the domestic entrepreneurship sector, active players include Codoon, Chunyu Doctor, and Happy Mommy.

Last week,Codoon, in partnership with Industrial Bank and China UnionPay, announced the launch of the Industrial Bank “Xing Dongli” Credit Card in ShanghaiNotably, unlike previous domestic and international R&D efforts in mobile payment that have largely focused on smartphone-based payments, this credit card will be bundled with a wearable wristband. In addition to tracking exercise data and monitoring sleep, the wristband also features payment functionality.

Chunyu Doctor, two weeks after the last press conference, announced another major event,Established a specialized laboratory focused on health big data analysis and research in collaboration with the Chinese Academy of Sciences—the Chunyu-University of Chinese Academy of Sciences Joint Laboratory for Health Big Data. The data interface will be opened to the laboratory, and the Big Data Laboratory will establish a health streaming data model.

Last week,Happy Mommy and Edan Instruments Join Forces to Co-Build a Mobile Internet Industry Chain for Maternal and Infant Health. Both parties will fully leverage their respective strengths in their fields to build a healthy industrial ecosystem through an open strategy.

Secondly, two major investment/acquisition deals were announced.

Last week, China's largest mobile communications chain enterpriseBeijing D-PHONE Invests Tens of Millions in Vodicon to Enter the Telemedicine Industry, among which Vodicon (Beijing) Hospital Management was recently established and serves as the exclusive representative of the U.S.-based WorldCare organization in the Greater China region.

Conba Invests Another RMB 230 Million in Zhencheng Pharmaceutical, Entering the Intelligent Diagnostics SectorPreviously, Conba acquired a 30.81% equity stake in Zhencheng Pharmaceutical last December. Upon completion of this transaction, Conba’s shareholding in Zhencheng Pharmaceutical will increase to 57.25%, thereby bringing the latter into the scope of Conba’s consolidated financial statements. Meanwhile, Conba also announced that it would inject RMB 30 million in capital to acquire a 20% equity stake in Jiaxing Yikang, marking its entry into the fields of in vitro diagnostics and smart wearables.

Three blockbuster new products were unveiled.

1. Primarily engaged in pharmaceutical retailYixintang Extends Its Commercial Reach into the Maternal and Infant Market, focusing on cultivating new growth drivers. It was also announced that Yixintang’s maternal and infant brand, “Baiyue Shiguang,” will officially launch today (June 1). Subsequently, its offline maternal and infant lifestyle stores will gradually expand into the Yunnan market, as Yixintang strives to build a new business model for the maternal and infant sector.

2. Last week,First Internet-Based Cancer Medical Insurance Launched. Ping An Pension Insurance launched its first personal cancer medical insurance product sold entirely through mobile and internet channels.

3.The Birth of “Yibao” in the Medical Insurance SectorHangzhou Yibao Kangjian Network Technology, a mobile health internet company co-founded by former executives from Alibaba and Tencent, has launched the app “Yibao.” Centered on the concept of a “Medical Health Mutual Aid Alliance,” the platform strives to identify the “quality healthcare” that patients seek. It aims to build a new medical service system that enables every Yibao user to access medical resources more promptly and efficiently, while receiving considerate and personalized care.

Finally, some good news,Gansu Establishes China’s Largest Telemedicine Consultation Network, “Directly Connecting” to Village ClinicsCurrently, the Gansu Provincial Telemedicine Network Hospital has expanded from 133 member institutions at its inception to 1,478, covering all municipal and county-level hospitals across the province, as well as township hospitals with internet connectivity and selected village clinics. It has facilitated tens of thousands of remote medical consultations and established network connections with renowned hospitals in Taiwan and mainland China. Through this platform, participating medical institutions can not only conduct remote consultations but also engage in a variety of services, including medical education, personnel training, information dissemination, health counseling, and remote imaging and pathology consultations. In emergency situations, the “Gansu Provincial Emergency Rescue Platform for Remote Medical Consultation” can be activated immediately to provide 24-hour free online emergency treatment services, guiding and assisting primary healthcare institutions in the timely and effective management of critically ill patients.

Healthcare Reform

• Hubei Abolishes Government Pricing for Drugs, Repealing 247 Drug-Related Documents:“While implementing the national drug price reform, Hubei Province will introduce a ‘Two Cancellations, Two Non-Issuances’ policy,” said Wu Xiaofeng, Director of the Rural Medical Division. The policy will abolish the drug price declaration and approval system administered by the price control authorities, as well as the online public disclosure system for market-regulated drug prices. Price control authorities are prohibited from issuing any form of drug price certification documents and must not provide cost monitoring conclusions or reports for drug tendering and procurement. Hubei’s price control authorities will deregulate drug prices, shifting their focus thereafter to regulatory oversight.

• Guangdong | Autologous Blood Transfusion Expected to Be Covered by Medical Insurance Reimbursement:Currently, following investigations by the Guangdong Provincial and Municipal Health and Family Planning Commissions, it has been determined that fee standards for autologous blood transfusion must be established as soon as possible, and an application will be submitted to the medical insurance authorities. “The response from the medical insurance department was also clear: once the fee standards are set and the conditions for inclusion in the reimbursement catalog are met, approval will be granted immediately.” During this year’s municipal “Two Sessions,” when government departments held public consultation booths, Li Cheng, Director of the Medical Insurance Division of the Human Resources and Social Security Bureau, clearly articulated this position. This means that the inclusion of autologous blood transfusion in medical insurance reimbursement is expected to be realized within the year.

• Blue Book: Report on the Development of Beijing’s Elderly Care Industry ReleasedThe “Beijing Elderly Care Industry Development Report (2015)” was released on May 26. Data show that nearly 80% of elderly care institutions in Beijing are located outside the Fifth Ring Road, and the five districts of Xicheng, Dongcheng, Chaoyang, Haidian, and Fengtai each have a shortfall of more than 5,000 elderly care beds. Despite the insufficient supply of elderly care beds, the occupancy rate of elderly care institutions is not high, standing at only 40%.

• Shenzhen Fully Liberalizes Multi-Site Practice for Physicians, Implementing a Regional Registration System:Upon review and approval by the Guangdong Provincial Health and Family Planning Commission and the Shenzhen Leading Group for the Reform and Development of Medical and Health Services, the Shenzhen Municipal Health and Family Planning Commission issued the “Implementation Plan for Reforming Physician Practice Registration and Management.” The plan proposes four key reform measures: fully liberalizing physician practice registration, implementing regional practice registration for physicians, improving supporting management systems, and strengthening self-regulation within the industry.

• Beijing Takes the Lead in Piloting Relaxed Conditions for Sino-Foreign Joint Venture Hospitals:According to the Chinese government website, the State Council recently issued the "Reply on the Overall Plan for the Comprehensive Pilot Program of Expanding the Opening-up of the Service Sector in Beijing," approving the launch of a comprehensive pilot program in Beijing to expand the opening-up of the service sector. The program covers six key areas: scientific and technological services, internet and information services, cultural and educational services, financial services, business and tourism services, and healthcare and medical services, with a pilot period of three years.

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Data

• Branded Anti-Breast Cancer Drugs to Reach $20 Billion in 2020:According to the latest report, sales of branded anti-breast cancer drugs amounted to $13 billion in 2014 and are projected to rise to $20 billion by 2020. The report considers only FDA-approved drugs. In 2014, Roche accounted for 70% of total sales of all anti-breast cancer drugs. Pfizer’s star drug, Ibrance, is expected to become a major growth driver, contributing 24% of sales by 2020. Additionally, Novartis’s novel anti-breast cancer drug may achieve global sales of $5 billion by 2020.

• Genotyping Market to Reach $17 Billion in 2020:MarketsandMarkets, a U.S.-based market research and consulting firm, released an analytical report on the global genotyping market. According to the report, the size of the global genotyping market is projected to grow from $6.2 billion in 2015 to $17 billion in 2020, representing a compound annual growth rate (CAGR) of 22.3%. North America constitutes the primary market for global genotyping, holding the largest share, followed by Europe. However, the Asia-Pacific region and other regions (including Latin America) are expected to witness robust growth. The report forecasts that the Asia-Pacific market will expand at a CAGR of 25.4% during the period from 2015 to 2020. Countries such as India, China, and Brazil will significantly drive this market growth. This trend is primarily attributed to the introduction of healthcare reforms, increased investment from government and private institutions, and the unmet medical needs of patients with cancer, diabetes, and cardiovascular diseases.

• In 2020, the in vitro diagnostics (IVD) segment is projected to account for the largest share of the medical device market, while neurology is expected to register the fastest growth:According to EvaluateMedTech®’s forecasts, the global medical device market is projected to grow at a compound annual growth rate (CAGR) of 5% from 2013 to 2020. In vitro diagnostics (IVD) will remain the largest subsector by market size, with sales reaching $71.6 billion by 2020, accounting for 14% of the global medical device market. During the same period, the IVD market is expected to grow at an annual rate of 6.1%. The fastest-growing segment will be the neurology products market, which is projected to expand at a CAGR of 7.1%, reaching a market size of $9.8 billion by 2020.

• U.S. Mobile Consumers to Reach 145.9 Million in 2015:eMarketer predicts that the number of mobile consumers in the United States will reach 145.9 million this year, with an annual increase of 23 million. However, only half of smartphone users will make purchases on their mobile devices. By 2015, mobile commerce accounted for only 1.6% of U.S. retail sales.

• Global Smartphone Sales Reach 336 Million Units in Q1 2015, Up 19.3%:Gartner, the world’s leading information technology research and advisory company, announced that global smartphone end-user sales reached 336 million units in the first quarter of 2015, representing a 19.3% increase. The growth was primarily driven by strong smartphone sales in emerging markets (excluding China), with the fastest growth observed in the Asia-Pacific, Eastern Europe, and the Middle East and North Africa regions. The outstanding performance in these areas contributed to a 40% year-over-year increase in smartphone sales across emerging markets in the first quarter of 2015.

New Technologies

• MIT Graduate Student Invents Microneedle Capsule

Carl Schoellhammer, a graduate student in chemical engineering at the Massachusetts Institute of Technology (MIT), has designed a Microneedle Pill (mPill). The mPill is a capsule studded with microscopic needles on its surface and coated with a pH-responsive layer to facilitate swallowing. Schoellhammer developed this device with the aim of replacing traditional injections.

• Ocumetics Bionic Contact Lens: Implantable in 8 Minutes, Vision Exceeds Normal Standards by Over Two Times

Garth Webb, an optometrist from British Columbia, Canada, has invented a groundbreaking device that grants you “superhuman vision” without the need for glasses, offering visual acuity twice as sharp as standard 20/20 vision. According to the Ocumetics company website, the “Ocumetics Bionic Lens” can be implanted into your eye in just eight minutes, with a completely painless procedure. Reports indicate that the implantation process is similar to cataract surgery, involving the removal of the eye’s natural lens and its replacement with an artificial intraocular lens.

• Icelandic Company Launches Implantable Sensor

Icelandic prosthetics manufacturer Össur has launched an implantable sensor that enables users to control prosthetic limbs with their thoughts. Known as the Implanted MyoElectric Sensor (IMES), this device allows users to operate the Proprio Foot prosthetic using brain signals, mimicking the natural control of a biological limb. Currently, there is often a lag between user intent and action execution when controlling prosthetics, as users must physically contract muscles to activate the device. The IMES addresses this issue. When electrical signals travel from the brain to the residual limb, they activate the IMES sensors located near the muscle tissue. The sensors then wirelessly transmit commands to the Proprio Foot, instructing it on which movement to perform. Since muscle contraction is not required for activation in this process, there is no lag between thought and action.

• Graphene Quantum Dots Enable Bacterial Spores to Function as Humidity Sensors

Researchers at the University of Illinois at Chicago claim that embedding graphene quantum dots onto bacterial spores (dormant bacterial strains) not only achieves more than tenfold higher sensitivity than polymer-based humidity sensors, but also enables tolerance to extreme environments, including high temperatures, vacuum, and ultra-low humidity. The deposition of graphene quantum dots onto bacterial spores yields graphene-coated spores. Attaching electrodes to the battery of bioelectronic devices can further enhance humidity sensitivity.

• Non-invasive Skin Monitoring of Blood Components

According to Forbes, Echo Labs, a startup incubated by Stanford University’s Start X incubator, has made new advances in health monitoring. The lab has designed a wristband prototype that uses optical signals to measure oxygen, carbon dioxide, pH levels, and blood pressure in the blood. This wristband measures blood components using light and a proprietary algorithm. In simple terms, it emits electromagnetic waves that penetrate human tissue and then measures the reflection at different light frequencies to detect the concentration of molecules in the blood.

• Headphones can measure intracranial pressure, diagnose and treat brain injuries and infections.

Doctors have developed a device capable of detecting brain pressure. The device, a specialized headset equipped with earbuds, can detect life-threatening brain injuries and infections. The technology consists of a headset worn by the patient, which connects to a computer. This device enables physicians to measure intracranial fluid pressure, commonly known as intracranial pressure (ICP), thereby eliminating the pain associated with surgical procedures and lumbar punctures.

• Brain-Computer Interfaces Enable Paralyzed Individuals to "Walk"

Miguel Nicolelis, the founder of Duke University’s “Walk Again Project,” has announced exciting news: mechanical exoskeletons developed using brain-computer interface technology have now enabled patients with spinal cord injuries to regain sensation and voluntarily move muscles that had been paralyzed for years.

• Novartis Announces Development of Robotic Pill for Gastric Injection

Novartis, the Swiss pharmaceutical giant, has announced a collaborative project with U.S. biotechnology company Rani Therapeutics to develop a “robotic pill.” Medications that previously required injection to be effective can now be administered orally via this “robotic pill.” The pill retains the appearance of a traditional capsule. In simple terms, the mechanism works as follows: once the pill reaches the intestine, the capsule shell dissolves, and microscopic needles made of sugar embedded within the capsule adhere to the intestinal wall to deliver the drug via injection. The entire process is painless. However, the actual underlying mechanism is far more complex. Rani Therapeutics has completed a Series C financing round exceeding $25 million.

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