Panoramic Review of Mobile Health in 2014 (Part I): Earth-Shaking Developments and Product Landscape

For the mobile healthcare industry, 2014 was destined to be a milestone year, marked by numerous earth-shattering developments and unexpected events. Join Dr. 2 in conducting a comprehensive review from the dual perspective of an industry participant and observer.

I. Guided by benchmark projects, investment institutions can no longer “sit still”! 

In 2014, a massive influx of capital flooded into the market, sparking a surge in investment and financing activities within the mobile health sector, which profoundly reflected shifts in the market landscape. If 2013 was characterized by undercurrents of growth in mobile health, then 2014 marked an explosive boom for the industry. Throughout the year, more than 80 projects received investment, with total funding approaching $700 million—more than double the sum of the previous four years combined.

Almost every month, investment firms announce major portfolio companies, repeatedly reshaping our understanding and making it feel as though we have “interstellarly traversed” into the future! Apart from Tencent’s Fund two blockbuster deals totaling $170 million, the investment projects fall mainly into four categories: 16 in wearable devices, 10 in medical services, 13 in medical applications, and 6 in health applications. Of course, there are also some unique projects that do not fit neatly into these classifications.

II. “Large-Scale” Players Begin to Enter the Arena

To determine whether an industry is on the verge of explosive growth, one must look beyond market dynamics and policy landscapes to consider whether major players have begun to participate—such as BAT (Baidu, Alibaba, Tencent), 360, and Xiaomi. These tech giants, whose interests have long been intertwined across sectors like finance, e-commerce, ride-hailing, education, banking, O2O services, and film and television, have now fully extended their competitive battleground into the mobile healthcare sector.

1. Alipay’s “Future Hospital” Initiative, Ali Health, Drug Regulatory Codes, and Tmall Pharmacy

Future Hospital: It is a mobile healthcare platform that Alipay is developing, aiming to simplify the cumbersome medical consultation process. In the future, patients will be able to complete appointment registration, waiting, payment, viewing test reports, and doctor-patient interactions directly online. For example, typically, patients need to wait outside the consultation room for their number to be called by the doctor or displayed on a large screen. However, in the future, they can check their queue status via their mobile phones and schedule their arrival at the consultation room based on real-time updates, thereby eliminating the need to wait at the door of the consultation room.

Once a patient’s laboratory or diagnostic reports are available, they can view them directly on their mobile device. Additionally, after a physician issues a prescription, the patient can pay directly through the Alipay system, eliminating the need to wait in line at hospital payment windows. This is made possible by linking the patient’s medical card with their Alipay account. As the healthcare ecosystem continues to evolve, settlement issues involving medical insurance will also be resolved. After completing their visit, patients can also provide ratings and feedback for the hospital.

Alibaba Health: In early 2014, Alibaba acquired a 54.3% stake in CITIC 21st Century, a key strategic move in its nationwide expansion of Alibaba Health. This acquisition not only granted them an online pharmaceutical sales license but also provided control over China’s only drug regulatory code system. Currently, they have developed two major business segments:I. Seeking to Control the “Faucet” of Data: Because data-driven operations are the foundation of large pharmaceutical companies and the basis for e-marketing. Similarly, collaboration with insurance companies serves as a critical bridge.II. Currently, Alibaba Health has been launched in Shijiazhuang and Hangzhou, starting from the consumer side by enabling users to upload prescriptions for price comparison and medication purchases on the platform.

Thus, before the state officially launched the separation of prescribing from dispensing, it inherently opposed the entire pharmaceutical industry chain, disrupting the established interest structure of doctors and hospitals. It sought to leverage its substantial strength to establish a de facto monopoly akin to Taobao’s position in the e-commerce landscape. By employing a dual-drive strategy combining heavy subsidies and government administrative mandates, it aimed to achieve its objectives; however, progress has thus far been less than smooth. Nevertheless, Dr. 2 believes this likely carries the implications of a national strategic pilot program, warranting a dialectical perspective. At the very least, it has moved a significant obstacle, potentially shaping market expectations.

The top-level design of the drug regulatory code and Tmall Pharmacy may form a comprehensive closed loop with Alipay’s Future Hospital and AliHealth. I have written numerous articles on this topic and will not elaborate further.

2. WeChat’s “End-to-End Healthcare Service Platform” and Cross-Platform “Strategic Positioning” Acquisitions

Patients need only scan the WeChat QR code or search for and follow the official account of the relevant “Hospital Name,” then enter basic personal information to link their medical visit card. This enables them to complete various healthcare processes via mobile phone, including appointment registration, payment, checking waiting queue status, and viewing test reports. The WeChat team has also partnered with local health bureaus across the country to launch the unified appointment registration public service account, “XX Health Pass,” striving to create a “hospital in your pocket.” Once fully integrated into the network, citizens will be able to enjoy end-to-end services such as appointment registration, access to personal health records, and WeChat Pay at multiple local hospitals. Further resource integration is anticipated; hints of this trend can be discerned from Tencent’s substantial investments in DXY.cn and Guahao.com within just two months.

However, judging by the territories where the two sides are “clashing,” Alipay has launched a more aggressive offensive, securing access in over 20 provinces ahead of its rival. WeChat, meanwhile, has partnered with more than 70 hospitals across five provinces and municipalities. Nevertheless, given WeChat’s significantly higher penetration rate in the mobile sector, its consumer-side (C-end) reverse-entry strategy means that the future landscape remains highly uncertain.

3. “Ping An Health Manager”

On October 28, 2014, Ping An launched the healthcare mobile application “Ping An Health Manager,” which comprises five modules: Disease Inquiry, Renowned Specialist Consultations, Community Engagement, Information Updates, and Health Assessments. The app emphasizes consultations with renowned specialists and the concept of family doctors, featuring private health advisors and real-time online consultations with top-tier physicians to provide one-on-one private doctor services. It is promoted as offering users a comprehensive range of services from medical consultations to daily health advice. Additionally, it formulates personalized health management plans based on users’ health conditions and reminds them to maintain healthy lifestyle habits. Every week, the app launches the “Renowned Specialists Are Here” series of consultation activities to facilitate online medical interactions with users.

Ping An Good Doctor has leveraged its advantages in existing medical institutions and insurance customer resources to pursue a reverse strategic layout, implementing an integrated model of diagnosis, treatment, consultation, and claims settlement. However, current user engagement remains low, and by blurring the traditional “client-provider” boundaries within the business model, it risks pushing a segment of its original medical partners toward competitors, making its future success or failure highly uncertain.

4. Baidu’s Strategic Layout

Baidu has adopted a defensive strategy. In addition to its existing investment in Haodf.com and the traffic referral services provided to it, Baidu has primarily sought to leverage its own strengths this year by focusing on two key dimensions. First, it aims to establish the concept of a data platform to attract more third-party hardware and software companies to upload their data, thereby building an open, traffic-referring “connective” ecosystem. This ecosystem is also intended to provide reciprocal benefits. Furthermore, leveraging its local government relations, Baidu launched the Beijing Mobile Health Hardware Information Flow Initiative, although progress to date has been modest. Second, while other well-funded competitors have been spending lavishly, Baidu has concentrated its resources on internal “data mining” and “deep learning” initiatives to build up technological reserves, with the expectation that technological leadership will ultimately expose the fragility of other so-called business models.

5. 360, JD.com, and Xiaomi

360That year, it also launched a drug database query system in collaboration with the National Medical Products Administration (NMPA), after which activity in this area became relatively quiet. Apart from Zhou Hongyi’s financial investments in or exits from several small-scale projects, the company largely chose to consolidate its operations—perhaps biding its time for a major move, or perhaps adopting a wait-and-see approach.

JD.comThe strategy is relatively straightforward: leveraging e-commerce and crowdfunding capabilities to create a launch platform for smart hardware, which naturally includes mobile health devices. Simultaneously, an open data platform is being established to channel data to Chunyu Yisheng or other third-party platforms, thereby building an ecosystem. Currently, the hardware launch segment appears promising, but other components are still under development, making their prospects uncertain. Additionally, JD.com is positioning itself in the pharmaceutical e-commerce sector, aiming to capture a certain market share once regulatory restrictions are lifted.

XiaomiIt continues to wield its formidable weapons of “direct-to-consumer internet sales” and “cost-effectiveness,” primarily focusing on hardware deployment. It has invested in numerous mobile health hardware companies, including iHealth, and leverages its strong bargaining power to acquire, disrupt, or imitate competitors, sustaining its aggressive growth. In the future, it aims to use the hardware supply chain as an entry point to expand into the mobile health sector. Its relationship with Tencent remains intriguingly ambiguous, involving joint product promotions and co-investments.

III. Rapid Market Entry by Enterprises in the Pharmaceutical (Medical Devices and Equipment) Industry Chain

Traditional players in the healthcare sector are also actively engaging, gearing up for competition in the mobile health arena. Taking pharmaceutical manufacturers and distributors as examples, several representative companies have been selected. Each is strategically positioning itself at different entry points, penetrating the market through mobile app development, pharmaceutical e-commerce, e-marketing, wearable devices, and cloud-based data services. The pharmaceutical e-commerce segment has naturally become a battleground with intense competition. Many pharmaceutical companies, constrained by their own backgrounds, struggle to maintain balance and control over the e-commerce platform market. Consequently, non-traditional enterprises such as JD.com and Tmall’s pharmaceutical platforms are rapidly advancing.

Jointown

Jointown Pharmaceutical Group began its foray into pharmaceutical e-commerce. In addition to the now-defunct “U Yi U Yao” platform and its currently operating “Hao Yaoshi” (Good Pharmacist) brand, its O2O professional medication shopping guide platform, the “Qu Mai Yao” (Go Buy Medicine) app, was officially launched for full-scale operations in September 2014. The app features functions such as locating pharmacies, pharmacist consultations, and symptom-based medication recommendations. Consequently, analysts and Jointown’s internal team have publicly declared that “Jointown’s controlling stake in Hao Yaoshi will capture the largest market share, with limitless growth potential!” Currently, Hao Yaoshi has signed agreements with 3,000 physical pharmacies. According to its plan, it aims to sign 10,000 pharmacies by the end of this year, with a target of expanding to 50,000 pharmacies within three years. However, the issue is that they had made the same plans over the past two years; it is estimated that they will likely continue carrying forward these targets this year as well, given their failure to achieve them.

Dr. 2 believes that Jointown, as a regional leader, ventured into pharmaceutical e-commerce. While it seemed to enjoy the advantage of proximity and early access, in reality, its existingA Pharmaceutical Background Will Become a Major Obstacle. When he began to expand his business, the initial growth was inevitably rapid. Why? Because his own stores provided 100% strong support. And then? There was no "then." Looking at cases from countries around the world, it is beyond doubt that the future of the first tier in pharmaceutical e-commerce belongs to third-party platforms!

Jianyi.com

China Resources’ pharmaceutical e-commerce platform, “Jianyi.com,” officially announced that it completed a RMB 300 million financing round in the first quarter of this year, with Shanghai International Group Venture Capital (SIGVC) as the investor. The company has since launched “Jianyi Doctor,” aiming to create a closed-loop ecosystem spanning from online consultations to medication sales. However, similar to Jointown Pharmaceutical, its strong pharmaceutical background may hinder its ascent into the top tier. Moreover, this “internal closed-loop” strategy risks significant failure for two reasons: first, it discourages partners from referring traffic; second, it incurs prohibitively high costs and reflects a misalignment with the company’s core competencies.

iHealth

They are transitioning from traditional consumer healthcare electronics to mobile health products. Since 2010, the company has launched its iHealth product line and has continuously increased R&D investment in hardware, applications, and cloud infrastructure. The iHealth portfolio now includes nearly ten products covering areas such as blood pressure, blood glucose, body weight, blood oxygen saturation, and fitness tracking. Some of these products have obtained FDA and CE certifications (for the European market). Currently, the company’s sales revenue is primarily derived from hardware, with actual sales reaching several hundred thousand units and generating approximately USD 20 million. Revenue from backend apps and cloud services is negligible.

iHealth will strategically expand into high-barrier backend operations (APP and big data analysis management) through mergers and acquisitions. After accepting Xiaomi’s equity investment, it effectively adds a direct sales channel. Therefore, the company’s future goal is to build user health big data and connect with insurance institutions, new drug R&D companies, and others through this data, thereby realizing commercial value.

Lepu Medical

In August 2014, Lepu Medical announced the establishment of Beijing Yikang Shiji Technology Co., Ltd., holding a 70% stake. The positioning of Yikang Shiji is very clear: it is primarily engaged in the R&D, sales, and service of wearable medical devices for cardiovascular diseases and diabetes. It also aims to build a platform for post-implantation patient management of cardiac implantable devices and for full-lifecycle engagement between doctors and patients. Meanwhile, it acquired two pharmaceutical auxiliary marketing companies and a secondary hospital, hoping to create synergies for the popularization of its cardiology devices. Dr. 2 believes that, similar to “Taihecheng,” adopting a platform model for post-operative doctor-patient follow-up is feasible, as it can provide high-quality management for patients and improve efficiency for doctors. However, its acquisitions of pharmaceutical marketing assets and a hospital may overstep boundaries, potentially triggering backlash from existing channel partners and causing systemic friction in business expansion. This approach appears somewhat greedy and may result in losses outweighing the gains.

In the next chapter, we will examine the reverse strategic layout of HIS enterprises in this field, as well as some representative third-party companies currently operating in the mobile healthcare industry.

(This article was first published by NetEase Technology, and republished by VCBeat with authorization from Dr.2.)