Dear Friends and Digital Health Affiliates focused on China,

Despite the fact that the Dow Jones Index plunged 617 points after China retaliated with higher tariffs, we try to stay optimistic and are excited to bring the latest digital health trends from China to you. Again, we invite you to partially shift perspectives from Silicon Valley to Shenzhen/ Beijing and engage with the USD 1.2tn healthcare market.

1 Chinese Tech giant to partner with UK firm on clinical trial using AI technology

Unlike the situation in the UK and in European nations, the AI landscape in China is driven by innovation with strong support from the state.Tencent was asked two years ago by the Chinese government to lead efforts to develop AI programs for medical diagnosis. Surprisingly, Tencent is conducting trials with the relatively unknown UK digital health startup called ‘Medopad’. The company aims at developing and validating algorithms that will be able to predict complications across a range of disease indications, including Parkinson’s, cancer, and heart diseases. The clinical trial will take place at Dementech Neurosciences, a private mental health clinic in London, involve around 40 patients and be completed over the next few months. In general, we find interesting, that given access to NHS data, UK healthcare companies can white-label Chinese technology under their own intellectual property.

Cited companies in this article:

  • Medopad – Digital healthcare company specialized in Artificial Intelligence – Valuation: around USD 100mn (Financial Times)
  • Tencent – Internet service portal offering value-added internet, mobile, telecom, and online advertising services – Revenue 2018: USD 47.3bn (Statista.com)

2 Mutual health plans companies on the rise

Like so much else in China, demographics are driving innovations. At the end of 2018, 18% of China’s population (roughly 250mn people) had reached retirement age. That’s the world’s largest population of elderly, and it’s growing. Today only 6.7% of Chinese have private insurance; in 2016, private payouts accounted for a mere 3.3% of income at Chinese medical institutions. With the growing elderly population, chronic diseases become a bigger challenge. Cancer has always afflicted generations of Chinese. Now, for a small monthly fee, Xiang Hu Bao customers will be guaranteed for cancer care, once diagnosed with the decease. Beyond Xiang Hu Bao (as covered in last newsletter), at least two other mutual health plans claim more than 50mn members each.

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Cited companies in this article:

  • Xiang Hu Bao Digital health insurance product by Ant Financial
  • Ant Financial – Online payment services – total funding: USD 22bn (Crunchbase)

3 Three reasons why the future of German healthcare companies lies in China

As the trade relation with the US has worsened, the need of healthcare innovation and products from the EU has dramatically increased, especially from Germany. Consequently, Sino-European cooperation gains greater significance in economy and open up opportunities for European companies. There are three reasons why to engage deeper into the Chinese healthcare system: First, Chinese government has begun to modify the laws and regulations mirroring international standards and China’s total expenditure on healthcare quadrupled between 2007 and 2017 (2007: USD 172.3bn, 2017: USD 782.9bn). Second, the traditional tech giants like Alibaba and Tencent have entered the healthcare domain with high pace and using their existing market penetration. Third, there is a great need for China to catch up in the area of training and further education of medical professionals.

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Cited companies in this article:

  • Tencent – Internet service portal offering value-added internet, mobile, telecom, and online advertising services – Revenue 2018: USD 47.3bn (Statista.com)
  • Alibaba – Enable businesses to transform the way they market, sell, operate and improve their efficiencies – Revenue 2018: USD 39.9bn (Statista.com)
  • WeDoctor – Digital healthcare service platform – USD 1bn total funding (crunchbase)

Again, We hope this short overview gives you a better understanding, what is going on in China and thank you very much for your positive feedback so far. See you again in two weeks.

Have a productive week & 祝大家成功!

Chenchao Liu & Min-Sung Sean Kim

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