Investment in the Chinese healthcare sector has surged in the past three weeks. Based on data sourced from 36Kr, it seems a lot of early stage investors are eyeing up companies who apply artificial intelligence to medical practices – notably those offering online diagnosis either through image recognition or sensor technology that can monitor patients’ wellbeing.
Undoubtedly, the outbreak of the novel coronavirus in China is a cue for this activity. Since mid-January there have been 10 healthcare investments, including Minkang Biological Group, a company producing a blood glucose monitoring system, which received Rmb150 million ($21 million) from China Venture Capital.
Another company, Universal Medical Imaging obtained Rmb600 million ($85 million) from V Star Capital, Teda Venture Capital and Hidea Venture. The startup produces medical imaging equipment and an AI image diagnosing system.
The uptick could also be a signal of a shift in the way people perceive online medical practices. Has the onset of a health crisis brought about by a highly contagious virus made people think differently about how they get diagnosed? Do they really want to wait in a doctor’s surgery running the risk of catching something unpleasant?
The chairman of Ping An Good Doctor, an online healthcare platform, certainly believes so. The Chinese company saw a huge jump in visits to it site – 1.11 billion over a three-week period. “People coming to us for online consulting has increased dramatically in recent days,” Wang Tao told FinanceAsia in a phone interview on February 11.
Wang believes the onset of the coronavirus – which has claimed more than 1,600 lives, mostly in mainland China – will undoubtedly accelerate the development of the online clinic in China. If to be believed, the first area of change would be a regulatory one.
For example, Chinese “online hospitals and clinics” are restricted from purchasing and dispensing certain drugs, they cannot provide an official first diagnosis of a patient, and they do not come under the cover of the national insurance system.
Given the huge pressure facing the Chinese government over the handling of the outbreak and the sheer speed of its transmission in cities such as Wuhan, there is likely to be a huge review of the medical system in China once the situation is brought under control, of which assessing the freedoms of such online services could be on the agenda.
“The situation [could spur] policy change if people want to avoid human contact and buy drugs online,” Wang said. “Online hospitals have a unique advantage – they can provide [safer] services during a virus outbreak, and that’s why we would like to be treated equally like the traditional hospital.”
Regardless of regulatory and policy change, Wang said the company was busy investing in new technology. Ping An Good Doctor is looking to develop what it calls a smart ICU monitoring system, which can track patients’ physiological data and automatically alert doctors to any meaningful changes, a technique that can potentially speed up the diagnosis and reduce human contact.
Wang said Ping An Good Doctor will increase investment into research and development in 2020, but didn’t specify by how much. However, he added that the investment will not have a significant impact on the profit-and-loss statement.
Ping An Good Doctor’s online medical services clinic service generated revenue of Rmb858 million ($123 million) in 2019, double what it was in 2018, and is the fastest growing business for the company. However, is it yet to turn a profit – its total net loss narrowed 18% year-on-year to Rmb750 million. It expects to break even by 2021.
AI ALL THE WAY
Artificial intelligence is definitely a core focus for Ping An Good Doctor in 2020. Millions of people visit the website or app to lay out symptoms of illness they or loved ones are having. The data is collated and doctors on the other side of the computer need to make the diagnosis as accurate as possible. That requires a lot of help from an AI system that needs to grab medical history and prescription records to support diagnosis.
Language comprehension system will also be an investment priority so AI can help with triage online, Wang said. Ping An Good Doctor recently struck a deal with Saudi Arabia’s Ministry of Health to licence out its AI technology in this field.
Image recognition is another area of interest. “Pulmonary imaging diagnosis has been used a lot during the virus outbreak,” Wang said. “We need lots of [computerised tomography] scans to train AI to help doctors’ online diagnosis.”
Ping An Good Doctor was founded in 2014, as one of the key sectors for Ping An Group. It completed a $500 million fundraising in 2016 from undisclosed investors. In 2017 it received $400 million from Softbank as its pre-IPO round with a post-investment valuation of $5.4 billion. It listed on the Hong Kong Stock Exchange in 2018.