Thursday, 2023 September 28

Magnify China 2020 | Healthtech firms play catch-up with foreign players in post-pandemic era

The COVID-19 pandemic has accelerated the transformation of China’s healthcare industry. The sector is attracting attention and fresh capital, with new innovation cropping up due to healthcare consumers’ changing behaviors. Meanwhile, discerning tech giants allocated more resources to digitalize healthcare-related services and ventured into new medical verticals.

Magnify’s healthcare panelists included Shi Wenyong, CEO of HocerMed, a Beijing-based ultrasound scalpel manufacturer; Evan Xu, CFO of Genetron Health, a Beijing-based precision oncology firm; and Zhen Qin, Bluerun Ventures’ executive director who specializes in healthcare investments. The three industry leaders shared insights on the current healthcare industry in China and how to stand out in the competitive market.

Rise of telemedicine

The healthcare industry boom is shaped by multiple factors. “On one hand, since the second quarter, the demand for telemedicine and disease detection rose due to the pandemic,” said Qin. “On the other hand, the industry itself is entering a new phase because of the development of technologies.”

In Xu’s opinion, after years of evolution, disease detection has reached a stage where business models and technologies are mature enough to be commercialized on a large scale. National policies also laid a foundation for the development of precision medicine, like Healthy China 2030, a blueprint released by the Chinese government in 2016 with the goal of optimizing the national public healthcare system to provide equitable services to all citizens. Besides, the open capital market and a constant flow of talent contributed to the industry’s progression, Xu said.

Genetron Health provides services including early screening for cancer and other disease detection. Image source: Genetron Health’s website.

Finding a niche

The threshold of entering the medical industry is high, and the lucrative rewards come with significant risks. Enterprises in the healthcare sector set their sights on different niche markets, hoping to gain competitive advantages ahead of other players.

Xu told KrASIA that Genetron Health keeps its focus on early screening for liver cancer. “China accounts for about half of the world’s 800,000 new live cancer cases detected each year—it causes suffering for many families and brings about substantial medical costs,” Xu said, noting that Exact Science Corp., a US firm that specializes in earlier cancer detection, has a market capitalization of over USD 20 billion.

HocerMed’s Shi said a batch of Chinese companies are developing robotic surgical systems, following the example of Da Vinci Surgical System in the US. This domestic development is still at the early stage, but it will carry key breakthroughs in the field of medical equipment. He also pointed out that in the arena of minimally invasive surgery, the adoption of products from local companies is taking off, stemming from the pandemic and trade tensions between the US and China. 

From the perspective of an investor, Qin told KrASIA that Bluerun places a focus on health insurance. This is mainly due to two drivers—convenient payment methods in China and healthcare needs. She also mentioned that venture capitalists continue to eye areas related to cognitive or behavioral diseases.

HocerMed is a manufacturer of advanced surgical devices and consumables, specializing in ultrasound scalpels. Image source: HocerMed’s website.

Commercializing medical innovations

Regarding how to stand out in the market among largely homogeneous products, Xu said the core technology is a key differentiating factor for healthtech startups. In Genetron Health’s case, he said there are two attributes. “The first is the superior performance of its product, which surpasses clinical standards and traditional methods. Secondly, it is highly convenient, opening up accessibility.”

Shi thinks the biggest problem is the lack of technical talent, not only for R&D but also for marketing. The second problem HocerMed encountered was financing, because high-tech industries like healthcare typically require longer R&D cycles—and heftier R&D expenditure—before reaching profitability. Also, these firms needs a nurturing environment, with support from the government, users, and medical professionals.

Xu said although Genetron Health is committed to developing products for clinical and commercial use, the company faces one major challenge: early screening is not a well-known concept. “Transforming management and business models in order to explore a to-consumer model on the back of previous diagnosis or medical field-focused model is a tough task for our commercialization,” said Xu.

Wency Chen
Wency Chen
Wency Chen is a reporter KrASIA based in Beijing, covering tech innovations in&beyond the Greater China Area. Previously, she studied at Columbia Journalism School and reported on art exhibits, New York public school systems, LGBTQ+ rights, and Asian immigrants. She is also an enthusiastic reader, a diehard fan of indie rock and spicy hot pot, as well as a to-be filmmaker (Let’s see).

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