The rise of “new forces” in medical technology

Our reporter Yan Guowen and Cao Xueping reported in Beijing

In February 2022, 75-year-old grandma Xu from Ningbo, Zhejiang was diagnosed with diffuse large B-cell lymphoma at the People’s Hospital of Ningbo University. On April 12, the doctor issued a prescription for CAR-T therapy for her at a cost of 1.29 million yuan.

The diagnosis of hematological malignancy and the astronomical drug costs of up to one million yuan followed one after another. Fortunately, about 80% of the drug costs of Grandma Xu were reimbursed. In mid-April, Ningbo Inclusive Commercial Supplementary Medical Insurance Tianyiyong Ningbao paid her 1 million yuan in a single payment, setting a new high for a single CAR-T payment.

Yuanxin Huibao, a subsidiary of Beijing Yuanxin Technology Group Co., Ltd. (hereinafter referred to as “Yuanxin Technology”), is a specific drug service enterprise in the above-mentioned claim settlement case of Tianyi Yong Ningbao. Using the power of insurance and technology to reduce the financial burden of patients and improve the availability of medicines, there have been more and more similar cases of Yuanxin Huibao service.

According to Frost & Sullivan, in 2021, Yuanxin Technology will be China’s largest comprehensive medical delivery platform focusing on prescription drugs. Building a healthcare company.

The reporter of “China Business News” learned that in recent years, a number of medical technology “new forces” companies with strong Internet and technology genes, including Yuanxin Technology, have deployed in the out-of-hospital market and seized new market opportunities. At present, several representative medical technology companies are in the process of listing.

On October 21, Yuanxin Technology updated its prospectus on the Hong Kong Stock Exchange. As of the end of August this year, multiple core indicators of Yuanxin Technology have increased significantly. The number of pharmacies has increased from 264 at the end of 2021 to 314, the number of contracted hospitals has increased from 361 to 421, and the number of insurance policies managed by Yuanxin Huibao has increased from 25.77 million orders increased to 32.9 million orders.

Deep integration of online and offline

The data shows that in 2021, the market size of China’s prescription drug out-of-hospital delivery market will reach 234 billion yuan, and it is expected to reach 563.4 billion yuan in 2025. In 2019, China’s prescription drug out-of-hospital delivery market accounted for 23% of the pharmaceutical market, compared with 70.2% in the United States during the same period. There is still much room for growth in the penetration rate of out-of-hospital drug delivery in China.

After a series of explorations, Yuanxin Technology, which was established in 2015, has formed three core businesses: comprehensive out-of-hospital patient services, supply-side empowerment services, and medical industry-side empowerment services.

At present, out-of-hospital comprehensive patient services contribute the main source of income to Yuanxin Technology. According to the latest version of the prospectus, Yuanxin Technology’s out-of-hospital comprehensive patient service revenue in 2019, 2020, and 2021 will be 2.303 billion yuan, 3.537 billion yuan, and 5.615 billion yuan, respectively, and the first 8 months of 2022. Revenue is 4.469 billion yuan. In 2019, 2020 and 2021, the revenue of out-of-hospital comprehensive patient services accounted for 97.9%, 97.5% and 94.6% of the total revenue, respectively. In the first eight months of 2022, out-of-hospital comprehensive patient service revenue accounted for 95.3% of the total revenue.

The comprehensive out-of-hospital patient service of Yuanxin Technology is jointly provided by the pharmacies of the hospital side stores, the strategically deployed outpatient clinics and the Internet hospitals with Miaoshou doctors as the carrier.

There are many differences from ordinary community pharmacies. The hospital side pharmacy is located near the hospital. It mainly sells prescription drugs, and most of them are new and special drugs. It is equipped with professional pharmacists and can provide prescription review, medication consultation and health management services, mainly for patients. .

As of August 31, Yuanxin Technology owned and operated 314 specialty pharmacies. Among these 314 pharmacies, 267 are located within 1 km of the hospital, 205 are within 300 meters of the hospital, 219 pharmacies are designated pharmacies by the national medical insurance, and 81 pharmacies are designated as dual-channel pharmacies for serious illness medical insurance.

The drugs provided by Yuanxin Technology are mainly new and special drugs, and the online and offline pharmacy platforms provide about 54,700 varieties, and the product portfolio covers 76 of the 97 innovative tumor treatment drugs approved by the State Food and Drug Administration since 2015 . The number of pharmacists has increased from 448 to 611, and the average number of pharmacists in a single pharmacy is close to 2.

As the online platform of Yuanxin Technology, Doctor Miaoshou is one of the first Internet hospitals in China to obtain a medical license. In the first eight months of 2022, the average monthly user visits of Doctor Miaoshou are about 34.9 million. Miaoshou Doctor complements offline pharmacy services to provide patients with high convenience and high-quality medical and medication services.

With the acceleration of hospital digitization and the rise of Internet medical care, the scale of China’s hospital information digitization market will increase from 42.9 billion yuan in 2017 to 80.4 billion yuan in 2021, and is expected to reach 249 billion yuan in 2025. In addition to traditional medical informatization manufacturers, medical technology companies including Yuanxin Technology are deeply cultivating in this field.

Supply-side empowerment services are the second largest business of Yuanxin Technology. As of August 31 this year, Yuanxin Technology has cooperated with more than 420 hospitals, including more than 160 tertiary hospitals, to develop an online medical service platform operated in the form of mobile application App, WeChat applet or public account to provide online medical services. Online hospital functions such as consultation, intelligent referral, and appointment solutions.

In addition, Yuanxin Technology assists hospitals in managing, coordinating and tracking the entire treatment and rehabilitation process of patients, and has developed a set of mobile-side infrastructure and management solutions under the Medical Interoperability brand to improve hospital operational efficiency and improve patient experience. Nanjing Drum Tower Hospital, Tianjin Cancer Hospital, West China Stomatological Hospital, Shandong Provincial Hospital and other well-known tertiary hospitals are all customers of Yuanxin Technology’s supply-end empowerment services.

In 2019, 2020 and 2021, Yuanxin Technology’s supply-side empowerment service revenue was 5.76 million yuan, 3.8 million yuan and 47.18 million yuan respectively. In addition, the revenue in the first eight months of 2021 and 2022 will be 10.35 million yuan and 36.88 million yuan respectively, both of which have increased significantly.

Build a multi-level security system

In recent years, medical “new forces” companies have been targeting the health insurance market, serving patients through multi-level health insurance, and improving the availability of new and special drugs. Data show that China’s technology empowerment market for insurance companies will increase from 9.8 billion yuan in 2017 to 25.3 billion yuan in 2021, and is expected to reach 162.1 billion yuan in 2025.

The medical industry empowerment service is the third core business of Yuanxin Technology, which mainly includes disease course management and service packages provided to patients, pharmaceutical marketing services provided to pharmaceutical companies, and insurance services provided to insurance companies, including claims processing, Tripartite management, drug benefit management and marketing services.

As the insurance technology service brand and platform of Yuanxin Technology, Yuanxin Huibao was established in April 2019. Yuanxin Huibao is based on the professional ability of “insurance + medical + medicine” to provide services for people with major diseases, chronic diseases and other diseases. Healthy people are provided with reliable medical care and medical insurance.

Yuanxin Huibao is the specific drug service company behind the aforementioned case of reimbursement of millions of CAR-T drug expenses in Ningbo, Zhejiang. It is understood that since April this year, Yuanxin Huibao has been helping CAR-T therapy to benefit more patients.

As a comprehensive commercial insurance service provider, Yuanxin Huibao is deeply engaged in the four major service areas of Huimin Insurance, Drug Insurance, Health Management and Claims Investigation, covering all aspects of the chain with “medicine-drug-insurance”. Yuanxin Huibao’s services focus on four types of insurance products, namely innovative insurance products designed for new special drugs, inclusive commercial medical insurance, and sickness insurance.

In 2019, 2020 and 2021, the business income of the third sector was 43.44 million yuan, 88.47 million yuan and 276 million yuan respectively, and the income in the first eight months of this year was 183 million yuan. In 2019, 2020 and 2021, the revenue of Yuanxin Technology’s services in this sector accounted for 1.9%, 2.4% and 4.6% of the total revenue, respectively.

According to the prospectus, as of August 31 this year, Yuanxin Technology has provided services for about 159 insurance companies and 8 reinsurance companies, and has cooperated with insurance companies to launch more than 40 new and special drug insurance products, and has launched inclusive types in more than 100 cities. Commercial health insurance, and distributed a total of 41 health insurance products through the platform, with more than 32 million policies.

In addition, Yuanxin Technology has provided innovative drug marketing services for pharmaceutical companies since the end of 2018. As of August 31 this year, it has served a total of 217 pharmaceutical companies, including 9 of the top 10 Chinese R&D companies and 13 of the world’s 20 largest pharmaceutical companies in terms of sales volume.

Medicine, medicine and insurance form a linkage

At present, the out-of-hospital market has ushered in a series of favorable policies. Policies such as zero mark-up on drugs, separation of drugs, and restrictions on the proportion of drugs have accelerated the growth of the out-of-hospital drug market. The online sales policy of prescription drugs has promoted the regulation and prosperity of pharmaceutical e-commerce. The dual-channel policy has gradually been implemented across the country, promoting smooth payment channels for out-of-hospital pharmacies. In addition, the report of the 20th National Congress of the Communist Party of China pointed out that the orderly connection of multi-level medical insurance should be promoted, the critical illness insurance and medical assistance systems should be improved, the settlement of medical treatment in different places should be implemented, the long-term care insurance system should be established, and commercial medical insurance should be actively developed.

Under a series of favorable policies, “new forces” in medical technology represented by Yuanxin Technology are rapidly rising.

After the outbreak of the new crown pneumonia epidemic, Yuanxin Technology quickly adjusted its business ideas, showing strong corporate development tenacity in terms of corporate revenue and empowerment for the industry. In 2019, 2020 and 2021, Yuanxin Technology’s revenue was 2.352 billion yuan, 3.629 billion yuan and 5.938 billion yuan respectively. In addition, revenue in the first eight months of 2022 will be 4.7 billion yuan.

It is understood that the three business segments of Yuanxin Technology correspond to medicine, medicine and insurance respectively. The three businesses complement each other and promote each other, covering the entire medical service cycle of patients. Yuanxin Technology meets the needs of patients for medication and online medical services through out-of-hospital pharmacies and Internet hospitals, and at the same time develops solutions for hospitals that simplify the workflow of in-hospital operations, assists hospitals to provide patients with better out-of-hospital and in-hospital medical services, and provides innovation for pharmaceutical companies marketing plan. In addition, by providing a variety of insurance and payment schemes, the burden of medication on patients is reduced, and more patients are provided with medical and medical protection.

The senior management team of Yuanxin Technology has a deep background and rich experience in drug retailing, medical services, medical products, new special drugs, hospital operations, insurance, etc. Since its establishment, Yuanxin Technology has obtained a total of billions of yuan in financing. The main investment institutions include Sequoia, Qiming, Xingjie, Kunling, Aobo Capital, etc.