HONG KONG (Reuters Breakingviews) - China’s biggest corporate showdown has kicked off. Alibaba, Tencent and Ping An Insurance dominate e-commerce, video games and insurance respectively. Now the trio, worth a combined $1 trillion-plus in market capitalisation, is converging on healthcare.
Before Covid-19 hit, China’s medical system suffered from chronic under-investment. Healthcare expenditure, of which the government accounts for over half, was just 5.2% of GDP in 2017, data from the World Health Organization show, far lagging 17% in the United States.
A big problem is a shortage of general practitioners, resulting in threadbare primary care. It’s geographically unbalanced too; medical resources are concentrated in wealthier urban areas. Top-tier hospitals, representing just 8% of the country’s total, received nearly half of all patients in 2016, according to research cited by China Renaissance.
Alibaba and Ping An, as well as the Tencent-backed WeDoctor, see potential for profit in filling the gaps left by overstretched, overcrowded hospitals. All three offer cheap online consultations, which have spiked in the wake of the coronavirus outbreak. They are racing to develop all-encompassing apps offering diagnosis, prescriptions, referrals, appointment bookings, 1-hour drug delivery and even insurance.
Ping An’s Good Doctor is ahead for now. The app, run by a Hong Kong-listed subsidiary, has 67 million monthly active users as of the end of last year, thanks to a sizable team of in-house doctors and a network of partner hospitals and pharmacies. But Alibaba is beefing up its healthcare arm, also listed in Hong Kong, by reshuffling its pharmaceutical business and appointing a new chief executive. Tencent’s ubiquitous messaging app, WeChat, too has rolled out features like Covid-19 heat maps and hospital appointment bookings. It owns an undisclosed stake in WeDoctor, which is now looking to raise up to $1 billion in a Hong Kong initial public offering this year, Reuters reported.
Beijing welcomes such private investment. But regulatory risk is still high. Existing rules are ever-evolving, and there is a chance that tech companies could be held responsible for faulty medicine or bad medical advice delivered via their apps. Profit has been elusive so far, with Alibaba Health and Ping An Healthcare and Technology both loss-making. With competition intensifying, at least patients will benefit.
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