Prescription for disruption
$6-billion Chinese startup WeDoctor aims to be the Amazon of healthcare.
As soon as you’re diagnosed as diabetic, advertisements for treatments show up on your social media feeds. You get alerts about health supplements, maybe nutrition tips. Prompts on insurance policies pop up on your phone.
That’s not a scene from Minority Report. It illustrates the trove of data harnessed by WeDoctor, a Chinese health provider on an ambitious quest to upend the business of personal care. The ads may not be conspicuous — they can be buried within a pitch about chronic diseases — but the target is uncannily precise: you.
Backed by Tencent Holdings, WeDoctor joins a growing contingent of tech giants hoping to revolutionise an industry seemingly impervious to online disruption. While the likes of Google seek to unlock the secrets of immortality or unravel medical mysteries, WeDoctor is focusing on something more pragmatic: making money by unclogging bottlenecks in a Chinese healthcare market forecast to be worth 8 trillion yuan (US$1.2 trillion) by 2020.
Founded by artificial intelligence guru Jerry Liao Jieyuan in 2010, WeDoctor aims for nothing less than being an Amazon for healthcare. Once a scrappy startup that helped people book doctors, it has grown into a business valued at $5.5 billion that offers online follow-up consultations, drug prescriptions and actual clinics staffed by physicians.
The company is also building artificial intelligence (AI) to analyse more data, helping detect ailments such as cervical cancer. It sells an Amazon Echo-like $600 speaker for the home that can link to fitness wearables and doubles as a medical-advice hotline.
In Chinese fashion, it has even concocted a game out of treating maladies: a function that helps sufferers ask questions and reward the best answers. To fund all pf that, WeDoctor is counting on an initial public offering as soon as 2019.
“AI won’t replace doctors but it will become an important tool for doctors and help improve their efficiency and accuracy,” said Liao, also a co-founder of the speech-recognition specialist iFlytek Co. “Through the internet and AI, China’s healthcare services will improve significantly in the next five to 10 years.”
The company is now angling to break into an area that has resisted some of the country’s deepest pockets, including Alibaba and Baidu. But the impetus to overhaul the medical sector is clear to anyone who’s visited a Chinese hospital, many of which are dingy affairs run by state organs that pay doctors less than $10,000 a year on average.
If WeDoctor’s model takes off, it may levy an additional cost on patients — the price of cutting through red tape and waiting times at government clinics.
WeDoctor has come a long way since Liao began traversing the country trying to persuade hospitals to get online. The Hangzhou-based firm this year secured $500 million from investors including the insurer AIA Group, the property developer New World Development and Shanghai Fosun Pharmaceutical Group.
“The industry is still in its early stage, so it’s hard to say which one has the most potential,” said Leon Qi, head of Asian financials research for Daiwa Capital. “While internet companies have an advantage in their online user traffic, we see offline players, either supported by financial institutions or other conglomerates, have edges in their offline distribution and offline medical resources. Hence we do not see it as a ‘winner takes all’ business.”
Underpinning the business is the freedom to collect and use patient data on a scale unparalleled in much of the rest of the world, particularly as regulators grow increasingly wary of the influence of tech giants. China has yet to establish laws to protect personal information but is building health profiles on its 1.3 billion citizens — a worldwide first for scale.
That allows WeDoctor, and peers such as Good Doctor, an affiliate of Ping An Insurance, to tinker in areas often off-limits to rivals. Google’s Deepmind, for one, drew fire from British regulators for inappropriately accessing hospital records. In the US, the industry navigates a web of regulations designed to protect patient privacy.
“There are a lot of issues that need to be taken into consideration when it comes to privacy, including who can access data on patient’s medical records and how that data can be used,” Jason Siu, an analyst with Guosen Securities, wrote in a report.
WeDoctor isn’t shy about its ability to glean data. Users in China are accustomed to surveillance and having their information shared with the government, and information leaks — when publicised — seldom cause ripples. Jeff Chen, a former HSBC banker who now heads strategy for the company, talks openly about how unfettered access to medical data helps profile users and create powerful marketing tools for big pharma and insurance.
“One of the reasons we think WeDoctor could become a big business in China is because of the sheer demand for better and more convenient healthcare treatment,” said Gilbert Ho, a senior director at NWS Holdings, a New World unit.
WeDoctor’s data comes from several sources, but one of the most important is the hundreds of hospitals in its network whose doctors plug information into a central database — with consent from patients who may want to switch caregivers. They could also upload their own records.
The company then profiles users, classifying them in “buckets” based on age, gender, region or symptoms. That’s a potent advertising aid to drugmakers and insurers, Chen says. That leeway to commercialise patient information comes with caveats: WeDoctor stresses data is anonymous and it doesn’t share it with third parties.
“So one bucket might be chronic disease, and within that bucket there might be diabetes, high blood pressure or gout,” he said. “Then they would basically create products that target that bucket, so when I give it to you, you don’t feel it’s really specifically targeted.”
From another perspective, WeDoctor and its rivals’ direct-to-consumer approach represent a shortcut through a system prone to corruption. Pharmaceutical companies spend millions every year persuading doctors to prescribe their drugs. Beijing, in its quest to stamp out graft, has taken aim at this practice since 2014, when it fined Glaxo SmithKline 3 billion yuan for alleged bribery.
WeDoctor’s platform is more transparent, Chen said.
“The drug companies can target easily just by doing a campaign with us, or a seminar basically teaching to 240,000 doctors,” he said. “It’s very cost-effective for them.”
That’s just one piece of the money-making puzzle. WeDoctor also takes a cut on consultation fees via its app or smart speaker. The 4,000-yuan box has a screen in the front and comes with a year’s access to doctors online.
In March, WeDoctor opened a clinic in Hangzhou, a rising tech hub that is home to Alibaba. The 2,500 square-metre centre houses paediatricians, ophthalmologists and a CT scanner. It plans at least six by the end of the year, including in Beijing and Nanjing. That’s where backer New World could come in handy: the partners plan to develop clinics in its residential projects across China.
“Most of the businesses that have been disrupted by the internet, you see users spend a lot of time online and a small part offline,” Chen said. “Healthcare service is the reverse. Your bulk is offline.”
Those clinics complement “online hospitals.” WeDoctor has won licences to operate 10 such platforms that offer real-time chats with doctors. This also lets the best clinicians, usually working out of big hospitals that keep fees artificially low, to earn more on the side. Top doctors can demand 3,000 yuan per session, WeDoctor says.
“Our platform is just in the early phases of development and there’s so much more we can do to make the space more efficient,” Chen said.
“Most of the businesses that have been disrupted by the internet, you see users spend a lot of time online and a small part offline. Healthcare service is the reverse. The bulk is offline” JEFF CHEN Chief strategy officer, WeDoctor Group