Internet healthcare – a reset of healthcare delivery in Asia

Technology as an enabler

Digital technology, utilising artificial intelligence (AI) and data analytics, could provide the solution to upgrade and augment the current medical care delivery systems in Asia. For instance, hospitals can use AI to determine the order of treatment for patients via triage, which is the process to ascertain the priority of patients’ treatments by the severity of their conditions or the likelihood of recovery with and without treatment.

With technological innovation in healthcare, such as telemedicine, patients’ home could effectively be turned into virtual hospital wards, where doctors can be available on demand via video links; wireless sensors are used to monitor chronic medical conditions; and prescriptions are conveniently delivered at the doorsteps of patients.

Telemedicine isn’t new but had seen a slow take-up rate in many countries before the Covid-19 outbreak. However, the pandemic has changed users’ behaviour towards telemedicine, and many are now embracing digital healthcare services.

Asia at the forefront of e-healthcare

It is encouraging to see that Asia is currently far ahead on the telemedicine adoption curve versus other regions.

In populous Asian countries, such as China and Indonesia, online medical services have seen an explosion in internet traffic volume and new user numbers of late, as demand for contactless healthcare services surged during Covid-19.

In Indonesia, for instance, telemedicine provider Alodoktor received more than 60 million web visits2 and had more than 33 million active users2 in March 2020. Its application has been downloaded more than 5.5 million times2 and the number of patient-doctor interactions has increased to more than 750,0002 during that period. The number of Alodoktor’s monthly active users also surged three-fold to about 18 million2 in April 2020. Another Indonesian telemedicine provider Halodoc also reported a similar sharp increase in web volume, as patients flock to its online medical services amid the Covid-19 pandemic.

The growth of telemedicine in Asia is led by the private sector, most notably in China, where high-profile corporations (including Ping An Insurance, Tencent and Alibaba) have developed and spun off e-healthcare platforms.

Even before the Covid-19 pandemic, several Asian governments have demonstrated strong support for telemedicine services by establishing regulatory policies and rules around reimbursement in this new area of healthcare delivery. Since the outbreak, we have seen governments further strengthen national support for internet healthcare by expanding reimbursement.

Meanwhile, many technology-embracing medical institutions in the region have upgraded their hospital information systems, digitised medical records and developed their digital technology infrastructure, all of which are required for telemedicine platforms to take off in a sustainable way. To boost affordability, Asia’s e-healthcare platforms are also working and building relationship with government agencies overseeing the regulatory aspects of online healthcare services in order to have drug rebates and fee reimbursement, which can be passed on to consumers.

Internet healthcare platforms will need to achieve economies of scale, critical mass in terms of user numbers and technological capability in order to establish a sustainable business model in online consultations, consumer healthcare e-commerce and online prescription sales. In our opinion, emerging and developing parts of Asia, given their large smart-enabled, internet-savvy population with high unmet healthcare needs, are the ideal markets for telemedicine players. In China, for instance, online pharmacy sales are expected to nearly double to 40% of total sales by 2022 (see Chart 2).

Asia’s telemedicine players

In China, the leading companies in the internet healthcare service space include Alibaba Health3, Ping An Healthcare and Technology3 and soon-to-list WeDoctor. In Indonesia, the key telemedicine players Halodoc and Alodoktor remain unlisted.

Alibaba Health Information Technology (0241.HK)

Alibaba Health Information Technology (Alihealth) is the healthcare subsidiary of Chinese e-commerce giant Alibaba Group and the largest healthcare e-commerce platform in China. Over the years, Alihealth has built a comprehensive health platform, integrating medical resources to provide better technical support for the Chinese pharmaceutical and healthcare industry, and leveraging on Alibaba Group’s strengths and experience in Internet and AI. The company is a key beneficiary of the relaxation of regulatory controls over online drug prescription and reimbursement in China.

Ping An Healthcare and Technology (1833.HK)

Ping An Healthcare and Technology is an online healthcare software company in China that offers a mobile platform, Ping An Good Doctor (PAGD), for online consultations, hospital referrals and appointments, health management and wellness interaction services. It has become one of the leaders in China’s online medical services sector. As of December 2019, registered PAGD users totalled around 300 million, while its monthly active users exceeded 66 million. PAGD has a full-time, in-house doctor team and uses AI auxiliary diagnostics system based on accumulated consultation data, which greatly improves the productivity of doctors.

WeDoctor

Compared to PAGD, which mainly provides online healthcare services through in-house doctors rather than cooperation with hospitals, WeDoctor is more focused on working with hospitals and reimbursement. WeDoctor has helped Chinese hospitals to establish online healthcare platforms by building standardised electronic health records for patients. It cooperates with hospitals to conduct chronic disease management; connects families to general practitioners in primary medical institutions; and collaborates with local governments in China to build medical alliances.

Key takeout

We believe that the strong growth in the adoption of e-healthcare services and telemedicine in Asia will continue as a result of Covid-19 and could even accelerate in a post-pandemic world due to overwhelming demand for medical services in the region. Internet healthcare companies in Asia that are able to take advantage of this long-term structural shift in healthcare will thrive in a post Covid-19 era.

1 Source: United Nations (UN), Department of Economic and Social Affairs, Population Division (2019)

3 Source: CLSA; Deloitte, 21st Century Health Care Challenges: A Connected Health Approach; and The Jakarta Post 3

Any references to particular securities are for illustrative purposes only and are as at the date of publication of this publication. This is not a recommendation in relation to any named securities and no warranty or guarantee is provided.