Ping An Good Doctor’s Strategy in 2019
Hong Kong-listed Ping An Good Doctor (PAGD), along with the Hurun Research Institute, in early 2019 released a “Good Doctors Guide” covering both traditional Chinese medicine and Western medicine to “help 1.4 billion people find the doctors they need”.
In 2019, Good Doctor intended to develop its Hospital Cloud, Clinic Cloud, Pharmacy Cloud, Village Medical Cloud and increase the pace of its international strategy. According to Wang Tao, chairman and CEO of Good Doctor, the Shanghai-based firm “will utilize Internet + AI technology to empower hospitals, clinics, pharmacies and village doctors, while at the same time exporting technology and services to boost the pace of its internationalization strategy”.
In August 2018, Good Doctor and Grab had announced a US$140 million joint venture to tap the online health care market in Southeast Asia.
The joint venture intends to offer one-stop health care services in 225 cities spread over eight Southeast Asian countries and targets the regional online health care market of 260 million people valued at US$370 billion.
The JV, officially known as Ping An Healthcare and Technology, formed a 70:30 venture with Southeast Asian ride-hailing platform Grab, which will give users in the region access to artificial intelligence-assisted online medical consultations, medicine delivery and appointment bookings.
It took PAGD and Grab three months only to form the joint venture, with help from Masayoshi Son, chief executive of Japanese conglomerate SoftBank.
A Large, Untapped Market for Medical Services
Southeast Asia, with a population of about 660 million, has over 200 million mobile users.
According to Ctrip, China’s largest online tourism agency, in 2016 over 500,000 outbound medical trips were taken, five times the number in 2015. Average spending was over 50,000 yuan (US$7,286), 10 times the expenditure for individual overseas trips. The reason behind this growth is that “both China and Southeast Asian countries face a shortage of medical services. People in Southeast Asia are willing to pay small amounts for medical consultancy services.”
Ping An Good Doctor, a Unicorn
Spun off from Ping An Insurance Group, Ping An Good Doctor was valued at over US$1 billion – thus, became a “unicorn” in VC parlance – when it listed in Hong Kong in May 2018. When reporting its first six-month earnings after going public, PAGD showed losses that narrowed by 2.6 per cent to 444.2 million yuan while revenue jumped 150 per cent to 1.1 billion yuan, compared to the year-earlier period.
The spin-off and subsequent listing allowed parent company Ping An to gather external funds to finance PAGD’s capital-intensive growth as well as to facilitate the formation of joint-ventures and other long-term partnerships outside of China, not to mention to allow its healthcare activities to operate outside the purview of China’s insurance regulator.