JD Health - Digitalizing health care in China

By Line Heidenheim Juul

With a quickly increasing silver population and rising demand for quality health care and health management, the tech giants are quickly building integrated online- and offline services, revolutionizing the industry. Telemedicine is poised to grow from USD 6 trillion to 16 trillion by 2030, making this an extremely attractive growth area. In this blog, we take a look at JD Health, the biggest Chinese online health care service provider, and the biggest IPO in Hong Kong last year.

One of the biggest trends in China right now is within healthcare and tech. All the major tech giants have already invested in this, and are building full circle ecosystems. This has been a hot investment topic and development started way before Covid-19 hit the world. A fast-growing elderly population and increased focus on health and happiness is driving demand. Companies like JD Health are successful in taking an omnichannel approach to fully connected and digital users in China.

Covid-19 accelerated users and services

Covid-19 has naturally accelerated the development in telemedicine, but tech giants like JD Health (part of the JD.com ecosystem) was already ahead of the game before the pandemic, spearheading new solutions in telemedicine. With a strong backbone in advanced logistics and vast experience as China´s largest online retailer, it is not surprising that JD.com has become the largest of the Chinese online health care service providers, with almost double the revenue of its closest competitors. But the ambitions are high, and the goal is to create a full ecosystem of health care and health management for the most populous country in the world.

What is JD Health?

JD.com is perhaps known best as the biggest online retailer in China, with an extensive logistics network that can reach all corners of China. But the tech giant is much more than that. The JD ecosystem contains JD Logistics, JD Technology (formerly JD Digits) and JD Health. The latter is now the largest retail pharmacy in China, sitting on more than 15% of the total market share and growing on average four times as fast as its competitors. JD Health provide round retail pharmacy services and round the clock health care services via in-house doctors and external partners.

Pharmacy retail on speed

Imagine that you can get your medicine delivered in 30 minutes. That is the reality and the norm in China´s largest cities now. Only a few years ago, this was not possible. JD Health officially sold its first pharmaceutical product online in 2013, and since then the business have taken off. With more than 14 drug warehouses and over 300 other warehouses nationwide, JD Health can deliver medicine from over the counter to prescription drugs fast and easy for its users. They launched a “Family Medicine Kit” service which provides families a one-stop health care management service platform offering drug recommendations, health knowledge sharing and pharmaceutical after-sales services. It is linked with JD´s insurance business team and JD Logistics and offers replacement services for expired drugs.

But JD Health also cover B2B, as they aim to build the complete retail ecosystem. For drugstores in China’s rural areas in fourth tier cities, it has long been a struggle to compare medicine prices, incomplete variety of drugs and long procurement times. JD’s marketplace has an extensive range of products, ranging from OTC (over the counter) drugs to medicine for chronic diseases, medical equipment, and nutritional products.

JD experimented with unmanned delivery robots during the height of the Covid-19 pandemic. The delivery robots integrated touch less payment and diminished human contact to prevent the spread of the virus. Photo: jdcorporateblog.com

Consultations online

In China, primary care such as family doctors and general practitioners is not commonplace, and people must go to a hospital for serious illnesses or a community clinic for less complicated issues. This creates extremely long lines, waiting times and uncertainty for those who do not live near hospitals. Therefor telemedicine is high on the national agenda, and the central government has over the past many years launched several key policy documents like “Healthy China 2030” outlining the priorities for commercial players to tap into. JD Health was the first company to offer both retail pharmacy and online health care services, and in 2020 JD Health launched a family-doctor service. It is an annual subscription service, that can cover a family unit of up to eight people, who can get quality care, monitor health conditions of family members afar and access online and offline consultations. Online consultations were on the rise before Covid-19, but the pandemic made the number of users explode, and surveys show a significant increase in citizens willing to accept online consultations for basic issues as well as long term health conditions.

An expanding ecosystem

The ambition for JD Health is to build a closed loop ecosystem, making it possible for patients to have easier access to better health care, no matter their geographical location. As the retail pharmacy business is growing and profitable, it is less so in general with online services. However, experts and investors in the area expect to see this become profitable in 5-10 years. The overall strategy of the closed loop system is also to drive traffic from patients on the online pharmacy platform to the health management services, and in turn drive traffic back to the retail pharmacy business. JD Health has a clear advantage in its extensive logistics network and advanced cold chain supply chain capabilities as well as its services in finance and insurance.

Why does this matter?

Opportunities. The red-hot health care market in China is worth paying attention to for investors as well as for companies in medical devices, pharmaceuticals or health care services and senior services. There are already more than 250 million people over 60 years old, and that number will grow quickly. There is no tradition for institutional elder care, a matter usually handled by the families themselves. But with a shrinking birth rate and decade’s worth of single-child families there is an obvious need for better health management, quality treatment and elder care services. But the industry is still underdeveloped missing digital upgrades as well as training for qualified staff. JD Health and other companies are quickly tapping into these opportunities. But there is still room in the market for partnerships and upgrading and digitalizing for example “offline” health care services. The consumers, the government and the commercial companies are all on this wave of the development. Should you be?

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