By Liu Jiaying, Jiang Juntao, Hu Xing
Directed by Tan Ying
Data support: Whale Associate Insight
At the beginning of 2019, the General Office of the State Council issued a pilot program for centralized purchasing and use of nationally-organized medicines on January 17th, announcing the arrival of the moment of reshuffling of the pharmaceutical market. Earlier, reviewing the many changes in the medical and health industry in 2018, the tone of reform has long been set, and the industry's trend towards high-end and localization, technology and innovation drive has also been revealed. Throughout the 2018 medical and health industry and investment and financing data, Whale Alignment Research Institute takes you to interpret the keywords of the medical and health industry, and insight into the future development trends and opportunities of the medical and health industry.
.01. One of the keywords of the healthcare industry: institutional reform
In March 2018, the State Council ushered in the seventh government institutional reform. For government agencies in the healthcare field, this is the biggest adjustment in the past 30 years, basically laying the framework for future institutional design and regulatory trends in the healthcare industry. The "band purchasing", which has been causing industry tremors since the end of last year, was conceived in the context of the State Council's institutional reform.
In the State Council's institutional reform, the family planning function of the former National Health and Family Planning Commission was weakened to "health" as the core, and a new National Health and Wellness Commission was established. On the basis of the functions of the former Planning Commission, the NHSC incorporates the responsibilities of the Office of the Leading Group of the State Council for Deepening the Reform of the Medical and Health Care System, the Office of the National Working Committee on Aging, the responsibilities of the Ministry of Industry and Information Technology-led compliance with the Framework Convention on Tobacco Control, and the responsibilities of the State Administration of Work Safety for the supervision and management of occupational safety and health.
In terms of health care, the newly formed National Health Security Bureau, in addition to the basic health care functions, has the original NDRC's drug and medical service price management functions, as well as the Ministry of Civil Affairs of the former medical assistance functions. As a result, the Bureau of Medical Insurance, as an organization directly under the State Council, will form a stronger and more vocal payer system and further influence the price formation mechanism of drugs and medical services to cope with the growing trend of health care costs.
Drugs, the former State Food and Drug Administration functions, and into the State Administration of Market Supervision. However, taking into account the specificity of drug supervision, the State Market Supervision Administration set up the State Drug Administration under the State Market Supervision Administration to continue to deepen the reform of the drug approval system, to promote the research and development of new drugs and innovation and the consistency evaluation of generic drugs, and to accelerate the transformation and upgrading of the industry.
.02.Healthcare Industry Keywords No. 2: Market reshuffle
Since the second half of 2018, the controversy about "capital winter" has continued. In 2019, "capital winter" and "economic downturn" are still hot topics of discussion in many industries. In October last year, the Whale Alignment Research Institute, based on the first three quarters of 2018, the investment and financing data of the medical and health industry, had released "Everyone is talking about the capital winter, has the heat of medical investment dropped in 2018? An article, judging that the medical and health field is still an investment hot spot in 2018.
In the new economy industry in 2018, the average time between rounds before the B round was 520-525 days, while the average time between rounds after the C round was 415-420 days. Compared with the historical data, the time between rounds of financing in the new economy industry is in the normal fluctuation range. It can be seen that in the "capital winter", ordinary projects may face difficulties in financing, while the new economy industry, which has gradually become a pillar of the economy, is relatively less affected and has the hard power to go through the cycle. Therefore, in the cold external environment, the competitive advantages of high-quality enterprises are more likely to be highlighted and further strengthened.
Focusing on the healthcare industry, except for the interval time from seed/angel round to A round, which exceeds the average of the new economy industry by 12.8%, the interval time for all rounds after A round is shorter than the average of the new economy industry. In particular, the average time between rounds C and D in the healthcare industry is only 384 days, one month shorter than the average of the new economy industry. This also reflects that before the A round of medical and health projects, due to the uneven level of projects, investors are more cautious, so that the interval cycle exceeds the average value of other industries; while after the A round of the project usually in the experimental data, mechanism validation, business model and other aspects of some progress, more likely to be favored by investors.
Now that 2019 has arrived, reviewing the investment and financing data of the healthcare industry for the whole year of 2018, it can be seen that compared with the past four years, the overall financing amount of the healthcare industry ($78.7 billion) for the whole year of 2018 is still on the rise, with the fastest growth in the field of pharmaceuticals and medical services. The total number of financing events in the industry was 824, a slight decrease compared to 2017, but the average single financing amount increased significantly to $95 million, an increase of about 130% compared to the previous years.
Additionally, 48.8% of financing events in 2014 were for less than $10 million, and in 2018 that percentage was only 20.5%. The proportion of investments of more than 100 million yuan also rose from 5.3% in 2014 to 16.7% in 2018. It can be seen that the investment projects are gradually concentrating on larger scale and excellent targets in the industry innovation category.
And from the financing round, the proportion of angel round financing events in the medical and health industry in 2018 decreased sharply, continuing to decline from 49.5% in 2015 to 22.6%. The proportion of strategic investment, on the other hand, rose from 4.6% in 2014 to 9.7% in 2018, and the number of mergers and acquisitions increased 10 times compared with that of five years ago, with the trend of industrial consolidation accelerating significantly, and the medical industry is maturing.
On the one hand, regulatory policy encourages product innovation, promotes industrial upgrading, accelerates the domestic drug and device market to meet international standards, thus improving the quality of domestic services and products in the long term; on the other hand, industry innovation and high-end has become an inevitable trend of development, and enterprises have opened up the key links in the industrial chain through M&A transactions, and their main business has transformed in the direction of high value-added.
.03. Medical and Healthcare Industry Keyword No. 3: Innovation Driven
With the development of genetic testing, artificial intelligence and other technologies, the medical and healthcare industry has seen more innovative products and services emerge in 2018. Only from the whale quasi-heat trend, molecular diagnostics, antibody drugs, intelligent diagnostics and other popular segments of the medical health industry in 2018, and most of them are driven by innovative technology, which is also in line with the government's policy direction of encouraging innovation.
Take intelligent diagnosis as an example, with the development of artificial intelligence and medical big data, intelligent diagnostic system trained by a large amount of data is expected to become the fastest landing application scenario of artificial intelligence in the medical field. Data from Whale Quasi Insight shows that nearly 100 domestic companies are developing intelligent diagnostic products related to medical imaging, focusing on small lung nodules and fundus image screening. At present, most of the intelligent diagnostic products have not really gone to clinical applications, and their potential for application in areas such as brain diseases has to be further explored.
In the field of digital healthcare, in addition to intelligent diagnostics, with the development of artificial intelligence technology, the government's emphasis on the application of medical big data is gradually increasing, as well as the three major state-owned data groups on the data base operation of the deepening of the degree of involvement in the future of the enterprise and other industry subjects to retrieve the data, the difficulty of the use of data is expected to be further reduced. On this basis, more innovative products and business models will emerge in the field of digital healthcare, which is expected to reshape the ecology of the healthcare industry.