Caixin
Dec 21, 2020 08:12 PM
BUSINESS & TECH

JD Health Swells Staff of On-Call Doctors With Distinct Healthcare Tie-Up

Founded in 2012, Shenzhen-based Distinct Healthcare started with services for internal medicine and pediatrics-related enquiries, and has expanded into a variety of healthcare services.
Founded in 2012, Shenzhen-based Distinct Healthcare started with services for internal medicine and pediatrics-related enquiries, and has expanded into a variety of healthcare services.

The internet drugstore and healthcare arm of Chinese e-commerce giant JD.com has agreed to work with private clinic operator Distinct Healthcare, to capitalize on the ongoing relaxation of regulations governing the online sale of prescription drugs.

The partnership will bring more than 200 full-time doctors to the JD Health platform, who will offer remote consultations and write digital prescriptions. The platform will then sell and deliver prescribed medicines to patients within three days, Distinct Healthcare said in a statement to Caixin.

JD Health — the nation’s top provider of online health services — currently employs 300 full-time doctors but boasts 65,000 part-time physicians on its platform. By comparison, rival Ping An Good Doctor had more than 1,800 full time medical staff as of June, it said, but its revenues remain a fraction of JD Health’s turnover.

The shares of JD Health surged to a record high of HK$166 ($21.41) Monday, representing a more than 50% boost from its first trading day in Hong Kong nearly two weeks ago.

After significant back-and-forth, China has begun slowly liberalizing supply of drugs, and in August of last year the country’s top legislature amended the Drug Administration Law to open the door for third-party internet healthcare companies to sell both prescription and over-the-counter drugs online. The changes took effect in December 2019.

Last month, the drug regulator released draft guidelines for online drug sales for public review, in a sign that the country plans to double down on online options to alleviate pressure on bricks-and-mortar hospitals.

Tapping into this “seeing the doctor online, getting the medicine offline” model, the partnership can both boost delivery capacity and make prescription placement more efficient, Wang Zhiyuan, CEO of Distinct Healthcare, said in a statement.

The internet health sector rallied during the pandemic. “With Covid-19 cases surging locally, the combined telemedicine and online pharmacy themes look like the right prescription to drive investor demand,” one analyst at a mid-sized brokerage said.

JD Health is China’s largest online healthcare and pharmacy platform by revenue, according to its prospectus. The company recorded revenues of 8.8 billion yuan ($1.34 billion) in the first half, up from 5 billion yuan in the same period a year earlier.

By contrast, Ping An Good Doctor, the healthcare arm of Ping An Insurance Group Co. of China Ltd., saw its revenue from online medical services in the first half double from last year to 695 million yuan, accounting for more than a quarter of overall revenue, it said in the financial report, with the majority coming from in-person clinical visits.

Alibaba Health Information Technology Ltd., a slightly smaller rival to JD Health, has seen its share price triple year-on-year as demand surged for remote medical consultation and drug purchases.

The partnership with Distinct Healthcare would help improve the online and offline medical services that JD Health could provide, according to industry observers, which in return would share its vast user base with the clinic operator. JD.com boasted 72.5 million monthly active users as of June.

Founded in 2012, Shenzhen-based Distinct Healthcare started with medical services for internal medicine and pediatrics-related enquiries, and has expanded into a variety of healthcare services, including dermatology, daytime surgery, medical cosmetology and vaccine shots. It is running 28 clinics across a dozen major cities around the country and plans to construct its first physical hospital in Shenzhen next year.

The clinic, which earlier this year was the first private clinic agency in the province of Guangdong to have acquired the license to operate online, said more than one-third of its patients saw doctors online.

But difficulties remain for online pharmacies and clinics, including the lack of government support for medical insurance payments which cover the fees for prescription medicines. So, while focusing on providing medical enquiries instead of selling pills and physical examinations, Distinct Healthcare could not find a way to subsidize its patients with public insurance.

While it has contracted with commercial insurance companies to cover 20% of the fees of offline enquiries, it had not found a solution for people to claim insurance for expenses taking place online.

Contact reporter Anniek Bao (yunxinbao@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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