In recent years, the Chinese government has, on many occasions, demonstrated its ambitions to promote Internet healthcare services nationwide and establish the national Internet healthcare service infrastructure. There have also been intensive capital investments in the Internet healthcare industry.
Overview and Outlook of China Internet Healthcare Industry
Market Size
With the rapid expansion in recent years, the market size of China Internet healthcare industry reached RMB10.9 billion in 2016. In light of the rising healthcare awareness, improved Internet technologies and increasing disposable income of Chinese residents, China Internet healthcare industry is expected to continue to grow at a fast pace from 2016 to 2026.
Online Consultations
Along with the continual expansion of market size, the volume of online consultations in China increased rapidly from 29.8 million in 2012 to 148.4 million in 2016, at a CAGR of 49.4%, and is expected to reach 4.2 billion in 2026.
Online Pharmaceutical B2C Business
Integral to China Internet healthcare industry, the pharmaceutical B2C business experienced a nearly tenfold growth in GMV from 2012 to 2016, at a CAGR of 77.2%, reaching RMB20.3 billion in 2016. Such growth is mainly driven by the increase in per capita disposal income, rising healthcare awareness, rising popularity of shopping for health products online and promotional efforts of pharmaceutical companies. Propelled by these drivers, the pharmaceutical B2C GMV is expected to reach RMB672.3 billion in 2026 and the GMV of China pharmaceutical B2C business excluding prescription drugs grew from RMB2.0 billion in 2012 to RMB19.7 billion in 2016, at a CAGR of 77.0%, and is expected to reach RMB499.2 billion in 2026.
Online Healthcare Advertising and Marketing Business
Following the imposition of stringent restrictions on the expression and wording of online medical-related marketing by the SAIC, most of such marketing is now undertaken by means of social community activities or academic promotion, rather than direct advertising. Nevertheless, China online healthcare advertising and marketing business has experienced rapid growth in recent years, with its revenue growing from RMB309.1 million in 2012 to RMB1,203.3 million in 2016, at a CAGR of 40.5%. China online healthcare advertising and marketing business is expected to continue to grow in the long term, as the relevant SAIC restrictions are expected to be gradually eased in the future.
Key Growth Drivers of China Internet Healthcare Industry
In the next decade, the following factors are expected to unleash the growth potential of China Internet healthcare industry:
Large Number of Active Internet Users in China.
There were 731.0 million active Internet users in China in 2016, increasing from 564.0 million in 2012. However, the penetration rate of active Internet users was only 53.2% in 2016, which indicated considerable growth potential for both the population of active Internet users and demand for Internet healthcare services in China. Furthermore, the number of mobile users has experienced an explosive growth in recent years, accounting for 95.1% of China’s total active Internet users in 2016, increasing from 57.5% in 2012. These users are expected to become an important stimulant to the growth of the PRC Internet healthcare industry.
Favorable Policies.
In recent years, the Chinese government has made great efforts in promoting Internet healthcare services, including endorsing the concepts of the telemedicine application system , smart healthcare and healthcare big data security system in a series of policies. Such favorable policies are expected to incentivize the further development of Internet healthcare.
Increasing Need for Better Accessibility and Convenience of Healthcare Services.
Due to China’s aging population and rising prevalence of chronic diseases, the demand for healthcare services is expected to continue growing with a strong momentum. However, due to the scarce and unevenly distributed medical resources in China, medical institutions are unlikely to fully meet such increasing demand. By comparison, Internet healthcare platforms can provide remote medical services and ensure highly accessible and convenient services. Such advantages are likely to improve patients’ experience of healthcare services and motivate them to switch from traditional offline healthcare services to Internet ones.
Advancing Technology.
Benefiting from the rapid development of Internet technologies, Internet healthcare services such as online consultation and pharmaceutical e-commerce have become readily available. In addition, new technologies such as big data analytics and AI are expected to bring improved quality of care and other benefits such as enhanced efficiency, more precise diagnosis and effective disease prevention to the daily health management offered through Internet healthcare. Such benefits were unavailable under traditional offline healthcare services, and are expected to drive the growth of China Internet healthcare industry in the near future.