Health Industry in China: Status quo, key innovation players and best practices

1. Health industry in upheaval worldwide

Just a few weeks ago, no one would have known the name Biontech. Today, everyone knows it - the pandemic is bringing global attention to the health industry. And it's not just high-tech champions, because the pace of change in biotechnology, pharmaceuticals and medical technology is rapid. European companies also face great opportunities in a steadily growing market - but they are also confronted with several challenges. They need to maintain scientific leadership, but at the same time develop operational excellence and modernize business processes. All this in an environment dominated by legal regulations and where technology giants continue to advance.

Just in a nutshell: Life Sciences, pharma, medtech, healthcare - these terms are often used synonymously worldwide, but there are overlaps and differences. Accenture is separating the Health industry into two sectors: Life Sciences and H&PS (Health & Public Service). Life Science companies are basically within an interdisciplinary field of research linking biotechnology, medical technology and pharmacy. While pharmaceutical companies manufacture drugs - including research, development and logistics. Medical technology, on the other hand, combines engineering with medicine in order to improve the quality of life of sick people in the long term and to prevent diseases at an early stage through preventive measures. H&PS, also called life sciences, specifically means the development of sustainable health and prevention programs, insurance, diagnostics and telemedicine, including the active promotion of the health of various groups of people.

Future of the Health Industry: Disruption through Digital Technologies

Multinational companies in the life science and pharmaceutical industries expect demand to rise. According to forecasts, demographic change, the increasing prevalence of chronic diseases, pandemics and rising consumer purchasing power, among other factors, will increase spending in the healthcare sector and demand for life science products. Highly innovative medical and pharmaceutical products and innovative therapies that ensure optimal patient care and improve quality of life as well as eradicate life-threatening diseases are in demand. At the same time, profitable growth must be ensured. This balancing act can only be achieved through disruptive technologies that reduce costs and enable faster market approval for new products and services.

Digitization offers significant development opportunities for new business models. New market players, such as start-ups and large technology companies, are increasingly appearing. With high innovation speed and a completely different innovation culture, they are disrupting the status quo of traditional pharmaceutical and medical technology companies. Tech giants involved in healthcare and investing in startups are masters at using data. They know how to optimize the patient experience and develop medical-grade technologies for diagnosis and therapy. In the wake of digitalization, they are now looking for more direct and better access to patients to get a holistic picture of the patient (360-degree view). Technology companies like Amazon, Apple & Co. as well as Chinese tech giants Baidu, Alibaba and Tencent (BAT) have already perfected being in touch with patients via apps, health and fitness devices or online communities to share and analyze data.

To survive in such a market, life science companies need to reposition themselves and expand their portfolios accordingly, investing in companies such as startups or collaborating with others. And that is exactly what is currently happening in China. Let's take a closer look.

2.??Key Players in the Chinese “Health Universe”

China's much-cited pace of innovation and high adoption rate of advanced digital technologies, including in the Healthcare and life science industries, was recently evident in the fight against COVID-19 (see our POV on vaccination here). But who are the key players in the Chinese life science (LS) & Health Care (HC) industry and what are their solutions and growth levers for global challenges??

First of all, the Chinese market is extremely attractive for life sciences, Pharma and Healthcare MNCs and is only growing in importance - as can be seen, for example, from the fact that most of the top 20 companies in this segment have already established R&D centers and innovation hubs there and are continuing to expand. They are working together with local players, also to scale innovation globally from China.

Leading Chinese CMT players are active in Life Science & H&PS sector

As mentioned above, similar to Amazon & Co. in the West, China's largest CMT (Communication, Media & Technology) companies, Baidu, Alibaba, Tencent, and Ping An, one of the largest financial services companies in the world, are very active in the healthcare sector.

All are investing heavily in healthcare and using their digital capabilities to drive innovation. In addition, China is investing heavily in R&D as well as venture capital in startups, building a large ecosystem of young companies in this space. Overall, China spends the second most on R&D in the world (after the U.S.), and in its 14th Five-Year Plan (time span 2021-2025), the country has set a goal to continue to significantly increase this spending - with a targeted growth of 7% per year. China also invests more in venture capital in the healthcare market than all European countries combined according to Accenture Research.

• Tech Giants – Alibaba, Tencent, Baidu and Ping An

The number and variety of companies in which the tech giants are investing shows how dynamic the market in China already is.

• Alibaba

The healthcare ecosystem buildup of Alibaba includes both internal capability integration as well as external investment and cooperation. The E-commerce giant Alibaba is actually more focused on healthcare than investing in life science companies – the few Alibaba is currently investing in are mostly related to genomic analysis (Companies: Amwise, Prenetics) and diagnostics (Linkdoo), otherwise Alibaba focuses on telemedicine and drug delivery.

• Tencent

Social media und gaming corporate Tencent has been adhering to the concept of “connecting everything” to build up its Healthcare ecosystem. With WeChat and QQ’s (free instant messaging service) strong user base, Tencent has a huge competitiveness in the medical layout. The company is highly engaged, the invest range goes from Drug R&D (Atomwise), Genomic Analysis (Karius, iCarbonX, Clear Labs, Congenica, Tute Genomics), Precision Medicine (Locus Biosciences) and Diagnostics (Voxel Cloud) to Immunotherapies Vaccitech, Arctic Vision, Elpiscience).

• Baidu

Search Engine Baidu focuses on Drug R&D (Atomwise, Engine, Strateos, Correlia Biosystems etc.), Genomic Analysis (Sherlock Biosciences, Quantapore, Quitan a.o.), Diagnostics (Cytovale, Magnetic Insight, Probios) and Immunotherapies Neowise).

• ?Ping An

Ping An operates three core business with ten key subsidiaries with an integrated business model of “one customer, multiple products, and one-stop services”. By the end of 2020, the group had 598 million registered online users of different services.

The Finance & Insurance Group is invested in Drug R&D (NextCure, Innovent, Xgene), Genomic Analysis (Prenetics, Annoroad), Diagnostics (Hycor, Airdoc, MeMed, Chivd a.o.) and Immunotherapies (Tmunity, Rani).

3.??Life Sciences & Health Care solutions for global challenges and growth levers: best practices

The global life science industry faces fierce challenges, such as driving down the drug development costs, building up meaningful relationships between doctors, patients and health authorities, ensuring end-to-end traceability across the value chain and leveraging cloud. These global challenges of the LS industry can be tackled with strategic growth levers based on an Accenture internal study of China Bridge.

In China especially the big tech players are currently working to find solutions to global challenges by already adopting the strategic growth levers of the LS industry. They make noteworthy innovative solutions, such as the five ones we present below, possible.

3. 1 Tencent launched iDrug: How to shorten R&D cycles

In 2020, Tencent launched iDrug: a proprietary AI-driven drug discovery platform to shorten R&D cycles - specifically, from 3 - 6 years to 6 months - 1 year

?Offering: Developed by Tencent’s AI lab, iDrug speeds up the entire process of pre-clinical drug discovery. The platform is made up of five models for protein structure prediction, virtual screening, generative chemistry, ADMET* prediction and synthetic route planning (*ADMET stands for absorption, distribution, metabolism, excretion and toxicity/pharmacokinetic).

?

Innovation: Tencent’s new protein prediction algorithm has 10% higher accuracy than the industry-recognized method Robetta. iDrug‘s meta-learning and deep neural network algorithms for LBDD tasks increased median prediction accuracy to a new record of 0.42 (from 0.36).

Business Value: More than 10 projects, including potential cures for COVID-19, are currently running. The platform’s small molecule ADMET attribute prediction module exceeds existing commercial software by 6% to 37% in accuracy.

3.2 WeDoctor: How to provide an integrated online and offline healthcare experience

WeDoctor, an independent company but also a subsidiary of Tencent, is one of the first and largest unicorns in digital healthcare. In early 2020, in the midst of the pandemic, WeDoctor has filed for an IPO on the Hong Kong Stock Exchange.

Offering: WeDoctor is a multi-functional platform offering medical services, online pharmacies, cloud-based enterprise software for hospitals and more. After an initial hospital visit, users can receive follow-up checks online and transfer digital medical records to other doctors.

Innovation: WeDoctor offers an integrated online + offline healthcare experience as it is one of the few online healthcare providers qualified to accept payments from China's massive public health insurance system, which covers >95% of the population.

Business value: The platform has strong vertical integration: it owns 27 Internet hospitals, has linked its appointment scheduling system to 7,800 hospitals across China (including 95% of top-tier public hospitals), and hosts over 270,000 doctors and 222 million registered patients.

3.3??Yitu: How to use technology to efficiently assist physicians

Local Startup Yitu applies AI to help doctors carry out analysis and evaluation of therapeutic effects of COVID-19 lesions (injuries or disruptions to the function of an organ or limb) in 2-3 seconds.

Offering: In January 2020, the Intelligent Evaluation System of Chest CT for COVID-19 developed by Yitu Healthcare was officially launched and put into the frontline clinical battle against the pandemic as the first AI imaging product in the industry to intelligently evaluate COVID-19.

Innovation: As the first AI-equipped diagnostic assistant, it uses intelligent diagnosis and quantitative evaluation of COVID-19 CT images through industry-leading image algorithms and grades the severity of pneumonia diseases (lesions and entire lungs) in 2-3 seconds.

Business value: YITU's Intelligent Evaluation System of Chest CT for COVID-19 has been adopted across 25 provinces and municipal autonomous prefectures in 100 medical institutions and served over 100,000 person-times in China so far.

3.4???Genetron and JD Health: How to enable efficient patient access to oncology products in a fully integrated platform

Chinese startup Genetron Health has announced a strategic partnership with JD Health - part of tech giant JD.com - in 2021 to develop innovative solutions for cancer management across the lifecycle.

Offering: The single platform integrates online and offline in 6 key areas: consumer healthcare, digitization of liver disease mgmt., government medical associations, sharing of customer screening resources, education, and consolidation of oncology doctors and experts.

Innovation: This partnership combines Genetron’s precision oncology capabilities with JD Health's leading online healthcare platform in China, and represents an innovative commercialization strategy for molecular diagnostics products in oncology.

Business value: The platform enables earlier patient treatment and improves the penetration of liver cancer screening services in the industry by allowing more patients to access precision oncology products efficiently.

3.5?Quiknos: How to integrate village doctors and clinics with an advanced logistics system

Quiknos combines mobile internet and medical cold chain logistics to serve the primary healthcare sector in China’s rural areas

Offering: Quiknos is a leading service provider in China for primary healthcare facilities. It is also the first company to combine the service capabilities of mobile internet and medical cold chain logistics to serve the primary healthcare sector in China's rural areas.

Innovation: With the information and logistics systems support, Quiknos has made high quality clinical lab test service accessible to patients even in remote villages, enabling doctors in public health centers or private clinics to make more accurate diagnoses.

Business value: Since 2017, Quiknos operates more than 800 vehicles daily in over 2,000 villages and towns. The business has spread to 30,000 village clinics in 55 cities, serving 40-50 million people. Cumulatively, services have been provided to more than one million people.

4.??Conclusion

The life science and healthcare sector are facing similar disruptive upheavals as the classic industries with the topic of Industry 4.0. This upheaval is being driven on the one hand by groundbreaking molecular research and diagnostics, which are generating unprecedented gains in knowledge - and thus also gigantic new volumes of data - and on the other hand by consistently advancing digitization in research, testing and approval of new active substances, in diagnostics, therapy selection and sustainable patient care, as well as in new digital business models of "classic" medical technology. One consequence of this development is new areas such as personalized medicine, which pursues treatment concepts tailored to individual patients, but also the use of Big Data analytics tools for the consistent analysis and improvement of individual therapies or holistic therapy workflows. This will have a significant impact on the entire value chain in healthcare and will also have a massive impact on the pharmaceutical industry in particular.

USA is still the largest capital market for life sciences and health care worldwide. But China is about to catch up tremendously. Healthcare is one of the five strategic pillars in the new five-year plan of the government of the People's Republic. The sector is booming, and new excellent startups are emerging every month in a wide variety of life sciences fields.

Dr. Mei Wang?– Global Program Lead, China Bridge at Accenture Open Innovation

About China Bridge Program

China Bridge is a global program implemented and promoted by Accenture Open Innovation. With a presence in 15 global regions and over 200 partnerships with top startups, Accenture Open Innovation is identifying the next wave of technology partners to deliver the most innovative solutions to Accenture’s Global 2000 clients. As an innovation and exchange program, China Bridge helps clients of Accenture?unlock growth opportunities by bringing them together with best-in-class Chinese digital players and to co-create responsible technologies for the future.