Smart home-use medical devices for chronic disease management
Smart home-use medical devices for chronic disease management
Business Model Description
Invest in smart medical devices which can help patients monitor their health conditions and better manage their chronic diseases.
Common business models of smart home-use medical device companies include: Selling hardware directly to customers; Building health data-based online platforms for chronic disease management; selling the software to customers; Offering customers personalised services based on the data; Utilising consumer data to provide R&D services; Cooperating with hospitals to build data.
Expected Impact
Improve accessability and convenience for chronic patients, provide the collected data for medical research
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- China: Anhui
- China: Jiangxi
- China: Fujian
- China: Yunnan
- China: Guangdong
- China: Zhejiang
Sector Classification
Health Care
Development need
China’s health sector currently still faces many challenges, including weak capacity of grass-roots service providers, imbalanced development and resources distribution between rural and urban areas in health sector and accelerated aging trend.
The Action Plan for Promoting the Quality of Health Industry Development (2019-2022) focused on leveraging digital technology in the health care sector. On the back of COVID-19, the National Health Commission published a notice requiring the Health Commissions in all provinces to build Internet-based platforms for controlling and preventing COVID-19 as general healthcare.
Gender inequalities and marginalization issues
(1) Medical Financial Assistance (MFA) scheme in China did not offer adequate financial protection for marginalized people. (2) Women may be at risk or at greater risk of infection due to occupational gender segregation.
Investment opportunities introduction
The tageted subregions have low economic input in the healthcare sector, yet policy focus in this area is relatively strong. This indicates that the demand for better healthcare services and the need for further investment is high.
Key bottlenecks introduction
The shortage of medical talents in quantity and poor quality structure is the bottleneck that restricts the development of China's healthcare industry.
Health Care Providers
Development need
the rapid aging trend challenges healthcare delivery; access to nursing homes remains limited; there are significant regional disparities in the distribution of health resources; around 75% of older people suffer from noncommunicable chronic diseases; the demand gap of radiologists is increasing; the cure rate of early detection of cancer is low
Policy priority
China has made significant policy efforts to improve healthcare delivery. A national action plan (2018) was issued by the National Health and Family Planning Commission, planing to make diagnosis and treatment more convenient; gradually form a new system of medical services based on regional coordination, information sharing and service integration,.
Investment opportunities introduction
the 6 IOAs with the highest growth potential were shortlisted:internet healthcare, smart information systems in hospitals, Independent Clinical Laboratories (ICL),Medical imaging based on Artificial Intelligence technology, Smart home-use medical devices for chronic disease management,Senior care.
Health Care Delivery
Pipeline Opportunity
Smart home-use medical devices for chronic disease management
Invest in smart medical devices which can help patients monitor their health conditions and better manage their chronic diseases.
Common business models of smart home-use medical device companies include: Selling hardware directly to customers; Building health data-based online platforms for chronic disease management; selling the software to customers; Offering customers personalised services based on the data; Utilising consumer data to provide R&D services; Cooperating with hospitals to build data.
Business Case
Market Size and Environment
> USD 1 billion
> 25%
The market was worth 2.5 billion USD in 2019
Source: www.askci.com
Indicative Return
> 25%
The potential rate of return is expected to be about 30% according to the experts.
Sinocare (300298)： Net profit margin: 14.10% (2019), 20.02% (2018), 24.97% (2017) ROE: 9.50% (2019), 12.94% (2018), 19.43% (2017)
Biolight (300246)： Net profit margin: 8.84% (2019), 9.62% (2018), 9.94% (2017) ROE: 11.02% (2019), 12.02% (2018), 11.75% (2017)
Investment Timeframe
Short Term (0–5 years)
6 experts estimated that it would take 3-5 years to see positive cash flow for investors.
Ticket Size
Alex Investment invested in Biolight in 2008 and exited through IPO in 2011. MOC is 14.53x and IRR is 54.00%. IDG invested in Andon Health in 2007 and exited through IPO in 2010. MOC is 8.27x and IRR is 104.76%.
Market Risks & Scale Obstacles
Business - Business Model Unproven
Market - High Level of Competition
Market-Consumer Behavior
Impact Case
Sustainable Development Need
According to WHO, around 75% of older people in China suffer from noncommunicable chronic diseases such as cardiovascular disease, diabetes and hypertension.
There are about 240 million adult patients with hypertension in China. Among them, only 37.4 million people have reached the standard of blood pressure control, accounting for about 15.3%, while the proportion in the United States is 51.9%.
Gender & Marginalisation
Economic development can not keep up with the speed of population aging, resulting in many elderly people have no way to treat their chronic disease.
Expected Development Outcome
Accessability and convenience will be greatly improved since patients do not need to visit hospitals frequently but monitor their health condition in real time.
Home-use medical devices facilitate the provision of accurate and personalised medical advice, as doctor can utilise the data collected by the devices.
Medical insurance and pharmaceutical companies can use the collected data to study the patient group and hence design more innovative products.
Gender & Marginalisation
The emergence of Smart home-use medical devices can be a good solution for the treatment of chronic diseases for the elderly, giving them more and better options
Primary SDGs addressed
3.8.1 Coverage of essential health services
3.8.2 Proportion of population with large household expenditures on health as a share of total household expenditure or income
3.b.3 Proportion of health facilities that have a core set of relevant essential medicines available and affordable on a sustainable basis
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Indirectly impacted stakeholders
People
Planet
Public sector
Outcome Risks
It is hard to guarantee the accuracy of results given by these smart medical devices due to the restriction of measuring circumstances. This may limit this investment to deliver the expected impact.
Impact Risks
Cybersecurity and data privacy: connected devices are more vulnerable to data leakage, and large amount of sensitive medical information from patients stores in these medical devices.
Impact Classification
What
The outcome is likely to be positive, important, long-term and large-scale because the investment can provide convenience and consistent health status tracking for chronic disease patients.
Who
Chronic disease patients are underserved since death tolls of heart and cerebrovascular disease accounted for 22% and 20% of total deaths in China (2016), which showed an increasing trend.
Risk
Hard to guarantee the accuracy of results given by smart medical devices due to the restriction of measuring circumstances. This may limit this investment to deliver the expected impact.
Impact Thesis
Improve accessability and convenience for chronic patients, provide the collected data for medical research
Enabling Environment
Policy Environment
(Policy document): In September 2016, the Ministry of Industry and Information Technology and the National Development and Reform Commission co-published a document with guidelines for the innovation and development of intelligent hardware industry (2016-2018)
(Policy document): In July 2017, the State Council published a development plan for ‘new-generation AI’. This plan encouraged the research and development of flexible, wearable and biocompatible physical monitoring systems.
Financial Environment
Fiscal incentives: For high-tech enterprises that fulfill the requirements given by the government, the enterprise income tax rate can be reduced to 15%. (Normally it should be 25%.)
Other incentives: technology related to smart medical devices is included in the catalogue of high tech fields supported by Chinese government.
Regulatory Environment
(Regulation): The level of regulation in the smart medical device sector is moderate, but clear technical requirements have been issued for companies.
Marketplace Participants
Private Sector
Chronic disease management software companies, insurance companies
Government
Governmental funds
Target Locations
China: Anhui
China: Jiangxi
China: Fujian
China: Yunnan
China: Guangdong
China: Zhejiang
References
- (1) Ministry of Foreign Affairs,2019 https://www.fmprc.gov.cn/mfa_eng/topics_665678/2030kcxfzyc/P020190924780823323749.pdf "2) UNDP.2019 https://www.cn.undp.org/content/china/en/home/library/human_development/national-human-development-report-special-edition.html"
- (3)UN Women. (2020). Policy Brief: The Impact of Covid-19 on Women and Girls. UN Women.
- (21) CIRN, 2020, http://www.chinairn.com/news/20200219/170527209.shtml
- (22) Ministry of Industry and Information Technology and National Development and Reform Commission, 2016, Special action on innovation and development of intelligent hardware industry (2016-2018) (《智能硬件产业创新发展专项行动（2016-2018年）》), https://f.qianzhan.com/zhinengzhizao/detail/180330-6bcf93e5.html
- (23) the State Department, 2017, Development plan of new generation artificial intelligence (《新一代人工智能发展规划》), http://www.gov.cn/zhengce/content/2017-07/20/content_5211996.html
- (24) Baidu, 2019, https://baijiahao.baidu.com/s?id=1647550329852763371&wfr=spider&for=pc
- (25) CIRN, 2020, http://www.chinairn.com/news/20200219/170527209.shtml