With the development of the times, healthcare has become a hot topic of increasing discussion, yet there are two basic issues:The distribution of medical resources in China is unbalanced, and in the face of major diseases, society is desperate to achieve a breakthrough in new treatment technology. What stands out behind this is that there are many hidden investment opportunities in the context of the size of the medical market increasing with people's living standards.

Based on the above judgment criteria, I paid attention to the Hong Kong stock TATA Health International (1255.HK), a major health and life science business platform company. On the one hand, it relies on online medical platforms and its revenue sources cover all aspects of the medical ecosystem. On the other hand, it obtains exclusive production, R&D and distribution rights for top life technology in China and the Asia-Pacific region through “investment+introduction+innovation”. 

Obviously, TATA Health International is a typical two-wheel drive enterprise. The big health business and life sciences are the primary business, providing stable income and cash flow, and continuously expanding as the business continues to expand in multiple directions, while also supporting the capital requirements of the secondary business.In the near future, once the company's second business enters a harvest period, there is no doubt that TATA Health International will enter a period of rapid growth.

Based on this, let's take a look at the company's growth in detail in conjunction with the actual situation?

1Under the conflict between medical resources, Shangying Internet Hospital directly hit pain points 

China's healthcare industry is an important part of the national economy.Moreover, driven by various objective factors such as increasing per capita disposable income, aging population, and rising prevalence of chronic diseases,The market size continues to increase rapidly.According to Frost & Sullivan's data, China's medical expenditure in 2019 was RMB 6.5 trillion. It is estimated that by 2025 and 2030, China's medical expenditure will reach RMB 11.6 trillion and RMB 17.6 trillion respectively.

However, there are clear pain points in this area:The imbalance in the regional distribution of medical resources and the lack of a sound medical system and hierarchical diagnosis and treatment system have led to an imbalance between supply and demand. 

Second, there are more than 300 million patients with chronic diseases in China, which corresponds to a market size exceeding trillion dollars and the value is constantly growing.What has been revealed is a large increase in the number of patients with chronic diseases that lack long-term, ongoing treatment and disease management services. 

Faced with the above problems, the country has also enacted a number of policies to promote the digitalization of the industry.One of the highlights is the “Guiding Opinions on Actively Promoting Health Insurance Payments for Internet+ Medical Services” issued in October 2020It is used to promote the digitization process of the healthcare industry.

The favorable policies have directly boosted the digital health market, including Internet healthcare.According to Frost & Sullivan's data, the market size of China's digital health is expected to increase from RMB 28.1 billion in 2019 to RMB 4,222.8 billion in 2030, with a compound annual growth rate of 30.9%.

However, if enterprises want to enter this trillion-dollar circuit that concerns people's livelihood, it will inevitably mean that there are high barriers: license plate barriers, barriers to medical resources.

Shangying Internet Hospital is the main carrier of TATA Health International's health and life science business. It is the first and only independent specialist and comprehensive Internet hospital in Shanghai.It also has an exclusive third-class Internet hospital license and can have an independent operating model.

It relies on the rich medical resources of the Shanghai region to provide high-quality specialist and comprehensive remote medical services to users across the country. Combining doctors' multi-point practice policy support, cooperates exclusively with famous experts to buy out their practice time, and is determined to enter the blue ocean market for chronic disease management in China, directly hitting the pain point of imbalance between supply and demand for medical resources...

At the same time, efforts have been made to build physical pharmacies at current prices. The goal of incorporating offline physical pharmacies, hospital side pharmacies, and online internet pharmacies into the service supply system has been achieved. The focus is on cooperating with the hospital side stores of the top three hospitals to accept the outflow of prescriptions, obtain customers, and increase revenue. According to company data, it has covered 300 cooperative pharmacies in Shanghai.

As can be seen, Shangying Internet Hospital has formed an integrated and diversified business model around “big health”, that is, consultations, drug sales, health management, health product sales, insurance sales, and other innovative methods to guarantee diversified revenue sources.According to information, the Internet hospital business is expected to level off revenue in 2021, be fully profitable starting in 2022, and gradually expand. 

2, Promethera, a pioneer in the field of stem cell therapy, has entered the Chinese liver disease market of over 200 billion dollars 

On June 30, 2021, TATA Health issued an announcement stating that the Belgian sovereign fund SofiPol jointly invested in Promethera Biosciences (“Promethera”; same below), a pioneer in the field of stem cell therapy, involving about 20 million euros.After the delivery is completed, TATA Health will become PromeThera's largest shareholder. With its position as a world leader in stem cell therapy for end-stage liver disease, it brought advanced stem cell therapy to China, the world's largest liver disease market.

According to data, Promethera is committed to developing interstitial stem cells filled with stem cells and liver stem cell therapy to treat liver dysfunction caused by inflammation, fibrosis, and enzyme dysfunction. It has more than 450 patents and two production facilities that have passed cGMP certification.

Promethera's main cell therapy products are under development: HepaStem (phase IIB clinical) and H2Stem (phase I clinical), facing slow acute liver failure (ACLF), urea cycle disorder (UCD), and nonalcoholic steatohepatitis (NASH).

In terms of comparable benchmarking companies, because Promethera is an innovative pharmaceutical company focusing on stem cell therapy for end-stage liver disease, other companies' products are not targeted in the field of cell therapy. More importantly, they are unmatched by Promethera's mesenchymal stem cell-filled and liver stem cell therapy.

Second, when compared to companies that focus on liver disease therapy, the applicable conditions are similar to similar Promethera products (such as non-alcoholic steatohepatitis). However, these companies' products focus more on early and viral liver disease treatments, and are powerless against non-viral and advanced liver disease diseases. This point is forAs far as Promethera is concerned, it's a huge advantage.

Quoting a third party valuation studyPromethera's overall valuation analysis: After completing phase II clinical evaluation of Hepastem therapy for slow acute liver failure ACLF, the post-clinical valuation of phase III clinical evaluation will increase sharply to 260 million euros, and the post-clinical valuation of phase III will increase to 850 million euros. Looking at the latest progress,The company's phase II clinical and phase III clinical trials are expected to be completed by the end of 2022 and the end of 2024, respectively. 

For the Chinese market, this can be said to be a boon.Because China is the country with the highest burden of liver disease in the world, with the exception of most hepatitis C patients, which can be cured, patients with liver disease are difficult to cure, and there is an urgent need for clinically specific drugs. At the same time, the huge number of patients with underlying liver disease causes 460,000 new liver cancer patients in China every year, and the corresponding market size exceeds 200 billion.

Well, after this deal, TATA Health is expected to obtain the right to develop and implement PromeThera China. According to the R&D pipeline progress described above, it is expected to be implemented simultaneously in the country. At that time, implementation matters will be negotiated with various parties in line with the time schedule, and clinical and commercialization will be achieved.

In summary,With the consolidation, enrichment and continuous development of TATA Health International's first business, it can create a steady stream of fresh water to enrich the company's performance, while at the same time feeding back the second-largest business, which is “investment+introduction+innovation”, exclusive production, R&D and distribution rights for more top life technology technologies in China and the Asia-Pacific region.

As can be expected, TATA Health will continue to unleash growth and excellent financial performance with two-wheel drive in the future.