Since the beginning of 2024, relevant departments have successively voiced their support for the high-quality development of the digital economy and the medical and pharmaceutical industry, indicating that the digital transformation of the medical industry will usher in new development opportunities under favorable intensive policies.

As the aging of the population accelerates, the immediate health needs of the 1.4 billion people will be a strong support for the long-term prosperity of the medical industry. However, up to now, the healthcare industry still has pain points such as uneven allocation of medical resources, uneven quality of medical services, and asymmetric information. Therefore, digital transformation is not only a driving force for further growth in the industry; it is also imperative on an objective level.

The data economy is booming and is expected to surpass trillion by 2030

At the beginning of January, 17 departments including the National Data Administration, the Central Internet Information Office, and the Ministry of Science and Technology jointly issued the “Data Elements ×” Three-Year Action Plan (2024-2026), which proposed a clear target for the average annual growth rate of the data industry to exceed 20% by the end of 2026; during the two sessions, the 2024 Government Work Report also stated that it is necessary to work together to promote digital industrialization and industrial digitalization to promote the deep integration of digital technology and the real economy.

CITIC Securities released a research report saying that the data element market is expected to reach a new level of 200 billion yuan in 2025 and exceed trillion yuan in 2030. Following financial data, energy, medical and other industry data is expected to become a new important component of data transactions.

Zhongkang Holdings has been deeply involved in the medical and health industry for 17 years. With the increasing demand for data products and services from industry customers, it has continuously enriched the variety of products and services with its accumulated data resource advantages, technical advantages and market advantages to provide customers with a “SaaS product+professional service+industrial ecosystem platform” one-stop products and services to help customers make efficient digital decisions and accurately connect to the market.

In order to enable pharmaceutical and medical equipment companies to make efficient decisions in all aspects, Zhongkang Holdings has launched a variety of products, including the Linxi Consumer Insight System, the Zhongkang Pharmacy Channel Management Decision System, the CHIS Development System for Multiple Drug Information Search, the Linhe Intelligent Marketing Decision System, and the Silun Data Platform. The aim is to open up the entire chain of pharmaceutical products from R&D, production, distribution, promotion, and terminal retail to provide integrated smart decision-making cloud comprehensive solutions.

With the gradual implementation of documents such as the “14th Five-Year Plan” for the Development of Traditional Chinese Medicine and the “Implementation Plan for Major Projects to Revitalize and Develop Traditional Chinese Medicine”, the development of traditional Chinese medicine has been elevated to a national strategy. Zhongkang Holdings hosted the first Traditional Chinese Medicine Ecology Conference and launched the Zhongkang Yunlin - Chinese Medicine Industry Data System for the traditional Chinese medicine segment at the conference. It uses digital technology such as big data, artificial intelligence and cloud computing to transform the traditional Chinese medicine industry throughout the chain. With Zhongkang Technology's unique industry prediction model and data perspective, it is committed to promoting cost reduction and efficiency in the Chinese medicine industry. The system combines data on supply and demand of Chinese herbal medicine production, base data, climate and price trends, proprietary Chinese medicine sales data, macroeconomics, etc., to achieve multi-level industry data interaction and price prediction for core Chinese herbal medicine varieties. The accuracy rate exceeds overall expectations.

In 2023, Zhongkang's Smart Decision Cloud business revenue was 269 million yuan, a significant increase of 47.3%; the number of customers was 804, an increase of 39.6% over the previous year, and the customer repurchase rate was nearly 90%, which was widely recognized by the market. In the future, Zhongkang Holdings will continue to expand its leading edge in the enterprise-side business, further open up “in-hospital+out-of-hospital” medical and pharmaceutical data, and provide higher quality SaaS products and professional services.

The health management market has broad potential and “AI+” empowers the industry to grow

According to predictions from authorities, in 2024, the application of artificial intelligence (AI) in the medical and health care fields will increase dramatically. Applications such as AI+ pharmaceutical research and development, AI+ health management, and AI+ medical diagnosis will continue to emerge. However, in the field of health management, traditional medical examination reports are often explained only from a single physical examination index, and the joint interpretation of multiple disciplines and indicators often cannot balance efficiency and cost effectiveness at the same time. AI technology is widely used in health examinations, providing more possibilities for diversified and personalized post-examination health management.

Zhongkang Holdings' Zhuomniao AI-MDT health management system, in conjunction with more than 16 departments and 300 experts from third-class hospitals, has built a professional medical knowledge map. Through AI and disease prediction models, it can quickly and accurately analyze complex medical examination data and provide users with a more systematic and comprehensive interpretation of expert medical examination reports.

In terms of follow-up health management, the AI-MDT system can identify potential health risks, generate personalized health management recommendations based on different medical examination results, and provide users with a comprehensive health management plan including medical treatment, physical examination, diet, and exercise. In order to meet the post-examination management needs of medical examination users and the need to improve the service capacity of medical examination centers, the AI-MDT system added single-disease digital therapy, SCRM member management, and health management service modules to serve medical examination users in greater depth.

As the aging of China's population deepens and the public demand for health consumption continues to be released, the health examination market has also ushered in a period of rapid development. According to data from the “2024-2029 China Health Examination Industry Development Trends and Prospects Research Report” published by the China Research Institute of Research and Development, China's medical examination coverage rate in 2019 was only 30.5%, far lower than the medical examination coverage rate of more than 70% in developed countries represented by the United States and Japan in 2017, and as high as 95% in Germany.

According to statistics, in 2021, the number of annual medical examinations in China has already exceeded 500 million. As residents' health awareness is further raised, the demand for health management after the examination will continue to grow. By the end of 2023, the AI-MDT system has reached 650 medical examination centers. The number of users interpreting medical examination reports has exceeded 2.4 million, and the maximum daily processing capacity has reached 30,000 +. The AI-MDT system will usher in a broad market space.

The retail market is becoming increasingly competitive, and digital tools help reduce costs and increase efficiency

According to Zhongkang CMH data, the pharmaceutical sales scale in the Chinese pharmaceutical retail market reached 501.5 billion yuan in 2023, an increase of 3.3% over the previous year. According to data from the State Drug Administration, the total number of pharmacies in China increased from 489,000 in 2018 to 644,000 in 2022, and the average number of service people in the store was about 2,265 in 2023. In comparison, the average number of people served in US pharmacies was 6,250, and the average number of service people served in Japanese pharmacy stores was 2,299. The overall number of retail pharmacies in China is nearing saturation, and the retail market is becoming increasingly competitive.

In order to improve the efficiency of pharmacy operation and management, major pharmacy chains are exploring digital transformation. Zhongkang Holdings' upgraded and iterated SIC system integrates digital functions such as membership management, category management, intelligent marketing, chronic disease management, and pharmaceutical services to increase the per capita sales output of pharmacy chains, increase member activity and repurchase sales rate, and achieve cost reduction and efficiency. It provides multi-dimensional data decision-making references for pharmaceutical companies to achieve sales growth at retail terminals through store employee and member behavior data, sales data, and management data accumulated by SIC.

Furthermore, focusing on smart medical scenarios, Zhongkang Holdings has developed a scientific research SaaS platform based on deep learning and multi-modal big language models. The “full-course management digital therapy+private patient operation” patient care service model has benefited more than 250,000 patients. Hospitals and expert networks based on big data platforms and accumulated patient management services further provide customers with personalized digital products including scientific research collaboration, collaborative innovation in artificial intelligence+medical interdisciplinary research, and patient management product development based on AI technology.

Behind the trend, how to solve the many challenges in the data industry?

Currently, as a new type of production factor, data elements have been rapidly integrated into various aspects of production, consumption, circulation, distribution, and social service management, profoundly changing production methods, lifestyles, and social governance methods. In all aspects of healthcare, the widespread application of emerging digital technologies such as artificial intelligence, big data, and cloud computing will also effectively improve medical efficiency, medical inclusiveness and accessibility, and meet consumers' needs for personalized health management.

Zhongkang Holdings is deeply involved in the medical and health industry. It has laid out an extensive industrial cooperation network and leading big data processing technology on the supply side and operation side of data elements, and connected the data demand side through an industrial ecological platform, forwardly laid out the application of health industry data elements in different scenarios, pioneered data element profits in the industry, and proved the viability and sustainability of its business model with excellent performance.

In 2023, the customer range of Zhongkang Holdings covered major health industry participants such as pharmaceutical device manufacturers, pharmaceutical device retail, medical institutions, and innovative pharmaceutical companies. The number of enterprise-level customer cooperation was 1,288, an increase of 44.6% over 891 in the same period in 2022, and its product and service model were widely recognized by the market.

Zhongkang has established 38 health industry master databases covering the fields of pharmaceutical retail, industry supervision, medicine, pharmacy and life science. Through a complete data labeling system and mutual mapping knowledge maps, Zhongkang has created a set of structured health industry data standards. On this basis, the original data can be quickly cleaned and processed. Currently, the automatic cleaning rate of the machine exceeds 97%, the accuracy rate exceeds 99%, and the fastest response speed has reached T+1.

For example, based on an extensive pharmacy cooperation network and the technical advantages of rapid data processing, in response to customer demand for terminal marketing performance monitoring, the newly developed Lin Speed System by Zhongkang Holdings can rapidly feed back retail market data in T+3, dynamically track marketing activities, review and correct marketing plans in a timely manner, and improve the marketing input-output ratio.

In terms of data application, Zhongkang's self-developed “Tiangong-1” commercial data smart center and “Zhuomniao” smart health management and medical center can meet the needs of different application scenarios, use expertise, AI models, and insight capabilities to continuously dig deeper into data value to provide customers with efficient professional tools and services in digital business decisions, market layout, drug research and development, and customer management.

Compared with the development history of similar overseas companies such as Veeva System and Iqvia, Zhongkang Holdings is in the initial stages of industry development and enterprise development. With the continuous deepening and rapid development of China's healthcare digital industry, Zhongkang Holdings will inspire greater development potential.

In the context of emerging technologies such as big data, cloud computing, and artificial intelligence, which are expected to bring all-round transformation and upgrading to the healthcare industry chain, Zhongkang Holdings integrates digital applications with health industry development needs around a closed loop of full-life cycle health management centered on patient value, and has constructed a “to B first development curve, second development curve to C, and third development curve to R within 5 years”. 1) Focus on the ToB business, which has a leading edge, to provide customers with full-link digital services by further opening up “in-hospital+out-of-hospital” data, using data as the core resource to continuously iterate products and services; 2) Focus on the To-C health service business, using big data, artificial intelligence and cloud computing to build differentiated competitive advantages to serve the diverse post-examination health management needs of individual users; 3) Focus on TOR biomedical research and development to provide in-hospital formulation transformation, innovative project transformation, and overseas drug introduction through innovative digital services body Solutions to promote investment, introduction, R&D and marketing of drug innovation.

In the short term, as the US dollar interest rate hike cycle comes to an end and market sentiment shifts to optimism, the potential for recovery in the medical and pharmaceutical industry will gradually show; in the long run, the medical industry's boom will not abate. With core advantages such as data governance and application technology, rich health big data, and industrial resources, Zhongkang Holdings is expected to take the lead in benefiting from the development opportunities of the digital transformation of the industry.