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On August 10, the Health Industry (International) Ecological Conference (hereinafter referred to as "Health Industry Conference") was unveiled in Boao, Hainan. Wang Puchong, the core local business CEO of Meituan, shared Meituan's new thinking on how the pharmaceutical and health industry can achieve the transition from "survival" to "prosperity".

"To maintain the existing stock is to survive, to seize the incremental growth is to thrive, and there are many areas in the process where we need to change, which is called seeking change." As the O2O model matures, pharmaceutical companies and pharmacies gradually realize that digitalization is not just about moving drugs online, but behind it is an update of a set of operating concepts. "In 'seeking prosperity', we want to help everyone with digitalization and intelligent capabilities. Meituan hopes to become a small helper for pharmaceutical merchants to maximize the benefits of online and offline operations." Wang Puchong said.

In order to help pharmaceutical companies build brand influence and pharmacies improve service efficiency, Meituan Medicine has launched versions 1.0 to 3.0 of the "Takeoff Plan" since 2021. At this SIP Conference, a new digital solution "HEALTH" business growth model will also be released. It is reported that Meituan Medicine has accumulated more than 300 million transaction users, covering 250,000 pharmacies, providing more than 80,000 kinds of medicines to users in nearly 3,000 cities, counties and flags across the country, and continues to build one-stop online health service capabilities.

The pharmaceutical industry has a “K-shaped differentiation” and needs to understand digitalization better to “prosper”

On the morning of August 10, Wang Puchong introduced in his speech at the 17th SIP Conference that in the process of consumption structure transformation, lowering prices, streamlining stores and reducing costs are the survival strategies of most retailers. According to research data, the recent average customer price in industries such as home appliances, beauty, catering and hotels has dropped by 4.5%-12% year-on-year.

At the same time, the current pharmaceutical and health industry also presents a typical "K-shaped differentiation" characteristic. It is difficult to see an overall decline or overall rise, but the sub-sectors still have development potential. Zhongkang Technology CMH terminal market monitoring data shows that the growth rate of the pharmacy terminal drug market in 2023 is 1.1%, but the slowdown in the growth of drug retail is countered by the strong momentum of the consumer medical industry and the continued growth of the share of traditional pharmacies and pharmaceutical companies in O2O.

According to Meituan data, in the first half of 2024, orders for consumer medical and medical beauty services on the platform, including dentistry, ophthalmology, etc., increased by 39% and 43% year-on-year respectively. Users connect to high-quality health service supplies through online platforms, pursuing a "healthy" life and also hoping to live a "beautiful" life.

▲Meituan’s core local business CEO Wang Puchong delivered a keynote speech at the SIP conference.

Therefore, Wang Puchong believes that digital upgrading is a key variable in the transformation period of the pharmaceutical and health industry, which can achieve the transition from "seeking survival" to "seeking change" and then to "seeking prosperity". Specifically, with the formation of consumers' online purchasing habits, the increase in the participation of retail pharmacies, and the gradual liberalization of online medical insurance payments, opportunities will be tilted towards players who "know more about digitalization". To become a "prosperous" enterprise, it is necessary to have four capability quadrants, namely: advanced product strength, new forms of organizational capabilities, user thinking, and digital intelligence capabilities.

Wang Puchong said, "The demand has always been there, but the way to realize the demand has changed. The core is to redesign your business model and have new solutions to meet past needs." Just as consumers' demand for certain fulfillment gave birth to forward warehouses, the aging population trend gave birth to community day care centers, the O2O scale of pharmacies and pharmaceutical companies will continue to grow in the future, and more imaginative new business formats will emerge in the pharmaceutical industry.

Join hands with pharmacies and pharmaceutical companies to help build a "15-minute medical and health service circle"

"Pharmaceutical companies and pharmacies need to realize commercial value based on social responsibility and find their own position. This is the key." Wang Puchong said that the overall health industry can be divided into two layers of value structure. The first layer is for basic medical insurance for all people. This layer needs to maintain the user scale; the second layer is development and profit, which comes from 300-400 million families with purchasing power. Especially with the popularization of the concept of "being the first person responsible for your own health", the health management behavior of community residents will be more diversified.

Statistics show that by the end of 2023, the average number of people served by each pharmacy in China will drop to 2,155, while the World Health Organization recommends 2,500 people per store as the saturation standard. In this context, how to tap into the incremental market from the "seeking for prosperity" has become a major issue for industry players.

Take the instant retail of "30-minute health home delivery" as an example. As the consumption chain becomes shorter, users can experience the ultimate convenience, and then expand from emergency drug needs to daily health care needs, and user stickiness becomes stronger. For industry partners in the upstream of pharmaceutical retail, it can also further enhance drug accessibility and compliance.

When people get used to this more certain healthy lifestyle, retail entities within the "15-minute medical and health service circle" are also activated, including different store formats such as community stores and hospital-side stores, as well as branded pharmaceutical companies in the supply chain. Earlier public reports showed that three months after Merrill Lynch launched its new product, the medical antipyretic patch, on Meituan Pharmaceutical's instant retail platform, the antipyretic patch jumped to the top 2 antipyretic patch category on the platform, and Meituan Pharmaceutical has become the largest single channel for consumers to recognize its antipyretic patch.

It is reported that the theme of this year's SIP Conference is "Moving forward under pressure - breaking and establishing from existing to incremental". On the one hand, massive health needs are not met, and on the other hand, the growth of the health industry is sluggish. Once the theme was released, it aroused strong resonance in the industry.

In this regard, Wang Puchong said that Meituan's pharmaceutical industry and the industry are symbiotic and prosperous. "In everyone's mind, Meituan may be a food delivery company or an O2O company. In the pharmaceutical industry, we always firmly hope to be everyone's digital and intelligent helper. Meituan has invested a lot in this area. We have hundreds of R&D personnel in pharmaceuticals alone, we have our own AI big model, and 300 million consumers who buy medicine on Meituan. Meituan hopes to contribute to the industry from 'birth' to 'prosperity' and help build a '15-minute medical and health service circle'."