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Yan Shuo, trainee reporter of 21st Century Business Herald, reports from Beijing

According to media reports, Ant Group is planning to acquire Haodaifu Online. At the same time, an insider of Alipay Medical Health stated that the two parties had reached relevant business cooperation at the end of June this year.

In this regard, the reporter of 21st Century Business Herald contacted several Ant Group staff members, and they all said that they had nothing to respond to at the moment.

It is worth mentioning that this is not the first time that Good Doctor Online has been rumored to be acquired. In August last year, there was news that a major Internet company wanted to acquire Good Doctor Online and had already made an offer. In April this year, there was news that Ali Health was negotiating with Good Doctor Online on the acquisition, and the two sides had made substantial breakthroughs in the negotiations on some key issues. At that time, both parties denied it at the first time.

"It turns out that there have always been rumors about Ali Health and Good Doctor Online in the market, and everyone feels that it is quite appropriate because Ali Health is deeply involved in the field of Internet medical care. But now there are rumors that Ant will acquire Good Doctor Online, which does not seem to be a good match. The key reason is that Ant wants to focus on the service field." Zhao Heng, founder of medical strategic consulting firm Latitude Health, told the 21st Century Business Herald reporter that in the future, Good Doctor Online can still have good cooperation with Ali Health, but there will be certain differences between the two.

At the same time, Zhao Heng pointed out that due to the rigid demand for medical care and the reliability of offline services, although the scale of online medical service revenue continues to grow, the cost of acquiring customers has always been high, and there is still a lack of companies that can make sustained profits. Even with significant cost cuts in 2023, most companies continue to lose money, and only a few companies have a single quarter of profit.

Now that Haodaifu Online has chosen to rely on Alipay, which has huge C-end traffic, what kind of imagination space will it open up for the development of Internet medical care?

The question of commercialization

If we count the time when the first version of Good Doctor Online was launched, Wang Hang and Good Doctor Online have been together for 18 years by July 17 this year. As it becomes an adult, Good Doctor Online begins to tell another story.

Looking back at the development of Haodaifu Online, it is not difficult to find that in the first few years of its establishment, Wang Hang did not consider the issue of commercialization. The team focused on improving service quality, which laid a solid foundation for its subsequent good reputation, but also laid hidden dangers for its sustainable development.

After receiving its Series C financing in 2015, Haodaifu Online has been considered a leader in Internet healthcare. Until now, despite fierce competition, the usage rate of Haodaifu Online among doctors is still in the first echelon. A survey shows that among various online consultation platforms, the usage rate of Haodaifu Online platform exceeds 30%. In comparison, among different platforms, the proportion of chief doctors who often use Haodaifu Online is higher.

As an online consultation platform, Haodafu Online has always been a special existence in the field of Internet medical care. For many years, Haodafu Online has adhered to the "three no's" strategy, that is, no advertising to patients, no opening or investment in offline hospitals, no self-built pharmacies and no selling of drugs, and simply relying on medical service payment.

Wang Wenhua, partner of CIC Insights Consulting, said in an interview with a reporter from 21st Century Business Herald that by sorting out the profitability of my country's Internet medical enterprises, it can be seen that the main business models of profitable enterprises include pharmaceutical e-commerce, service income, Internet hospitals, technology output and platform sharing, O2O model and B2B model. The business models of loss-making Internet medical enterprises include online consultation platforms. Due to policy restrictions, the platforms cannot issue prescriptions, resulting in low user stickiness and low customer orders for light consultations that only provide some information consultation services, and ultimately fail to achieve corporate profitability.

A reporter from 21st Century Business Herald noticed that when you select the "Me" interface in the Good Doctor Online APP, the entrance to "Help Good Doctor" will pop up in the lower right corner, which includes two options: "Encourage us" and "Give us advice." When you select "Encourage us," the words "Come on for Good Doctor Online" will appear, and users can choose to give free or 5 yuan, 20 yuan, 50 yuan or other amounts of rewards. Since August 2022, more than 800 people have given online encouragement.

There are also some details that deserve attention. The reporter noticed that the Haodaifu Online APP is one of the few online medical platforms that does not have splash screen ads.

However, under the “three no’s” strategy, Good Doctor Online will inevitably face a realistic problem, namely, how to achieve sustainable development. Wang Hang and Good Doctor Online must answer the question of commercialization.

At the end of 2022, a letter from Wang Hang to all employees circulated in the industry, which pointed out that Good Doctor Online was about to adjust its strategy and organizational structure. The specific direction was to transform from focusing on production and research in the start-up period to market development. Wang Hang hoped that the company could get rid of its dependence on financing and be self-sufficient.

On June 8 of the following year, Wang Hang issued a "Company's Latest Situation Statement" within the company, pointing out that since a series of business adjustments began in December 2022, the company's losses have improved rapidly, but facing huge pressure from shareholders to withdraw their investment and request redemption, the adjustment plan did not meet expectations.

Subsequently, there were repeated reports in the market that Haodaifu Online was being acquired.

A reporter from 21st Century Business Herald found that when selecting "Consultation" through the "Health Care" portal of Alipay, a jump to "Good Doctor Online" appeared on the pop-up interface. After clicking in, the page layout and specific content were exactly the same as those of the Good Doctor Online APP. At present, Good Doctor Online still exists in the form of a mini-program or third-party platform. In the "Consultation" interface, the main service is still provided by Ali Health.

"In the future, the biggest difference between Haodaifu Online and Ali Health may be that Haodaifu Online provides services more from the perspective of payment, that is, its services are more aimed at improving users' payment stickiness. Alipay has always been centered on payment. Now, Ant continues to make efforts in the service field and wants to maintain user stickiness by providing various service scenarios. As far as I know, Ant has now established a medical and health division, which it did not have before." Zhao Heng said.

How to break the deadlock?

How to better realize commercialization is not a problem unique to Haodaifu Online, but a problem that the Internet medical field must inevitably face.

Chen Liteng, a digital life e-commerce analyst at the E-commerce Research Center of the China Internet Network Information Center, told the 21st Century Business Herald reporter that it is difficult for Internet medical services to make profits. First, medical services have high professional and safety requirements. At the same time, medical services involve multiple links and multiple participants. The coordination and information sharing between these links and participants are important challenges facing Internet medical services. In addition, medical services also need to face complex medical disputes and legal liability issues.

At present, under the influence of multiple internal and external factors, some of my country's Internet medical companies have shown signs of development fatigue. In addition to Haodaifu Online, which has been repeatedly exposed to layoffs and rumors of being acquired, 1drug.com, the first Chinese Internet pharmaceutical company to be listed in the United States, has launched a delisting plan; Kangaiduo, the once-star pharmaceutical e-commerce company, is on the brink of a cliff; and Chunyu Doctor has also fallen into silence after its peak.

The same is true abroad. After Teladoc laid off employees in early 2023, it laid off employees again in January this year; Optum, a subsidiary of UnitedHealth, announced layoffs in mid-to-late April this year; Walmart and Walgreens also closed stores and laid off employees.

It is worth mentioning that judging from the 2023 financial report and 2024 performance forecast of Teladoc, the leader in Internet medical care, the high-growth era of Internet medical care has ended.

According to the financial report, Teladoc's revenue in 2023 will be $2.6 billion, an increase of 8% from $2.4 billion in 2022. This is the first time that Teladoc's revenue growth has been less than 10% since its listing. At the same time, Teladoc's revenue growth forecast for 2024 is only less than 5%.

In Zhao Heng's view, the problem of a sharp decline in growth rate faced by Teladoc applies to all Internet medical companies. This is an inevitable trend after an immature market is quickly matured by the epidemic.

"Although the usage rate of online consultations is still much higher than before the epidemic due to the high base and user habits, the market clearance in the digital medical field continues." Zhao Heng said that the demand for digital medical care began to decline after reaching its peak in 2021, but the supply brought by previous investments continued to pour into this market, resulting in a clear oversupply.

From the perspective of market size, the data from the "2019-2024 Internet + Healthcare Market Prospects Research Report" released by the China Business Industry Research Institute shows that the market size of China's Internet healthcare industry will reach 309.9 billion yuan in 2022, a year-on-year increase of 39%. Analysts at the China Business Industry Research Institute predict that the market size of my country's Internet healthcare industry will increase to 419 billion yuan in 2024.

It can be seen from this that although the market size may exceed 400 billion, its growth rate has already slowed down.

Although the liquidation of the digital healthcare sector is still ongoing, Zhao Heng believes that Internet healthcare companies, including online consultation platforms, are not destined to be acquired or closed. "From the current perspective, these companies can survive on their own. The biggest problem of Good Doctor Online is that its shareholders want to sell, but the founder himself probably does not want to sell. Therefore, if there is no shareholder demand and the company can make a profit, it can survive well."

In Wang Wenhua's view, there are still many pain points that need to be solved in the commercialization of Internet medical care. First of all, the ability to integrate the industrial chain determines the business model that Internet medical companies can eventually achieve. The genes of different Internet medical companies entering this field are very different. Only by integrating resources based on their own advantageous resources can they achieve revenue growth and profitability. Secondly, companies need to explore diversified service models, such as combining the online advantages of the Internet with offline services, providing personalized health management solutions, etc., so as to increase revenue sources.

"In addition, in terms of market education, it is necessary to improve the market's awareness and acceptance of Internet medical care, enhance traffic retention and conversion, and gradually cultivate users' habits of using tools through the Internet through the continuous accumulation of user sedimentation and the penetration of user behavior." Wang Wenhua said.