JD Health recently announced its performance in 2021. The current situation of the development of internet medical platform and the problems it is facing emerge…
On March 28, JD Health announced that in 2021, the company achieved a revenue of 30.682 billion yuan, a year-on-year increase of 58.3%, and a net profit loss of 1.072 billion yuan, narrowed compared with the same period in 2020; The net profit under non IFRS indicators reached 1.402 billion yuan, a year-on-year increase of 91.5%. The company’s revenue growth is mainly due to the increase of medical products and revenueP align = “center” financial report of JD health in 2021
On March 30, JD health Hong Kong shares closed at HK $50.45 per share, up 2.02%.
prescription drug sales revenue increased rapidly
As the third listed enterprise of “Jingdong series”, behind Jingdong health is Jingdong’s system and customer accumulation that took more than 10 years to build, which has maintained a strong growth and profitability since its birth.
According to the data, from 2018 to 2021, JD health’s revenue was 8.169 billion yuan, 10.842 billion yuan, 19.383 billion yuan and 30.682 billion yuan respectively, and the revenue scale increased by 2.76 times in four years.
In recent years, the outbreak of covid-19 pneumonia has enabled JD health’s Internet medical business to develop rapidly.
According to statistics, China’s drug market has a scale of more than 1.7 trillion yuan, of which more than 85% is the sales of prescription drugs. Due to the outbreak of covid-19 epidemic, the demand for conventional drugs of patients has been pushed to the Internet.
In 2021, the policy of “selling prescription drugs on the Internet” was officially launched for comments.
At that time, Jin enlin, the new CEO of JD health, said at the performance meeting that the company would be ready for the official introduction of online prescription drug policy.
The capital market fully responded to this decision, and JD health’s share price rose 17.88% on the same day.
As one of the few internet medical enterprises in the industry with a complete chain of “medicine, medicine and circulation”, JD health’s prescription drug revenue was 500 million, 1.9 billion and 3.3 billion respectively from 2019 to 2021. In the total revenue, the proportion of prescription drug business is not high, but it grows rapidly, and the growth rate is also higher than that of other categories.
Behind the rapid development of Internet medicine, JD health has already arranged relevant cooperation with local governments and medical institutions to provide customized digital intelligence solutions.
Specifically, JD health co built Internet hospitals with the First Affiliated Hospital of Henan University of traditional Chinese medicine, Shougang Hospital of Peking University, the First Affiliated Hospital of Tianjin University of traditional Chinese medicine, Cangzhou Central Hospital, Taicang first people’s Hospital and other top three hospitals. At the same time, it also helped the national medical security information platform run smoothly in Suqian City, realizing the coverage of 3347 designated medical institutions and designated pharmacies in Suqian City, Serving nearly 5.29 million insured people in the city.
In terms of logistics, JD health has used 19 drug warehouses and more than 400 non drug warehouses nationwide, and 80% of self operated drug orders have reached the next day. Among them, the “self operated drug cold chain” of JD pharmacy has covered more than 200 cities across the country.
As of December 31, 2021, the number of active users of JD health in the year has reached 123 million, with a net increase of 33.6 million users on the basis of the same period in 2020.
limited involvement in internet medical field
At present, JD health’s income mainly comes from the sale of medicine and health products through its own business, followed by the collection of commissions and platform usage fees from third-party merchants and advertising service fees from suppliers and third-party merchants.
However, in terms of the current proportion of revenue, most of the revenue of JD health still comes from the sales of drugs and health products. In 2021, its revenue from selling drugs and health products reached 26.2 billion yuan, accounting for 85.3% of the company’s total revenue. Less than 15% of the remaining revenue is also related to drug sales, because JD health is also open to third-party businesses.
In addition, JD health’s online platform, digital marketing and other revenue totaled 4.5 billion yuan. The growth of this part of revenue was mainly due to the increase of advertising expenses put by merchants and the increase of commissions drawn by JD health.
It can be seen that although JD health belongs to the internet medical industry, its revenue mainly comes from drug sales, which does not particularly exceed the business scope of pharmaceutical e-commerce.
JD health did not disclose the income and net profit of Internet consultation in its financial report. It only said that the daily consultation volume increased rapidly, with an average of 190000 people per day.
In addition, the gross profit margin of JD health also decreased. According to the data, the gross profit of JD health in 2021 was 7.2 billion yuan, with a gross profit margin of 23.5%, down from 25.4% in 2020, mainly due to changes in product mix and promotion.
Nevertheless, as one of the leaders in the internet medical industry, JD health has ushered in a phased victory in performance compared with Ping An Health and micro medicine, whose net profit loss is still expanding.
JD health, like Alibaba health, which has turned losses into profits, relies on a powerful e-commerce logistics platform. From the results, this may be a reliable guarantee for internet medical enterprises to run forward.
industry competition enters the second half
With the release of a new round of annual reports, the market generally expects internet medical treatment to enter the second half from virtual to real.
For a long time, the imbalance of offline medical resources has been a social problem. According to the statistics of the National Health Commission, in 2020, the total number of hospitals in China was about 35394, of which tertiary hospitals accounted for only 8.5%, but served 46.9% of patients.
Despite the rapid growth of Internet hospitals in China in the past two years, many “built without use” can not effectively realize interconnection. Most of the operated internet medical platforms still lack high-quality doctors and medical resources, so it is difficult to provide patients with truly reliable one-stop medical and health services.
According to Jost Sullivan’s prediction, by 2025, the scale of China’s Internet medical and health market will grow rapidly to 1.5 trillion yuan, and the penetration rate will increase from 4.3% in 2020 to 13.2%.
With the rapid development, Internet medicine has also ushered in strict supervision. Last year, the medical administration and hospital administration of the National Health Commission publicly solicited opinions on the detailed rules of Internet diagnosis and treatment, and proposed that artificial intelligence software should not be used to replace doctors. At the same time, it is required to establish an evaluation and exit mechanism for medical institutions, and require internet hospitals that rely on physical medical institutions to obtain the practice license of medical institutions to be verified once a year.
Overall, the first wave of bonus period of Internet Medical has passed, and the online Internet platform is gradually moving towards the platform period with the peak of C-end traffic and value transformation. It is urgent to find new growth points.
Since 2021, the share prices of JD health and other internet medical enterprises have fallen sharply. JD health’s share price reached a high of HK $174.9 per share in February 2021, but then went all the way down, once falling to HK $31.4 per share in March this year. To this end, the company announced the launch of a repurchase plan of up to HK $3 billion at the same time as the financial report.
Huatai Securities Co.Ltd(601688) believes that the head company with the advantages of hard core technology and supply chain, mature and stable business model and rich medical and health ecological resources is expected to achieve higher profit margin.
