摩根士丹利-中国-医疗保健行业-两家互联网医疗玩家研究：政策推动下不断演变的商业模式-2020.3.25-64页.pdf

Yolanda.HSean.WLaurence.TAlexis.YEthan.DAttractiveMORGAN STANLEY ASIA LIMITED+Yolanda HuEQUITY ANALYST+852 2848-5649Sean WuEQUITY ANALYST+852 3963-0755Laurence TamEQUITY ANALYST+852 2239-1753Alexis YanRESEARCH ASSOCIATE+852 2239-7953Ethan DingRESEARCH ASSOCIATE+852 3963-0546China HealthcareAsia PacificIndustryViewChina HealthcareChina Healthcare|Asia Pacific Asia PacificInitiating on Two InternetHealthcare Players:Evolving BizModels Amid Policy TailwindsAli Health and Ping An Healthcare are leading players in theonline realms of drug sales and patient consultations in China.Both companies aim to build closed-loop ecosystems withmultiple offerings,and are backed by powerful parents.Initiateboth at OW.We are very constructive on Chinas internet healthcare industry:Chinasinternet healthcare market generated Rmb20bn in 2018 sales.China presentsdistinctive opportunities,owing to the countrys large internet/smartphone-adeptpopulation base and advancing modern technologies.Internet healthcare notonly addresses some of the current systems pain points,but it can also exploitthe power of big data to drive more effective business decisions and propel newbusiness models.The gradual rollout of reimbursement coverage for onlineconsultations and potential relaxation of online prescription sales in the next 6-12 months broaden the playing field for internet healthcare companies,andshould drive robust growth over the next few years.The Covid-19 outbreak notonly spurs near-term demand for online healthcare services,but should alsoprompt favorable regulatory development and broader public awareness ofinternet healthcare services in the medium to long term.Industry landscape/key players:In Asia Primer:The Era of Internet Healthcare,we map out the industrys various subsegments,discuss opportunities and risks,examine valuation,and introduce the key players.The industry includes bothindividual-facing internet healthcare services(e.g.,online consultations,drug e-commerce,consumer healthcare),and business-oriented technologies(e.g.,AI-based drug discovery and early disease diagnosis,clinical decision supportsystems and IoMT internet of medical things).Initiate Ali Health and Ping An Healthcare,each at OW:We project 74%/103%sales/adjusted NI CAGRs,F3/19-22,for Ali Health,driven by robust GMV growthfor both self-operated and platform segments,rising commission rate helped byplanned asset injections from Alibaba Group,more contribution from innovativebusiness,and high operating leverage.Potential relaxation of online prescriptionsales is key potential stock price catalyst.For Ping An Healthcare,we thinkfurther re-rating will be driven by more corporate partnerships,ramp-up ofsubscription-based sales,and margin improvement helped by AI.We project a33%revenue CAGR,2019-22,and break-even in 2022.Risks to our outlookinclude unfavorable regulatory shifts,slower-than-expected consumer adoption,and irrational competition.Exhibit 1:Ratings and price targetsAli Health(0241.HK)RatingOWPrice targetHK$14.5Ping An Healthcare(1833.HK)RatingOWPrice targetHK$74.0Source:Morgan Stanley ResearchMorgan Stanley does and seeks to do business withcompanies covered in Morgan Stanley Research.As aresult,investors should be aware that the firm may have aconflict of interest that could affect the objectivity ofMorgan Stanley Research.Investors should considerMorgan Stanley Research as only a single factor in makingtheir investment decision.For analyst certification and other important disclosures,refer to the Disclosure Section,located at the end of thisreport.+=Analysts employed by non-U.S.affiliates are not registered withFINRA,may not be associated persons of the member and may notbe subject to FINRA restrictions on communications with a subjectcompany,public appearances and trading securities held by aresearch analyst account.1March 25,2020 11:05 AM GMT每日免费获取报告1、每日微信群内分享7+最新重磅报告；2、每日分享当日华尔街日报、金融时报；3、每周分享经济学人4、行研报告均为公开版，权利归原作者所有，起点财经仅分发做内部学习。扫一扫二维码关注公号回复：研究报告加入“起点财经”微信群。Order of Preference&Comps TableAli Health(0241.HK,OW,PT HK$14.5)Ali Health is one of the largest pharmaceutical e-commerce companies in China,by grossmerchandise value(GMV).Pharmaceutical e-commerce is one of the highly promisingsub-segments within the internet healthcare space,given its clear monetization model,low penetration,and high scalability.Continued prescription outflow from hospitals,and potential relaxation of prescription sales online(80%of all drug sales in China)would be game-changing catalysts for online drug sellers.An asset injection fromAlibaba Group,announced on 6th-Feb,would,if approved,entitle Ali Health to earn ahigher commission from FY21 onward,improving OPM by 0.6ppt in FY22,we estimate.While the government projects are largely unprofitable now,we see significant value inthe data generated,as well as in potential synergies with Ali Healths core e-commercebusiness.Although 2HFY20 growth may be subdued because of the Covid-19 disruption,Ali Healths structural growth story remains intact.We see further upside to the stock at5x FY3/22 P/S,a discount to Ping An Healthcare vs.a historical premium.Ping An Healthcare(1833.HK,OW,PT HK$74.0)Ping An Healthcare is a leading online consultation provider in China,with 315mregistered users,67m monthly active users(MAU),and 3m monthly paying users(MPU).Facilitated by a proprietary AI-based consultation system,the companys 1,400 doctorsperformed 729,000 consultations per day,on average,in 2019.In our view,thecompanys partnerships with Ping An Group and more financial institutions,and theadoption of a subscription-based model set it apart from most peers,allowing it tomonetize rather quickly.We appreciate its comprehensive offerings,unparalleled scale,and relatively mature 2B business.The gradual rollout of public reimbursement forsome online consultation services is a key industry growth driver.Per management,thecompany has observed a notable increase in user activities amid the Covid-19 outbreak,which could provide an incremental lift for 2020 earnings.We see further upside at thecurrent 6.6x 2021e P/S multiple,against a 36%19-21 sales CAGR,which is still belowglobal peers(e.g.,TelaDoc at 11.4x 2021e P/S against a 28%sales CAGR,as based onRefinitiv consensus estimates).Exhibit 2:Internet healthcare comp tableCompanyMkt CapEV3M ADTVSales CAGREPS CAGRPerformanceUSD mnUSD mnmn(19A-21E)2019A2020E2021E2019A2020E2021E(19A-21E)2019YTDChina internet healthcare companies0241.HKAlibaba Health Information Technology LtdHKD12.319,13618,7484172%15.0 x8.6x5.1xNMNMNMNM42%28%1833.HKPing An Healthcare and Technology Co LtdHKD63.58,7337,710836%10.7x8.8x6.6xNMNMNMNM106%5%YI.O111 IncUSD5.84744050.36-NANANANA10%-14%Global Internet healthcare companies2413.TM3 IncJPY2860.017,96116,92638%15.2x13.8x12.9x85.6x71.5x63.0 x17%124%-13%TDOC.KTeladoc Health IncUSD139.610,19410,117228%18.8x14.2x11.4xNANANANA69%67%LVGO.OLivongo Health IncUSD21.62,0431,651165%12.1x7.3x4.5xNMNMNMNM-14%HCAT.OQHealth Catalyst IncUSD22.5838658022%5.5x4.5x3.7xNANANANA-35%ROSEG.SZur Rose Group AGCHF131.41,1651,286018%0.8x0.7x0.6xNANA141.1x19%23%SAEG.BEShop Apotheke Europe NVEUR48.7699695024%0.9x0.7x0.6xNANANANA16%12%Average of Selected Comparables27%8.9x6.9x5.6x85.6x71.5x102.0 xNMLocalCurrent priceP/SP/ESource:Refinitiv consensus for non-covered companies,Morgan Stanley Research estimates for covered companies(bolded).Priced as of March 20,2020.Note:Ali Health,Alibaba Group and M3 Inc s fiscal year ends 31st Marchthe next year,hence we use FY20e,FY21e,and FY22e figures for 2019e,2020e,and 2021e.Apple Incs fiscal year ends 30th September,and we still use FY19,FY20e,and FY21e figures for 2019e,2020e,and 2021e.2 Internet Healthcare in ChinaInternet healthcare encompasses any health-related activities facilitated bytelecommunication technologies from consumer-facing healthcare services,such asonline consultations,pharmaceutical e-commerce,consumer healthcare,andappointment booking,to more innovative concepts,such as data-driven drug discoveryand disease diagnosis,IoMT,and even remote surgeries.Frost&Sullivan projects thatChinas internet healthcare market will reach sales of Rmb51bn by 2022,almost fivefoldthe market size in 2016.We believe China presents distinctive opportunities for internet healthcare companiesbecause of its:1)very large internet-and smartphone-adept population base,nurturedby internet and tech giants over the past decade;2)advancing technologies in 5G,bigdata analytics,and IoT;3)inefficiencies in its current healthcare system,such as severelyuneven distribution of quality healthcare resources,lack of effective triage,and lack ofprimary care;and 4)favorable regulatory backdrop,including the ongoing trend ofprescription outflow from hospitals,public insurance coverage for online consultations,and potential relaxation of online prescription sales.Still,the market remains highly fragmented thousands of applications are availablewith different value propositions and fee models.Yet,a handful of companies havestood out,each attracting over 100m registered users and moving close to break even.Over time,we expect to see consolidation within the different internet healthcaresubsegments,with leading players broadening their offerings to address multiplehealthcare needs.Given high industry growth and changing dynamics,we see plenty ofinvestment opportunities down the road.Exhibit 3:Competitive landscape:Key subsegments and players in the internet healthcare industryB2Cpharmaceutical e-commerceB2B pharmaceuticale-commerceOnline consultations&Appointment bookingInvestment implicationsOne of the largest sub-segment of internet healthcare industry by revenue nowF&S projectsa 60%+CAGR during 2017-22 of industry GMV to reach Rmb300bn by 2022Potential relaxation of online prescription sales will expand the addressable market to 5 times the current sizeConnectdrug producers to pharmacies to enhance sourcing efficiencyBenefitfrom prescription outflow to retail channel,which may account for 35%of drug sales in China by 2022 vs.25%now,perF&SOnline consultations constituted 5%of all consultations by volume now in China,and even less by revenueNHSA released guidance to include online consultations under public medical insurance in Sep-19 and re-emphasized itsimportance in Mar-20,the gradual rollout of which will increase consumer adoption over timeAddresskey pain points of Chinas healthcare system:shortage and uneven distribution of quality doctors,and lack of tieringsystemHealth managementChronic disease monitoring,self diagnosis,health knowledge bank,etcSubstantial addressable market,but no clear leader in China who succesfully integrates hardware technology with healthcareknowledgeDoctor servicesMonetize by providing marketing,recruitment,and other services to pharmaceutical companiesF&S projects online healthcare advertising spending to triple from 2017 to 2022,reaching Rmb5.2bn by 2022Hospital&Pharmacy ERPChina healthcare IT spending to grow at 10%p.a.in 2018-22 to reach Rmb67bn by 2022Beijing encourages the development of electronic prescriptions,which lay the foundation for internet healthcareInternet of Medical Things(IoMT)2C smartwearable devices to monitor health status in real time and prescribe highly personalized treatment,or 2B sensorsempowering hospitals to operate more efficientlyGlobal IoMT market estimated to be worth US$158bn by 2022,32%of which will be generated in APAC,per Deloite ConsultingAI-based drug discovery&early disease detectionAn emerging area thatleverages big data and deep learning technologies to enhance R&D efficiency or early disease diagnosis,such as target identification,biomarker development,combo therapy efficacy prediction,etcMany globally-leading pharma companies are invested in this areaA winner-takes-all business.The key asset isits doctor membersKey Chinese playersAli Heallth*JD Pharmacy800 FangJianK111 Inc*eHaoYao111 Inc*Yao Shi BangYPZDW.com123YPW.comPing An Healthcare*Ding XiangDoctorHaoDaiFu OnlineChunYu DoctorXYWY.comJianKang 160HomeincareDoctor TangWell TangKnowing TCM39 Self-diagnosisDing Xiang YuanMedLiveE-pocketTrusted DoctorsDosing AssistantDiagnosis AssistantWinning Health*DHC Software*Tencent DoctorworkWan Jia HealthcareHydeeDing Xiang CloudHua WeiXiaomi*XtalPiLaboratoryfor advanced medicineBGI*IflyTek*RogercamSource:Company websites,Morgan Stanley Research.*Denotes listed companies.3With the Covid-19 outbreak,Chinas National Health Commission(NHC)and NationalHealthcare Security Administration(NHSA)issued notices in Feb-Mar to further promoteinternet healthcare services,such as online consultations and e-prescriptions,and theirinclusion into public insurance.The pandemic outbreak has not only shifted some near-term outpatient medical demand online,but also prompted broader awareness ofonline healthcare services,which could persist longer term,in our view.B2C pharmaceutical e-commerce is one of the highly promising internet healthcaresubsegments,given its substantial addressable market yet low penetration,straightforward fee model,and superior scalability vs.traditional pharmacies.AmidBeijings push for prescription outflow,the retail channel will account for an increasingproportion of drug distribution in China,from 25%share by value in 2017 to 35%in 2022,per F&S estimates.Compounding that,online pharmacies will continue to take sharefrom physical pharmacies,in our view,because of their greater convenience,widerselection,and lower operating costs that leave room for them to offer more attractiveprices or invest in marketing.The New Rules for Drug Management,passed in mid-2019,has,in theory,paved the way for online prescription sales,pending detailed guidance.Should that occur,the addressable market for online drug sellers would swell fourtimes(vs.OTC-only),per F&S.Online consultations volume in China grew from 30m in 2012 to 148m in 2016,representing a 49%CAGR,but still only accounting for 2%of all consultations.Onlineconsultations could fill the missing role of family doctors to a certain extent,savingpatients the queueing time at hospitals while also alleviating doctors heavy outpatientburden.With the help of AI assistants,doctors could achieve much higher efficiencythan in traditional face-to-face dialogues.In September 2019,the NHSA promulgatedGuidance for Pricing and Reimbursement of Internet+Healthcare,setting guidance andencouraging provincial health bureaus to reimburse online consultations.We believethat a gradual rollout of reimbursement coverage will be a key driving force for wideradoptions.Well-established companies with strong local government relationships,good recognition,and robust IT systems to connect with the insurance payment systemwill likely be key beneficiaries,in our view.A key value of internet+healthcare is its ability to collect and process massive amountsof health-related data,a feat that private companies have traditionally found hard toachieve.By applying modern technologies,such as machine learning,5G,and IoMT,tosuch