Expert Insights Christian Schmid: Digital health will shift the focus from treatment to prevention
How is health tech opening up new horizons for healthcare in China?
Christian Schmid: Since earlier this year the country is pushing the so called Internet Plus healthcare initiative for two reasons:
- Increase the quality, and
- Increase affordability.
Health tech helps with both regards. On the one side technology helps to make better use of existing medical resources in the system to increase quality in areas, mostly rural, where quality has not been the highest in the past. On the other hand online diagnostic services through telehealth solutions help to increase efficiency in the system and therefore increase affordability.
When hearing about what solutions will come onto the market, one could get the wrong impression that robots will push doctors out of the system. We don’t think so.
How does China compare to its global peers in the development and application of digital health?
CS: Since the challenges in most regions and countries are so diverse, a plain comparison would not do the job. China for example, due to its massive size, has the challenge to better distribute health services, increase efficiency and affordability. The US, for example, on the other side needs to find better solutions quick because health spending is about the massive equivalent of 18% of GDP and fast growing. Compared to that health spending in China is only about 5.5% of GDP. What we can say is that governments’ and regulators’ focus on introducing more technology based solutions into healthcare systems has just started and is very high up on the agenda around the world.
What are some of the challenges that cannot be solved through digital health?
CS: The answer here is very short: replacing doctors, which is good. When hearing about what solutions will come onto the market, one could get the wrong impression that robots will push doctors out of the system. We don’t think so. We think that digital health will help to make the system more efficient, move the focus from pure treatment when patients are already sick to more prevention which allows us better manage health and last but not least help doctors to generate better results.
Software, hardware, and services are the key segments of the digital health market. Which segment(s) do you think China will likely become a global leader in and why?
CS: Since challenges mostly are regional by nature every region will put its focus differently. However, China has proven in the past already that it has a broad and deep knowledge base and is therefore able to come up with leading solutions in all sub sectors. If we compare it to the three team building phases storming, forming, performing then digital health is still in the storming phase. So, time will tell.
Name 3 things investors should keep in mind when investing in digital health in China:
CS: First, is to get the best exposure to the theme investors who find companies that derive the majority of their business from digital health solutions, which is also one of our thematic investment teams’ key principles. We call them the ‘pure players’. Second, the digital health journey has only started and will most likely last for very long. To best access the potential profits from that journey investors should have a long term conviction about the theme. The third point is that since digital health is still in the ‘storming’ phase investors also need to be able to bear risks of investing in companies which sometimes are relatively early in the business cycle.