In-depth analysis of chronic disease management business model

With the continuous improvement of China's economic and social development and the level of health and health services, the increasing life expectancy per capita of residents, the prolongation of the survival period of patients with chronic diseases, coupled with the aging of the population, urbanization, the accelerated process of industrialization and the prevalence of behavioral risk factors on the incidence of chronic diseases, China's base of patients with chronic diseases will still continue to expand, the situation of prevention and control of chronic diseases is still grim.

But at the same time, as China's medical facilities continue to improve, the number of medical institutions is also climbing, pharmacies are gradually carrying out chronic disease management layout, the residents also gradually have a health awareness, through health checkups and other means of preventing chronic diseases. In addition, the rise of the Internet chronic disease management mode also greatly facilitates patients' chronic disease management and treatment.

Major listed companies in the chronic disease management industry: Ping An Good Doctor (01833.HK), Ali Health (00241.HK), Yuyue Medical (002223), etc.

The core data of this article: The number of major chronic disease diseases and the number of people suffering from them in China, the number of healthcare institutions, the number of retail pharmacies, and the number of patients with chronic diseases.

1, the demand side (patients and disease profile)

-- chronic disease patient base will continue to expand

According to the "Chinese residents Nutrition and Chronic Disease Status Report (2020)", in 2019, the prevalence of hypercholesterolemia in China's residents aged 40 years and older was 8.2%; the prevalence of COPD was 13.6%, compared with 9.9% in 2015, an increase of more than one-third. Prospective estimates of the prevalence of hypercholesterolemia and chronic obstructive pulmonary disease in 2020 in China's residents aged 40 years and older continue to improve over the previous year.

With the continuous improvement of China's economic and social development and health care services, the increasing life expectancy per capita, the continuous extension of the survival period of patients with chronic diseases, coupled with the aging of the population, the accelerated process of urbanization, industrialization and the prevalence of behavioral risk factors on the incidence of chronic diseases, the base of patients with chronic diseases in China will continue to expand. At the same time, the proportion of deaths due to chronic diseases will continue to increase, and in 2019, deaths due to chronic diseases in China accounted for 88.5% of total deaths, of which the proportion of deaths due to cardiovascular and cerebrovascular diseases, cancers, and chronic respiratory diseases was 80.7%, and the work of prevention and control is still facing a huge challenge. In addition to death, chronic diseases are often accompanied by complications, greatly affecting the quality of life of patients. Take diabetes as an example, the long-term accumulation of damage to small retinal vessels will lead to retinopathy, and may lead to blindness, the survey shows that the proportion of hospitalized patients with diabetic eye complications is 34.3%, about 1.1% of patients with double blindness.

Data show that China's chronic disease patients, hypertension alone has a prevalence of more than 300 million people. Overall, the number of people suffering from chronic diseases totaled 845 million in 2019. Considering that this part of the patient has an overlapping population, the forward-looking estimate is that China's chronic disease population in 2019 is about 500-600 million people, with a prevalence rate of about 35%-45%. It is predicted that the prevalence of cancer, diabetes and hypertension will increase to 0.7%, 14.4% and 27.8% respectively by 2026.

China's Medium- and Long-Term Plan for Preventing and Treating Chronic Diseases (2017-2025), released by the General Office of the State Council, mentioned that by 2025, risk factors for chronic diseases will be effectively controlled, and efforts will be made to reduce premature death rates due to cardio-cerebral and cerebral vascular diseases, cancers, chronic respiratory diseases, and diabetes in people aged 30-70 years by 20% compared with that of 2015.

Future, the pressure of population aging will further aggravate the burden of chronic diseases in China. China is in a stage of accelerated population aging, with 191 million people aged 65 years and older in 2020, accounting for 13.5% of the total population. The number is expected to reach 329 million by 2050, accounting for 23.6 percent.

--The premature mortality rate of major chronic diseases has been declining year by year

The premature mortality rate of major chronic diseases has been declining year by year, and the loss of labor force due to chronic diseases has been significantly reduced. According to the Report on Nutrition and Chronic Disease Status of China's Residents (2020), in 2019, the premature mortality rate of China's residents due to four categories of major chronic diseases, including cardiovascular and cerebral vascular diseases, cancer, chronic respiratory diseases, and diabetes, was 16.5%, a decline of 2 percentage points from 18.5% in 2015, realizing the 2020 national planning goal ahead of schedule.

--The situation of chronic disease prevention and control remains grim

According to the Report on Nutrition and Chronic Disease Situation of China's Residents (2020), unhealthy lifestyles are still prevalent among residents. The ratio of dietary fat to energy continues to rise, and for the first time in rural areas, the recommended upper limit of 30% has been exceeded. The amount of salt and oil used for cooking per capita per day in households is still much higher than the recommended value, while the proportion of residents eating out continues to rise, and the oil and salt in canteens, restaurants, and processed foods should be a cause for concern. The problem of children and adolescents regularly consuming sugary drinks has been highlighted, while the smoking rate of people over 15 years old and the drinking rate of adults within 30 days are more than a quarter, and the problem of insufficient physical activity is widespread.

In addition, the problem of overweight and obesity among the population has been highlighted, and the prevalence/incidence of chronic diseases is still on the rise. The overweight and obesity rate of urban and rural residents of all age groups continues to rise, with more than half of adult residents overweight or obese, and the overweight and obesity rates of children and adolescents aged 6-17 and under 6 reaching 19% and 10.4% respectively. The prevalence of hypertension, diabetes, hypercholesterolemia, chronic obstructive pulmonary disease and the incidence of cancer have increased compared with 2015.

In the face of the current still severe situation of chronic disease prevention and control, the CPC Central Committee and the State Council attach great importance to the implementation of a comprehensive strategy for the prevention and control of chronic diseases into the "Healthy China 2030" planning program, the rational diet and the prevention and treatment of major chronic diseases into the Healthy China initiative, further focusing on the current national face of the main nutritional and Chronic disease problems faced by the nation, and to synergistically promote them at three levels: government, society, and individuals (families), so as to actively and effectively respond to the current challenges and promote the realization of health for all people through measures such as popularizing health knowledge, participating in health actions, and providing health services.

Currently, China's cancer spectrum is in the stage of transition from developing countries to developed countries, with lung, colorectal and breast cancers, which are highly prevalent in developed countries, on the rise, and digestive cancers, such as esophageal, gastric, and liver cancers, which are highly prevalent in developing countries, declining compared with those in the 1970s and 1980s, but the overall burden is still heavy, and the overall situation of prevention and control of cancers is still relatively severe. China's five-year cancer survival rate has increased from 30.9% to 40.5% in the past decade, but there is still a gap with developed countries. To promote cancer screening and early diagnosis and treatment, we need to expand the supply of screening services, improve the capacity of screening services, actively explore and popularize appropriate technologies for screening, and raise the public's awareness of cancer prevention.

--Chronic diseases are characterized by "three highs and three lows"

With the rapid development of China's economy and society, chronic non-communicable diseases in general show a high morbidity and mortality rate, Disability rate is high, while the knowledge rate, treatment rate, control rate is low "three highs and three lows" phenomenon. The main pain points are centered on low patient awareness and low control rates, mainly due to the small coverage of disease diagnosis, uneven diagnostic standards and poor awareness of prevention among patients themselves.

Taking hypertension as an example, China's hypertension awareness rate of residents aged 18 years and above was 34.5% in 2007, and estimated to be 45.5% in 2020; China's hypertension treatment rate of residents aged 18 years and above was 24.8% in 2007, and estimated to be 43.6% in 2020; China's hypertension control rate of residents aged 18 years and above was 26.9% in 2007, and estimated to be 42.1% in 2020; China's hypertension control rate of residents aged 18 years and above was 26.9% in 2007, and estimated to be 42.1% in 2020. In 2020, it is estimated to be 42.1%. It can be seen that China's hypertension awareness rate and treatment rate of residents aged 18 years and above from 2007 to 2020 have been greatly improved, but the overall level is still at a relatively low level.

2, the supply side

China's chronic disease management market involved in a large number of subjects, mainly including: pre-diagnosis of health management organizations and physical examination institutions, asking diagnosis process of medical institutions and offline pharmacies.

--Chronic disease diagnosis and treatment system gradually improved, the number of medical institutions climbed

With China's sustained and rapid development of the national economy and the continuous improvement of the living standard of the residents, people's demand for health services is also growing, medical services and pharmaceutical market rapidly expansion.

In 2020, the total number of medical and healthcare organizations nationwide reached 102.3, an increase of 1.54 from 2019. Among them: the number of ****owned hospitals will be 35,000, an increase of 0.1 million from 2019; the number of primary healthcare organizations will be 971,000, an increase of 17,000 from 2019; and the number of professional public ****health organizations will be 14,000, a decrease of 0.2 million from 2019.

At the end of March 2021, the number of health care organizations nationwide reached 1,026,000 units. Compared with the end of March 2020, the number of healthcare institutions nationwide increased by 17,273, of which: hospitals increased by 1,170, primary healthcare institutions increased by 17,572, and professional public **** health institutions decreased by 1,624.?

At the end of March 2021, there were 36,000 hospitals, of which: 12,000 were public hospitals and 24,000 were private hospitals. Compared with the end of March 2020, there were 76 fewer public hospitals and 1,246 more private hospitals.

There are 973,000 primary healthcare institutions, including: 35,000 community health service centers (stations), 36,000 township health centers, 609,000 village health offices, and 263,000 clinics (infirmaries). Compared with the end of March 2020, the number of community health centers (stations) has increased, township health centers have decreased, clinics have increased and village health offices have decreased.?

Professional public **** health institutions 14,000, of which: the Center for Disease Control and Prevention (CDC) 3,387, health supervision institutes (centers) 2,936. Compared with the end of March 2020, there were 13 fewer CDCs and 59 fewer health surveillance institutes (centers). There are 0.3 million other institutions.

From the perspective of chronic disease management, the hospital end is the most important treatment channel for chronic disease patients. While the number of medical institutions continues to climb, the healthcare system should also be improved for the management of chronic diseases to make it easier for patients to seek treatment. The main means of treatment for chronic diseases is long-term medication, especially prescription drugs. But for patients with chronic diseases such as hypertension, hyperlipidemia and diabetes, there is still a considerable distance between them and prescription drugs.

Patients with chronic diseases often have to take medications regularly over a long period of time to control their conditions, but most of the medications need to be professionally medically diagnosed and available through prescriptions. Although the hierarchical diagnosis and treatment is still continuing to promote, but not completely spread landing, the patient through the side of the medical institutions to obtain drugs with a certain degree of difficulty. With high technical barriers and unbalanced supply of good medicines, consumers' access to medicines is even more limited. As a result, the common scenario is that many people have to go to the hospital early in the morning to queue up and register. Prescribe a drug, the amount of drugs basically maintained in a month, if the patient lives near the community hospitals or community hospitals do not have a full range of drugs, prescription drugs also had to go to the big hospitals to solve the problem, the old patients become "difficult to prescribe drugs.

In March 2021, the National Health Commission issued the Notice on the Management of Long-term Prescription for Chronic Diseases, clarifying the catalog of diseases for which long-term prescriptions can be issued, the scope of medication, the management system, and the requirements for safety notification to reduce the number of times a patient picks up medication. For chronic disease patients with stabilized conditions, medicines can be prescribed for up to 12 weeks at a time. This means that most patients with chronic diseases can reduce the number of times they have to run to the hospital for prescriptions compared with the past, and is a step forward in the exploration of the chronic disease management model of China's medical service organizations.

--Pharmacies to carry out chronic disease management layout

In 2009-2018, the number of retail pharmacies in China as a whole showed a growing trend. The State Drug Administration has recently released the 2019 Annual Report on Drug Supervision Statistics, which shows that as of the end of 2019, the country*** has 544,000 enterprises licensed under the Drug Operation License, of which 6,701 are retail chain enterprises, and 290,000 retail chain enterprise stores; 234,000 retail pharmacies. Compared with the data at the end of November 2018 (5,671 retail chains, 255,000 chain stores; 234,000 retail pharmacies) the total number of pharmacies in 2019 increased by 7.16% or 35,000 year-on-year, of which the chain stores increased by 13.73%, which is a new high since 2016. On the contrary, single-unit stores did not fare as well, recording zero growth in 2019. The chainization rate rose to 55.34% from 49.4% in 2016, with the number of chain stores continuing to outnumber single-unit pharmacies.In 2020, the number of retail pharmacies is estimated to be 605,000.

Offline pharmacy chains are also extremely keen on the chronic disease management sector. Jianzhijia (605266.SH) revealed in its quarterly report this year that since the end of last year, the company has been promoting its store chronic disease management big data program, providing customers with free rapid self-testing of blood sugar, blood pressure, uric acid, blood lipids and other important items related to chronic diseases, as well as health management services.

China's four largest pharmacy chains are Dasanlin, Common People's Pharmacy, Fung Pharmacy and Yixintang, which have also launched layouts in chronic disease management.

--Residents' health awareness, health checkup institutions show a spurt of development

In recent years, the national standard of living has improved, and residents' health awareness has been rising, gradually realizing the importance of chronic disease management. As well as the impact of consumption upgrading, many residents began to take the initiative to prevent chronic diseases through health checkups and other means. Therefore, the national health checkup industry has a strong market demand, and health checkup organizations are showing a trend of blowout development.

According to the Health Management Research Center of Central South University and the Zhongguancun Xinzhiyuan Health Management Research Institute Social Science Literature Press*** released the 2019 Health Management Blue Book (hereinafter referred to as the Blue Book), which shows that China's health checkups reached 575 million in 2018, accounting for 42% of the entire population. According to the statistics of the National Bureau of Statistics, the number of health checkups in China's health checkup market in 2019 was about 444 million, an increase of 2.07% compared to 2019. Affected by the epidemic, the number of people with nucleic acid testing increased in 2020, or to a certain extent, the number of health checkups, forward-looking estimates, the number of outpatient health checkups in China's healthcare institutions in 2020 may reach 455 million people.

In general, there are many types of chronic diseases, such as hypertension, coronary heart disease, diabetes, fatty liver, etc. With the current changes in living and dietary habits, the incidence of chronic diseases is gradually increasing, which has a direct impact on the health of our countrymen, coupled with the lack of knowledge of most of the patients on the disease, or weak awareness of self-protection of health, the family's economic situation is poor and other problems, so that they are not taken seriously, or not in accordance with the health care system. In addition, most patients do not know enough about the disease, or have a weak sense of self-health protection, poor family financial situation and other problems, so that they do not pay attention to their own condition, or do not follow the doctor's instructions to correctly use medication, which leads to further deterioration of the condition, and jeopardize the patient's life. In recent years, health checkups have helped to increase the detection rate of chronic diseases, helping patients to receive early diagnosis and treatment, controlling the progress of their conditions and accelerating their recovery.

--Internet Chronic Disease Management Model Emerges

With the development of a new generation of information technology, the Internet Chronic Disease Management Model has emerged. Health service organizations can use cloud computing, big data and other technologies to build a public **** information platform, provide long-term tracking, prediction and early warning personalized health management services, accelerate the development of Internet-based medical and health services, and support the innovation and application of intelligent health products. By analyzing massive data, including health care, chronic disease management all the data, the value of traditional data analysis methods can not be analyzed qualitatively into quantitative.

In addition, more and more businesses in the healthcare industry have also begun to rely on informatization technology support, and the demand for informatization is characterized by accelerated development. Domestic hospitals below the third-tier cities have also entered a period of rapid growth of information technology, for basic information technology products such as PC, Server, development platforms and so on generated a large number of demand; large hospitals information technology is gradually entering a period of integration, the demand for upgrading of software and hardware increased. In the public **** health management information technology construction, focusing on the development of community health management information technology, regional medical data centers, residents' health records and other systems, information technology services for the construction of information systems also generated a large number of needs.

Chronic disease management platforms such as Medical Union, founded in 2014, took liver disease as the entry point in 2018, focusing its business direction on the field of chronic disease management, and the platform has now covered a number of disease disciplines, such as cardiovascular, diabetes, respiratory, oncology, chronic renal disease, liver disease, HIV, traditional Chinese medicine, psychiatric psychology, and other disease disciplines, and it has constructed a complete closed-loop system from patient screening, follow-up follow up, delivery of medication to the door and payment by the health insurance to the It has built a complete closed loop from patient screening, follow-up, home delivery of medication, health insurance payment to out-of-hospital health management. The advantages of the Internet chronic disease management platform are as follows,

At present, some of the representative Internet chronic disease management platforms are as follows:

-- The above data refer to the Prospect Industry Research Institute's China Chronic Disease Management Industry Market Outlook and Investment Strategy Planning Analysis Report. >