Let’s set the stage
2020 has been a year of paradoxes. While the COVID-19 pandemic slowed down economies around the globe, it also set fire to investments in the global healthcare industry that received a whopping $21.8B USD in 2020, according to CB Insights. In particular, the Chinese med-tech industry in 2020 grew to around $8.6B USD. With its current momentum, it’s expected to reach $50B USD by 2025, surpassing the U.S. as early as 2023.
In China, med-tech generally falls into four categories: AI, AR (augmented reality), wearables, and telemedicine. Out of these four, the intersection of AI and medicine receives the most attention because of its unlimited applications to diagnosis, surgery, medicine development, and health management. According to VCBeat Research, China’s AI medicine market reached a valuation of $4.6B USD in 2020, with a CAGR above 40% the past 5 years. In China, the AI medicine market is being transformed by innovation that is catching the attention of investors around the globe.
In a nutshell: Why is this happening?
China’s med-tech industry entered a new stage of development due in large part to three driving factors:
- An urgency to control the virus
- Favorable investment policies
- Increased investor confidence
In 2020, hospitals were forced to digitally transform overnight due resource constraints. Many physicians utilized new channels of treatment and diagnosis to meet patient demand. In response to the pandemic, the Chinese government also quickly reformed policies restricting AI usage in medicine. In November 2020, the National Medical Products Administration (NMPA) formally issued Infervision an AI third-class certification, allowing them to begin applying their AI technology to clinical use. Soon after, many other companies began receiving the NMPA’s certification, marking a watershed moment in Chinese med-tech history.
With heightened confidence in AI innovation and application to the medical field, capital followed. XtalPi, a medical company founded in 2014 that conducts R&D on AI solutions for global pharmaceutical companies, recently completed its Series-C round with Tencent and Sequoia last September. In addition, AliveX (a Cherubic portfolio) combines AI and immunology to identify biomarkers of disease and recently completed its angel round last December. These companies are two examples of the many Chinese AI medicine companies that have caught a tailwind from the pandemic-era investment boom, boosting confidence in Chinese med-tech innovation.
Why does this matter to you?
The COVID-19 pandemic catapulted the Chinese med-tech industry into a new era. In the short-term, the pandemic increased demand for internet services to supply medical necessities. In the long term, the pandemic is expected to fundamentally change the way in which medical treatment and diagnostics are performed and distributed. In addition to favorable government policies and growing investor confidence, the Chinese med-tech industry is expected to continue to grow exponentially in the coming years, even surpassing the US by 2023.