Tencent makes $70m health investment

Largest-ever in online medical sector, will connect services to WeChat, Mobile QQ

Internet giant Tencent Holdings Ltd announced on Tuesday it will invest $70 million in Ting Ting Group, known as DXY, China's largest online healthcare community, marking the largest-ever investment by a firm in the country's Internet healthcare sector.

The investment will give Tencent a minority equity stake in DXY. The transaction is expected to close in the near future, the two companies said in a joint statement sent to the Global Times.

DXY, which is an online medical network with over 2 million doctors, will work with Tencent to bring its services to the latter's various platforms including WeChat and Mobile QQ, as part of its efforts to move from servicing doctors and healthcare companies to consumer healthcare, according to the statement.

"DXY is already earning sizable profits currently," Feng Dahui, chief technology officer of DXY, told the Global Times on Tuesday.

He did not disclose exact figures, but said the company's revenue mainly comprises of services fees from medical companies, hospitals and its e-commerce business.

With Tencent's large user base, DXY could attract more users, Internet consultancy Enfodesk said in a research note on Tuesday.

Tencent has already set up platforms to collect biometric data from mobile wearable devices.

The alliance with DXY will allow it to further analyze the data and provide more value-added services, Enfodesk said.

The deal breaks the previous investment record in China's Internet healthcare sector that was only set last month. In August, mobile healthcare app developer Beijing Spring Rain Software Co, which has around 30 million registered users and 40,000 signed doctors, announced it received investment totaling $50 million from investors including China International Capital Corp Ltd, Hangzhou Rushan Venture Capital Investment Co Ltd and Pavilion Capital Pte Ltd.

China's mobile healthcare market reached 2.34 billion yuan ($379 million) in 2013, up 25.8 percent year-on-year, and the number is expected to surge to 12.53 billion yuan in 2017, according to a report released by China Medical Pharmaceutical Material Association in December.

Internet giants have shown growing interest in the burgeoning market.

"We have been closely following the healthcare industry for a while. Tencent is capable of connecting DXY's talented pool of over 2 million professional doctors and their medical knowledge database with tens of millions of users," Martin Lau, president of Tencent, said in the statement.

In May, Alipay, the online payment service arm of e-commerce firm Alibaba Group, announced a plan called Future Hospital, enabling patients to book appointments, pay bills, and receive test results in cooperating hospitals via their mobile devices.

Chinese search engine leader Baidu Inc also partnered with some mobile device manufacturers on July 23 to launch a cloud healthcare platform, which allows mobile device users to upload their data to the platform for further analysis.

"Public demand for healthcare services has been growing in China with the aging population, but there's a huge unmet need due to a lack of qualified medical resources," Xu Zhipeng, an analyst with Zero2IPO Group, told the Global Times Tuesday.

Internet companies have seen business opportunities in this resources shortage, and they also expect that the mobile healthcare market will boom with the popularity of wearable devices, he said.

Apple Inc is widely expected to unveil a healthcare-focused wearable device at an event to be held in the US on September 9.

According to earlier data provided by Zero2IPO, a total of 58 investment deals were made in China's mobile healthcare sector between 2000 and March 2014, totaling more than $100 million.