Discussion keeps the world's turning.
This is Roundtable. Hello everybody, welcome to Roundtable, coming to you from Beijing.
I'm a young, good to have you join us on a day's show.
Imagine a world where your medicine cabinet is just a click away, and your medical insurance puts the bill.
That's the reality for Beijing residents as of July 1st.
All this new policy of allowing online medicine purchases with insurance coverage shake up the entire pharmaceutical landscape.
Ready to explore how this digital pill is transforming the way we think about healthcare from patients to providers.
And in a brave new world of the internet, online guides and social media platforms have replaced the old school travel guidebooks in providing travel, inspiration and advice.
Do you agree? For today's program, I'm joined by Ding Hong in the studio and Josh Cotterell on the line.
First, hold on to your virtual shopping carts, folks.
Beijing's healthcare scene just got a 21st century makeover in an era where digital solutions are transforming various sectors.
Beijing's move to enable online medicine purchases through medical insurance accounts marks a significant milestone in healthcare modernization.
This policy not only exemplifies the growing integration of technology in healthcare, but also raises important questions about the future of pharmaceutical retail and patient care.
So paint the picture for us, Ding Hong.
How does this new policy of allowing insurance coverage transform your experience of purchasing medication with just your smartphone?
Hmm, so some basic information is that Beijing Municipal Authorities announced on July 1st that those insured individuals in the city can use their personal medical insurance accounts on two particular platforms, Mayt1 and JD.com to purchase over the counter or OTC medicines online or the medicine cost will be covered by the personal medical insurance accounts and the delivery and packaging fees will be borne by the purchasers and the drugs will be right away delivered by online platforms after you place your order.
And online medicine purchases also support the mutual use of those personal insurance accounts among the legally registered family members in the city.
So I guess we're talking about a coverage of more than 300 designated retail pharmacies across the city.
According to the media reports I have read about the services seem to be quite swift.
According to media reports JD.com offers a quick delivery of medicines at an average of 28 minutes with the fastest delivery time on record being only nine minutes.
Well, yes, that's really fast and also because JD.com, well, in Chinese Ding Dong, so there's the Jing bit which coincides with Beijing, you know, and a lot of its warehouses and operations are based here in Beijing and therefore makes its delivery speeds super fast just like Tiam Mao or a lot of the Ali Baba operations are based close to Shanghai, for example, and then in Shanghai, I suppose a lot of the locals would prefer that platform as opposed to others.
So now I think again, this shows that Chinese consumers and internet users are very shrewd with our decisions.
We know which platform to go to for what and what they're good for.
So Josh, you're from the UK and you've told us many times on this show about the benefits, wonders of what the NHS does, your medical system in the UK.
And I'm wondering, you know, nowadays in your country, are people have a lot of these drug purchasing services migrated online as well and is it covered by your medical system?
Give us some insight in that.
Sure, well, I'll try to give you a simple answer to it because it can be a little bit complicated to understand that I think even for myself sometimes, but in the UK for sure, it's a similar story that there is an increased accessibility to online purchases of medications and stuff like this.
And there's a lot of evidence to suggest that this is making things cheaper for customers and also quicker, just as you guys described.
When it comes to whether it's funded or not by the NHS, this is a bit of a different story.
So the National Health Service is provides free medication for certain people in the United Kingdom.
I'll try and give you the really short, compact answer because I know we don't have too much time.
That is for children under 16, full-time students up to the age of 18, people 60 and over, pregnant women or those who have had a baby within the last 12 months, and certain people with medical conditions.
So of course, if you have diabetes, for example, you would often receive free prescriptions because you would need them, right?
So anyway, and then there's also income-related exemptions as well.
So if you have income support and things like this, there's a load of other exemptions as well that make them free.
But when it's not free, it's basically what's called a standard prescription charge.
This is adults over the age of 18, and the standard prescription charge is £9.65 per item.
So it's set at a rate, right?
It's usually that much, okay?
So it can differ depending on the medication sometimes.
And there's also things called prepayment certificates.
I've given you the very simple answer.
Now, when it comes to purchasing online, right?
This is where it gets slightly more complicated because there's a lot of private pharmacies, most of which operate online as well these days, that with the NHS under a contract, and basically the NHS funds the costs of medications and pharmacy services, and the pharmacies then reimbursed by the NHS and the cost of the drugs dispensed by the NHS, then receive additional fees for providing NHS services.
And when we're looking at what's going on here in China, I think it's important to give a little bit of background.
Although this is like pretty recent history, and a lot of these medical services have been migrating online, and then the relevant departments have been trying to upgrade the system to make it more convenient for patients and citizens altogether.
So Dingheng, could you tell us a little bit more about internet plus medical services?
This is a proper campaign that's been going on for some time.
Yeah, this is an issue over which China's National Medical Insurance Administration back in July 2021 issued a guidance about, namely, they were asking an exploration of information sharing to try to achieve integrated services like prescription circulation, online payments, settlements, and home delivery of medicines.
And in some regional level in China or provincial level, starting from June the 7th this year, 7 cities in the Southern Chinese province of Guangdong, including Dongguan and Zhongshan, etc.
they started online drug purchases with medical insurance payments.
And actually last November, I also saw the city of Shanghai initiate an early pilot's program in this regard.
And then in June this year, Shenzhen, officially announced the launch of online payment services for prescriptions by medical insurance accounts.
So these are some of the earlier examples, Beijing, so to speak, is not a pioneer.
Well, early adopters, let's just put it that way.
But certainly we're not the first in doing this in China.
And also we see that from the medical insurance bureau, they have some ambitious future moves in this area as well.
They're looking to moving the prescription drugs to online platforms as well being covered by the medical insurance and also increase the number of designated retail pharmacies for online purchase of OTC over the counter drugs.
And they're talking about beefing up supervision efforts as well, you know, for the use of medical insurance funds and monitor drug prices.
And these are definitely, I think, some of the big issues that we want to see go well.
How do you think this whole basket of measures, including some of these future prospects, might influence people's lives?
Because this is a big thing that is happening.
Personally, I think that the pros outweigh the cons here.
I think that it's going to have a massive effect on people's lives.
And I think that when it comes to something like medication, efficiency and, you know, time saving is really important, especially if, you know, people maybe have a disease or have something that needs to be seen to obviously as quick as possible.
So it makes sense, I think, to increase accessibility and increase cost efficiency.
And also, I think that digitizing this whole thing can also allow professionals eventually to better monitor and manage prescriptions and things like this.
Of course, there's probably going to be a bit of time where the system in the industry and patients have to get used to this, but it seems as though they already are.
I do think that there might be some downsides to this.
I know that I've been trying to find some, really, to be honest, because it's not my area of expertise, but I did find some arguments that suggest that it could be a challenge to community hospitals and major hospitals.
And I found a study in Germany that found the online medicine purchases actually disrupted some of the traditional supply chains, which in effect basically affects the revenue of community hospitals.
So of course, some hospitals, they rely on the revenue that they make from selling some of these medications.
And then that can be put to use in the hospital, because of course, some issues need to be seen to in the hospital, right?
And things like surgeries and also very serious cases where the patient might have to stay over.
So it probably is going to end up that the hospitals also have to get involved in this business in some way, which is quite complex.
It is quite complex and it's going to affect stakeholders in this whole process of getting medication, which will break it down one by one.
Dinkong, what do you think about for the average folk like you and I, you know, you're feeling under the weather, but instead of dragging yourself to the pharmacy, now you can simply reach for your smartphone and order drugs that we've been doing for some years.
But now the real big change is it's covered by your individual medical insurance, which means you're not paying out a pocket and your insurance covers it.
So what are the things that you think are the, you know, bright spots or maybe not so bright spots for the individual in all of us?
Yeah, personally, I am yet to try this practice.
But according to some Beijing local residents who have already tried this, the whole process seems to be pretty simple, just log on to the platform, choose whatever you want that are marked as a blue label called medical insurance, place the order and choose the category called Beijing Medical Insurance Personal Accounts Payment.
So it seems to me that the services are very convenient and handy, especially when we're talking about a scenario in which somebody suddenly all of a sudden feel not so well and need to get medicine immediately.
That's really a plus and a store of a pharmacy change here in Beijing said by the noon of July the 1st, it had received seven to eight online orders utilizing this new policy mainly for the purchase of medicines for treatment of coat.
But of course, I think there are some technical issues for these platforms to do a way like there are challenges or issues with payments, especially under conditions where medical insurance could not be used.
So definitely there might be some needs for improvement, but you know, anything could anything new could have challenges could bring about risks and challenges to the existing stakeholders we will talk about that's later, I guess, in our discussion today.
Yes, so the process still needs some perfection to make it smoother.
Anybody can relate to this.
Once you've purchased or you've picked everything you want to buy and then at the checkout point on your smartphone and then it doesn't have the kind of payment choice that you want then it's just frustrating.
So please make it better.
I'm sure it will in the future.
And one hurdle potentially of this comes to my mind when we're looking at the individual shopper level that is for older folks, you know, those who are not particularly tech savvy, this could be a bit difficult for them to use, but also I like to highlight that since COVID and a lot of the slightly older customers or let's just say those who manage to learn new technologies have done so.
Now you see Gramas and Grampas who are able to buy stuff online and hopefully this, yeah, I guess with the younger generation growing older and then gradually I think we'll just maybe have a bigger and bigger population who are able to utilize this kind of service.
But during the transition period, I guess some older folks might still need to go to the hospital or the community hospital, go it by the traditional way.
Josh, do you see this kind of obstacle of, you know, early or later adapters to these new technologies, even when it comes to, you know, these kind of vital health services in your country?
Yeah, absolutely. I think that you make a good point.
There's definitely a digital divide here.
And so this process has to be, I think, somewhat slow to some degree or slower for certain individuals.
And yeah, especially for older adults, actually in my own country, older adults, especially in low income groups, certainly face challenges when it comes to online platforms and online medications, which can definitely potentially lead to exclusion from a lot of the benefits, especially when we're talking about saving money and stuff like that.
So yeah, it's definitely an issue that needs to be considered.
But I do think that elderly people usually, they're supposed to be taken better care of in these systems, right, especially over the age of 60.
I know in my own country, for example, as I mentioned briefly at the beginning, over the age of 60 years old, means that you receive free medication generally in the UK and the NHS.
But I think also it's going to have to include extra services such as helping with the purchase of medication online if that becomes the norm.
Yes, indeed. And what about the overall offline to online pharmaceutical market?
I bet that industry insiders are all like at the edge of their seats looking to see how they can benefit or sort of adjust to this big policy change.
So I guess the big picture is that platforms like Meituan and Elima.com, they are really occupying a large market share here because they can quickly expand with their existing user traffic and their existing distribution system or network.
But in the meantime, some e-commerce giants like we talked about earlier, JD.com is also catching up quickly, becoming a so called a super player to compete with those traditional players in the market.
So the data I have read about is that indicates that currently there are more than 250,000 physical chain pharmacies that cooperate with Meituan in a case of Elima.
Many of our more than 200,000 medical retailers and 120,000 offline pharmacies cooperating with JD.
So competition will definitely become more intense.
So in the future, probably the course of any platforms, competitiveness will depend on how well they can manage those resources online and offline, how well they can manage this process of integration between online and offline platforms.
Yes. And Josh, you mentioned earlier on about sort of this cooperation between the NHS as well as these private pharmaceutical companies or was it the pharmacies or drug stores.
And I think in a way, there are some similarities here in China as well.
So what do you think are the, I guess, the areas of a contention here for better integration that these online and offline platforms, areas they need to work together to facilitate this to happen?
I guess aside from the issues that we've already discussed about the digital divide, and also I mentioned as well that there's going to be an impact on hospitals who obviously have pharmacies within that, you know, there walls a lot of the time.
It's also going to have an effect on brick and mortar pharmacies as well.
It's going to mean that offline pharmacies are going to have a reduced foot traffic due to their, due to the convenience of online purchases.
I guess people are probably going to be slightly less sympathetic to whether or not the drugs companies are making so much money, given how much money they usually make.
So actually there are a lot of businesses, they are businesses and those communities rely on business, right?
Relay on brick and mortar stores, especially smaller communities.
So that is an issue. And these pharmacies, these brick and mortar pharmacies are inevitably going to struggle.
So is it, I'm not really sure myself personally, is it that they're just inevitably going to have to close and go online or should they be supported in some way and, you know, maybe be given the same discounts that online stores have as well?
In my country, this isn't as big an issue because as I mentioned before, the NHS has set standard prices for certain medications, for certain prescriptions, right?
But I know that this isn't always the case in China.
Well, actually here in China, prescribed drugs or at least a fair amount of them, they have a set price and then it's being managed nationally.
But the individual pharmacies, they do have a little bit of leeway in setting their own prices for some of the other drugs.
And yes, this is going to have this new policies is going to have an impact on the pharmacies as new competition pretty much have entered the market, you know, with this new individual medical insurance coverage payment method coming in to the fold.
But overall, it seems like there are some pretty rosy predictions about this O20 pharmaceutical markets.
Yeah, exactly. I agree that going forward, overall picture seems to be pretty rosy according to medical information provider.
MeNATS.com, China's O20 retail pharmaceutical market is likely to account for over 19% of the physical pharmacies by the year 2030.
And if online medical insurance accounts is fully open, then the figure may even rise to 32% by 2030.
So obviously, there is a huge potential in terms of this internet plus medical health model.
And some industry insiders even predict that if this all goes well, eventually at the online sale of drugs covered by medical insurance could outpace the brick and mortar market altogether.
I don't know when if that might happen, but pretty astonishing figures in that sense.
And when we look at how different stakeholders are reacting to this new policy, it seems like the major hospitals might not feel the tremors as much, but the pharmacies, they are apparently bracing for impact.
And do you think that this could be a challenge as well as a possible opportunity for them to grow?
Yeah, this is a combination of challenge and opportunity.
And definitely it will incentivize these brick and mortar traditional pharmacies to further improve themselves, because currently it seems the reality is that some particular pharmacists tend to recommend more expensive options or additional yet unnecessary medicines to their consumers.
This phenomenon might change because when personal medical insurance accounts are involved in their purchases, I guess pharmacies might have less incentives to sell more expensive medicines to consumers.
And I think apart from these neighborhoods consumers, maybe another group like Josh mentioned earlier, we need to look at is really the interests of the community hospitals, because in China's context, community hospitals most likely function much like pharmacies.
People are not allowed to buy too much medicine at one time.
They usually get the medicine for like two weeks or so, and they need to see doctors again to get more medicines later.
But if we're talking about say a chronic disease, people may just want to get medicine without medical suggestions.
And community hospital cater to this particular part of the need from the general public, because they're not too crowded to make appointments and they have medicines.
Many people go there just to take their routine medicines for their chronic diseases.
And for their important prescription and really professional medical services or devices, people go to big hospitals.
So if now we are talking about a scenario in which getting access to those routine medicine can be done online by the money in their medical insurance accounts, then people would have probably loved to avoid this trouble, some process of going to hospitals, including community hospitals.
It's not really good news for those community hospitals.
Yes, do you point to the realities of going to the different levels of hospitals in this country, new competition force into the market.
And for all those involved providing services, you'll need to make your service better.
Otherwise, we can just do so much online.
Coming up, is there still a place for physical travel guidebooks in our digital first world?
Stay tuned.
