China's mobile health industry has been developing rapidly over the past year, both in terms of the number of ventures and the amounts these companies have raised from investors. But rumors have emerged that some of these ventures are teetering on collapse. Although the mobile heath industry isn't anywhere near as hot as it used to be, it still has a lot to offer patients, experts say. However, policy barriers, restraints on accessing medical data and strained doctor-patient relationships remain important obstacles to the development of mobile health in China. Still, experts say investment in this area will continue due to the many market opportunities as well as government reform of the healthcare system.

Photo: CFP

Beijing Spring Rain Software Co, a leader in China's mobile health industry, has recently become the subject of rumors that it will eventually fail due to the market's meager capacity and the company's unrealistic business model.

Spring Rain said its competitors started the rumors because of their own discomfort from the company's rapid rise, according to a report from industry news portal techweb.com.cn on Tuesday.

Mobile health, or the practice of medicine and public health via mobile devices, started gaining momentum in 2014. Since then, several prominent players have emerged along with Spring Rain, such as the online academic portal dxy.cn.

Some experts see a lot of potential in this industry due to the innovations mobile health can bring to traditional medical treatment.

"Mobile health, as an emerging business, has huge potential in China especially in areas such as the sharing of electronic medical records, online drug sales, disease prevention and elderly care," Jin Yi, partner of healthcare & life science practice at Roland Berger Strategy Consultants, told the Global Times on Saturday. "But it is quite difficult to give an exact figure because there are too many market segments. In addition, the advancement of national healthcare reform also influences the available market capacity."

These venture companies have also received a lot of attention for all of the money they have managed to raise. Take Spring Rain for example. The company has raised $61 million since 2011 and gained a reputation as a reforming pioneer in China's healthcare industry.

The problem is that none of these ventures has emerged as the clear leader.

"It seems that there is no one company in the industry that can stand as a model of success," Sun Di, executive assistant to the general manager at Beijing United Family Hospital and Clinics, told the Global Times on Friday.

Disputes and troubles

Sun acknowledged that mobile health can offer more convenience to patients, but she cautioned that the industry has become overheated. There has seemingly been no end to the new mobile health companies that have opened in recent years.

"There are many media reports that they have raised massive amounts of venture capital," Sun said.

In Sun's view, however, there has been too much hype around these companies.

"Unlike traditional hospitals, these mobile health companies are lacking in the traditional treatments - look, listen, question and feel for the pulse - the four ways of diagnosis that are essential to patients," she said.

Sun noted the government's encouragement in mass entrepreneurship and innovation has spawned numerous venture companies in the mobile health industry in 2014.

"But when we look back now, there are few good ones," she said.

Jin attributed the industry's troubles to several factors.

"Policy barriers are the major obstacle to China's mobile health industry," Jin said. "The Chinese government still heavily regulates the healthcare industry."

For example, the policy restrictions on remote medical treatment and online drug sales have restrained the development of mobile health, Jin noted.

"The government still has doubts about mobile health and continues to explore whether to open up the sector," Sun said.

As for concerns about the inaccessibility of medical data, which remain almost completely monopolized by public hospitals, Jin didn't think that data would be a big obstacle to mobile health.

"The government is now vigorously promoting regional medical consortiums throughout the country," he said. "This kind of integration and portability of medical data will surely promote data accessibility by the third-party institutions."

Sun still has doubts about the profit model that mobile health companies employ.

"I haven't seen any good way for them to translate their users into cash flow," she said.

Sun also worried about patients' safety and the quality of medical treatment at mobile health institutions.

"Doctor-patient disputes caused by irregular medical treatment will be a serious hidden peril to the mobile health industry," Sun said.

Investment bubble?

Despite the huge amount of venture capital that has entered the mobile health industry over the past few months, Jin refused to call it investment bubble.

"I'm inclined to attribute the excessive investment in this sector to investors' over-optimism about the pace of the government's liberalization of the healthcare industry," he said.

In fact, the government still prohibits the sale of prescription drugs online, even though it has been more than a year since the China Food and Drug Administration had solicited public comments on the issue in May 2014. The market saw the solicitation as a sign that the government would allow prescription drugs to be sold online.

Jin believes that more funds will enter the industry due to the many market opportunities and Chinese government's determination to reform the country's healthcare system.

"The efficiency losses still widely exist in the medical treatment," Jin said. "And these areas are where the mobile heath can play a tremendous role. Besides, there may be explosive growth in areas such as disease prevention and elderly care."

On the whole, Jin remains optimistic about the prospects of mobile health in China. He is still bullish about remote medical treatment, the sharing of electronic medical records and the online sale of drugs.

Sun is not as optimistic as Jin.

"The pace of investment will slow down and the amounts will shrink," Sun said.

In Sun's view, traditional hospitals will be strong competitors to mobile health companies due to their substantial resources.

"It is relatively easier for traditional hospitals to integrate with the Internet to explore the online-to-offline medical services," Sun said. "But it is difficult for the online companies to explore and integrate offline medial services because they lack the physical facilities and certified physicians."