Health & Beauty

On July 19, the listed companies Weining Health and Entrepreneur Huikang both issued announcements that Weining Health and Entrepreneur Huikang are planning to issue A shares from Weining Health to all shareholders of Entrepreneur Huikang through a share swap to merge Entrepreneur Huikang. The merger is expected to constitute a major asset reorganization and will not result in the change of the actual controller of Weining Health, and the actual controller of Venture Huikang will change.

Photos circulated in the industry show that the two parties held a merger signing ceremony in Hangzhou on July 18

Weining Health and Entrepreneur Huikang are the two leading companies in the field of medical informatization in my country. They are very similar. Among them, Weining Health was established in 2004 and listed in August 2011. It is a domestic focus on overall digital solutions for medical health. A high-tech enterprise with solutions and services; Venture Huikang was established in 1997 and went public in May 2015. Since its establishment, it has been focusing on the field of medical and health information, with smart medical care, regional health, and healthy cities as the main development direction.

The construction of national health information is regarded by the industry as a new direction for future medical information construction. Both companies are involved. From the perspective of market segments, Weining Health pays more attention to the construction of national health information at the provincial and municipal levels. , And Chuangye Huikang is good at prefecture-level and district-county-level national health information construction. Some people in the industry believe that the merger of the two leading companies will further increase the concentration of the industry. In the field of medical information technology, a new leading enterprise may be born.

01

Fierce competition in the medical information market

Neusoft Medical No. 1 for ten consecutive years

Since 2000, with the comprehensive development of hospital management information systems, a large number of hospitals have successively purchased related equipment. However, since subsequent developments have not made innovative changes to the system architecture, hospitals usually use "sew" methods to optimize the system. Under such circumstances, many hospitals’ information systems have been in use for nearly 10 years, and medical information services such as Neusoft Medical, Weining Health, and Entrepreneur Huikang have developed in this context.

However, with the popularization of the concept of smart hospitals and Internet hospitals and the entry of emerging technologies, hospitals have put forward new requirements for the capabilities of medical IT companies, and have also opened up the market for a new generation of medical management information systems.

In addition, the country’s policy orientation has changed from medical services to healthy China. The policy of “Great Health” and Internet+ has made the direction of information construction increasingly clear. The new generation of HIS needs to focus on the level of electronic medical records, information interconnection, and resource sinking. , Service convenience and other aspects of construction. Under multiple factors, the demand side (patient/health manager), supplier (hospital/doctor), resource side (pharmaceutical company/device manufacturer), and payer (medical insurance/commercial insurance) will all change.

According to data from the Eggshell Research Institute, the average investment in the construction of a single large-scale hospital smart hospital is about 13.88 million yuan, and the average investment in the information infrastructure of a single medical consortium and medical community is about 14.63 million yuan. The annual service fee in the industry is about the contract price. 5%-8%, not more than 10%.

Since the beginning of this year, the top companies have good orders and the boom is expected to continue. According to the tracking data of Huachuang Securities, in the first half of the year, the total number of orders from top companies increased by 57% compared with the same period in 2020, and increased by 53% compared with the same period in 2019. The compound growth rate from the first half of 2016 to the first half of 2021 was 31%. In the first half of 2021, the number of tens of millions of orders reached 90, an increase of 80% year-on-year, and the proportion of orders of tens of millions of orders reached a record high of 56.51%. In terms of regional distribution, Beijing, Zhejiang, Hubei, Jiangsu, and Anhui are the top five provinces (municipalities directly under the central government) in terms of amount of money, and the total amount of the five places accounts for 36%.

IDC released the "China Medical Industry IT Market Forecast, 2020-2024" report at the end of May last year. It pointed out that the continuous medical and health reform, medical digital transformation and upgrading, and the upgrade of the medical information system architecture and the application of emerging information technology are important for medical care. Three driving forces of IT development. In addition, in the treatment, prevention and control of the new crown pneumonia epidemic, informatization has played a huge role and has become an important driving force for medical IT investment. According to this, the report predicts that the total IT expenditure of the medical industry will reach 65.03 billion yuan in 2020, and the market size will exceed 100 billion yuan by 2024, and its compound growth rate will be 13.7%.

In the growing medical information market, the traditional hospital information system has not only gained increments, but also various new models have emerged. The medical information industry presents a situation of "a hundred flowers blooming and a hundred schools of thought contend". As the first large-scale manufacturer to put forward the concept of the hospital’s core business system, Neusoft Group ranked first in China’s medical solution service provider rankings for ten consecutive years, with nearly 500 tertiary hospitals, over 2500 medical institutions, and more than 30,000 Primary medical institutions and clinics provide software and services, leading the informatization construction of China's medical industry.

After the outbreak of the new crown epidemic, Neusoft Group quickly released its "sharp sword"-the overall solution of epidemic prevention and control information, mobile imaging platform (M-PACS), intelligent critical illness solution (E-CARE) and other new products, and it has successively contributed to the national 102 A designated hospital for COVID-19 and more than 200 non-designated hospitals provide technical support services during the epidemic.

According to IDC's 2018 "China Medical Industry IT Solution Market Forecast, 2018-2022", Neusoft Medical ranked first with a market share of 13.9%, far higher than Weining Health, Entrepreneur Huikang, Wanda Information, and Donghua Software etc. The prosperity of the medical IT industry is expected to rise in 2021. On the one hand, it comes from the start of the IT investment repair cycle that will be brought about by the recovery of hospital operations after the epidemic; on the other hand, after the public health market's demand gaps are exposed, the investment to "make up for shortcomings" accelerates. In recent years, my country's medical informatization policy has successively seen good news, which has accelerated the growth of this industry market.

02

After the merger, it surpassed Neusoft Medical,

Become the industry leader?

Weining Health and Entrepreneur Huikang focus on the field of medical information, based on HIS (Hospital Management Information System), and gradually extend to CIS (Clinical Medical Management Information System) and CMIS (Regional Medical and Health Services). The product forms a comprehensive coverage.

From the perspective of software product content, Weining health software products cover hospitals (HIS, CIS), medical insurance informatization, medicine (clinical experiments, recruitment and procurement), Internet medical services (mainly Internet hospitals, medical circulation, medical insurance informatization, and physical examination Four major areas) and so on. Entrepreneur Huikang software products are mainly concentrated on the hospital side, part of the medical insurance information, and Internet medical care, and the coverage area is lower than that of Weining Health.

According to the 2020 annual report released by Weining Health, its main business is the medical and health information industry and the Internet medical and health industry, accounting for 93.27% and 6.64% of revenue respectively. In 2020, Weining Health achieved operating income of 2.267 billion yuan, a year-on-year increase of 18.79%; realized net profit attributable to shareholders of listed companies of 491 million yuan, a year-on-year increase of 23.26%; net cash flow from operating activities was 390 million yuan, A year-on-year increase of 67.32%.

Entrepreneur Huikang’s 2020 annual report shows that its annual revenue is 1.633 billion yuan, of which 671 million yuan (41.09%) comes from technical service revenue, 591 million yuan (36.18%) comes from software sales, and 158 million yuan (9.69%) It comes from system integration equipment, and 13.03% comes from other main businesses.

Statistics show that Weining Health and Entrepreneur Huikang rank second and third in the medical information industry with market share of 9.3% and 5.7% respectively. According to this data, the combined market share of the two companies will surpass that of Neusoft. The current market value of the two companies after the merger is nearly 50 billion yuan, which is expected to become the industry's first.

However, the merger of the two companies is likely to be subject to antitrust scrutiny. According to Article 3 of the "Regulations of the State Council on the Standards for Declaration of Concentration of Undertakings" (hereinafter referred to as the "Regulations"), if the concentration of undertakings meets one of the following standards, the undertakings shall report to the competent commercial department of the State Council in advance. concentrated:

The global turnover of all operators participating in the concentration in the previous fiscal year totaled more than RMB 10 billion, and at least two of them had turnover in China in the previous fiscal year of more than RMB 400 million;

The total turnover of all operators participating in the concentration in China in the previous fiscal year exceeded RMB 2 billion, and the turnover of at least two of the operators in China in the previous fiscal year both exceeded RMB 400 million.

The annual report shows that the annual turnover of the two companies is 1.63 billion and 2.267 billion respectively. Together, the two companies may meet the requirements of Article 3 (2) of the "Regulations", that is, meet the standards for antitrust declaration.

According to the "Merger Intention Agreement", the two parties will negotiate the specific transaction plan for the merger, the conversion price, the settlement of claims and debts, the placement of employees, the protection mechanism for dissenting shareholders, taxes and fees and other arrangements. This agreement is only the preliminary intention of both parties, and the arrangements are subject to the formal transaction agreement finally signed by both parties. The shares of the two companies have been suspended since yesterday, and the announcement stated that they intend to disclose major matters, and trading will be resumed after relevant announcements are disclosed.

Since the new crown, Neusoft Medical has spared no effort to empower the medical and health industry with software, promote the integration and innovation of information technology and industry, and enable "ABCD+IoT" (artificial intelligence, blockchain, cloud computing, big data, Internet of Things), etc. New technologies have become new medical elements. At the 84th CMEF exhibition this year, MDaas was positioned by Neusoft Medical as a "strategic-level" product line. The core attribute is "service", which is related to the analysis and processing of patient traffic and medical data. In addition, Neusoft Xikang is also on the way to split the IPO. During the epidemic, through the Internet medical Xikangyun Hospital platform, it opened a free "new coronavirus pneumonia consultation zone" and prevention and control expertise. These are all for Neusoft Medical to continue to maintain information. Lay the foundation for the leading position in the field of chemical engineering.