China's GuaHao.com raised $394 million in venture financing, placing a major bet on online portal healthcare services in a market broadly in focus as well by Baidu, Alibaba ($BABA) and JD.com even as regulatory guidelines remain a work in progress.
The financing was led by Hillhouse Capital and Goldman Sachs for the Hangzhou-based firm that helps patients make appointments and payments online. The firm also runs a chat service akin to one provide by another investor, Tencent, with its WeChat service widely used in mobile messaging in China, according to Yahoo. Tencent has already invested $106.5 million in GuaHao in October 2014, Yahoo said.
Other investors included Bosun International and China Development Bank Capital, Yahoo said.
The WeDoctor service will bank on 1,600 hospitals now listed on the portal that will provide diagnosis and treatment advice as China works to reform a complex hospital system that sees patients rushing to major medical centers and avoiding smaller clinics because of quality concerns.
Baidu runs a service called jiankang.baidu.com that allows doctor appointments to be booked online and other services, Yahoo notes, while other firms such as Alibaba and JD.com are looking now at over-the-counter ordering and delivering and the prospect of prescription drugs filled in the same fashion, an issue now before China FDA.
In August, Shanghai Pharmaceuticals said it would launch a China healthcare venture capital investment fund of as much as RMB3 billion ($470 million) to back startups in all life science fields via its distribution subsidiary.
Initially, $157 million will be raised in a first tranche with Shanghai Pharmaceuticals putting down 25%. A local galaxy of venture capital and online sales firms will help out with the rest, according to the Aug. 26 release.
A separate story in China Money Network said that the funders include a firm called O2O (online-to-offline), a startup founded 6 months earlier by Shanghai Pharmaceuticals that has completed a RMB1.112 (US$174 million) series A funding from JD.com, IDG Capital Partners and other investors.
That effort followed speculation about a new policy that has been circulating since mid-2014. If approved, the policy could lead to the emergence of a market worth more than RMB1 trillion ($161 billion) as sales shift from hospitals to online pharmacies.
On the services front, China moved last month to overhaul the way patients seek medical care by attempting to break the habit of heading to a big hospital in a major city and instead encouraging folks to seek local advice and referrals first--all in an effort to get a handle on soaring care costs.
The hospital reforms may also pave the way for more online services in that space.
The play in OTC lays down a market as well for Alibaba Group as it took a controlling stake in HK-listed Alibaba Health Information Technology to grow in a still-fragmented market in China for online drug sales in July.
The potential saw Hangzhou-based Alibaba transfer its China online pharmacy business from Tmall to Ali Health in April for $2.5 billion of newly issued shares and convertible bonds that if fully utilized would take its stake in Ali Health well above 50% from around 38% now.
- here's a story on Yahoo news