• Q: Pandemic has moved a lot of healthcare online and what do you see as the reason for investors have really jumped on to this stock (JD Health) today?

A: Sector-wise, COVID-19 has accelerated the policy implementation process. Since 1H20, the government has launched a series of supportive documents to encourage the adoption of online healthcare services. The pandemic has spurred the market education process as well, as users typically want to avoid cross-infection and prefer online channels to purchase pharmaceutical products and consult with online doctors which are convenient and safe to them. These will combinedly accelerate the digitalization process of healthcare industry.

• Do you expect the momentum that we are seeing the stock to be watched in a good season，with more significant upside on the move of online prescription drugs sales?

A: Yes. We think JD Health is being as the main beneficiary from the deregulation of online prescription drug sales, which has a large addressable market in China with about RMB 500bn in total. Also, the online penetration for this specific filed is still quite low in China, at about 2% last year, so we think it still has large upside room to reach about 10% down the road, and JD Health as the leading player will benefit the most.

• Is that lots of money that they raised in terms of what they said that they will make investment and expand their business which is pretty general. Where do you think they might spend in terms of business expansion? Are they talk about outside of China?

A: 1) If they want to build up large-scale prescription drugs sales, they’ll have to build up medical resource network. It is because people who want to purchase drug online have to consult with online doctors and obtain the electronic prescriptions, so that internet players have to connect with more qualified offline doctors, in which JD health has built up its in-house medical team to acquire famous doctors to their platform which will use part of their budget. 2) They will allocate part of the budget to build up internet healthcare platforms, prescription drug warehouse infrastructure to enhance supply chain capability etc. 3) For overseas expansion, PAGD has footprint in overseas countries, such as replicating their experience into Southeast market.

• Does these players such as AliHealth, JD Health, and PAGD benefit a lot as they are having monster parent company?

A: Yes. The key strength for these companies is that they have strong parent company. For Ping An Good Doctor, they can leverage the Ping An Group’s strength in insurance, by which they could bundle their membership products with health insurance, which will further help promote the product to users much easier. For pharmaceutical eCommerce players, like AliHealth and JD Health, they will better leverage their strong parent companies’ strength in eCommerce field, by which they’ve already known how to operate the eCommerce business and sell the product, and they can leverage their massive traffic support as well.

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