JD Health (6618.HK) HK) threw out the first semi-annual report of Internet medical e-commerce.
On August 16, JD Health (6618. HK) released its semi-annual report, with revenue and net profit of 28.804 billion yuan and 2.037 billion yuan in the first half of 2024, a year-on-year increase of 6.04% and 30.48% respectively.
This is the first time that the revenue growth rate of JD Health's semi-annual report after listing has been in single digits.
At the close of trading on August 16, JD Health's increase still reached 8.22%.
Behind this, JD Health's profit margin has improved significantly. In accordance with non-IFRS, JD Health's profit margin reached 9.18% in the first half of 2024, setting a new record for half-year performance since listing.
This may be inseparable from measures such as continuing to increase the number of innovative drugs with higher unit prices and expanding the scale of third-party sellers.
In the next step, JD Health plans to continue to increase the layout of online and offline omni-channels to expand coverage.
Growth is in the single digits for the first time
After years of rapid growth, JD.com's healthy growth pace has begun to slow down.
In the first half of 2024, JD Health's revenue will be 28.804 billion yuan, a year-on-year increase of 6.04% and a decrease of 27.2 percentage points from the same period in 2023.
This is the first time that JD Health's semi-annual report has seen revenue growth fall to single digits since its listing.
The main reason is that the growth rate of pharmaceutical and health products that carry the banner of JD Health's revenue has declined.
In the first half of 2024, this part of the business generated revenue of 23.91 billion yuan, a year-on-year increase of 3.2%, and the growth rate fell by 29.32 percentage points year-on-year.
A slowdown in growth seems inevitable.
JD Health was listed at the end of 2020, when it was affected by the epidemic and other factors, and the market had a strong demand for online drug purchases, and JD Health also ushered in rapid growth from 2020 to 2022.
However, with the return of offline traffic, JD Health and other Internet pharmaceutical platforms may face new growth bottlenecks.
In fact, in 2023, the signs of JD Health's revenue slowing down have already appeared, with a revenue of 53.724 billion yuan in the current period, a year-on-year increase of 14.75%, a decrease of 37.17 percentage points from 2022.
But JD Health's profit margins have improved. Non-IFRS profit in the first half of 2024 was RMB2.644 billion, an increase of 8.54% year-on-year; The profit margin for the same period was 9.18%, an increase of 0.21 percentage points year-on-year.
This is related to JD Health's optimization of its product portfolio and the expansion of third-party cooperation.
On the one hand, JD Health has improved its overall profitability by introducing innovative drugs with higher unit prices through cooperation with large pharmaceutical companies.
In the first half of 2024, a number of new specialty drugs of JD Health will be launched for the first time in JD Pharmacy, including Xingqi Ophthalmology (300573. SZ), 0.01% atropine sulfate eye drops, Sanofi's new drug Zhilida, etc.
"In terms of pharmaceuticals, JD Health has comprehensively deepened cooperation with many pharmaceutical companies around the world, fully empowering brands in the first launch of new specialty drugs, omni-channel expansion of drugs and digital marketing. During the reporting period, a number of new specialty drugs were launched for the first time in JD Pharmacy. JD Health said.
However, fighting for the first right to launch innovative drugs has become an important way for Internet pharmaceutical e-commerce companies.
In 2023, Ali Health (0241. HK) launched the GLP-1 drug liraglutide injection of Huadong Medicine (000963.SZ) and Pfizer's alopecia areata drug Lefunuo online; Meituan (3690.HK) HK) also launched Merrill Lynch antipyretic patches online, Pfizer's Loctite for migraine treatment, etc.
On the other hand, the scale of JD Health's third-party sellers is expanding.
As of the end of June 2024, the number of third-party merchants on the JD Health platform reached 80,000, a year-on-year increase of 122.22%.
In March this year, JD Health also made it clear at the partner conference that it will adhere to the strategy of paying equal attention to self-operation and open platforms in 2024, especially increasing support for third-party business partners.
Omni-channel
With the implementation of the online payment reform of medical insurance, JD Health's revenue growth space is expected to open.
In order to promote the pilot work of online payment for drugs, starting from July 1 this year, insured persons in Beijing can use their personal accounts to purchase OTC drugs at 300 designated retail pharmacies of medical insurance on online platforms such as JD.com and Meituan.
According to JD Health's semi-annual report, as of the end of June 2024, more than 350 designated retail pharmacies for medical insurance have been connected to JD Health's platform, and the service network covers all administrative districts in Beijing.
JD Health said it would actively respond to people's needs and policy guidance and open online payment services for medical insurance in Beijing, Shanghai and Dongguan.
This may be the potential for JD Health's revenue growth.
Since Beijing is currently only open to OTC drugs, and the medical insurance payment market for prescription outflow has not yet been opened, it is still unknown how much room this can bring to JD Health's performance growth.
Correspondingly, access to medical insurance payment also means that JD Health's drug prices will be more strictly regulated.
JD Health is planning to carry out online and offline omni-channel layout.
"JD Health has continuously improved the efficiency of its retail model by building and improving an integrated online and offline service system." JD Health pointed out.
In 2023, JD Health will set up an instant retail department to expand the scale of services and improve the efficiency of distribution by deploying offline self-operated pharmacies and online cooperative pharmacies - as of the end of June 2024, JD Health's services cover more than 490 cities and more than 150,000 cooperative pharmacies.
"During the reporting period, we accelerated the investment attraction and expansion of the service network, and at the same time, by improving the efficiency of our self-operated stores, we achieved the speed of the 'JD drug delivery in seconds' service to 'an average of 28 minutes, and the fastest 9 minutes' delivery." JD Health pointed out.
In terms of self-operated stores, JD Health has not disclosed specific data for the time being. However, according to public reports, Wang Yiting, head of JD Health's instant retail department, said that JD Health has opened more than 150 offline self-operated pharmacies.
However, JD Health's practice of being both a "referee" and a "player" may bring some pressure to its expansion of third-party retail pharmacies.
At present, large offline chain pharmacies are also increasing their own online channel construction. In 2023, the common people of chain pharmacies (603883. SH) online channel sales were 2 billion yuan, an increase of 38% year-on-year.
In contrast to JD Health, Meituan emphasizes that it has no intention of building its own pharmacy.
"Meituan Pharma does not open offline pharmacies, and from an objective business perspective, we are not good at opening pharmacies and managing pharmacies, but we are always in awe of the professionalism of the pharmaceutical industry. We prefer to do the ecological construction of the platform. Li Jinfei, general manager of Meituan's pharmaceutical division, pointed out.
In the first half of this year, two offline hearing centers operated by JD Health have opened; At the beginning of the year, JD Health also acquired Tangshan Central Hospital, which is the first offline tertiary large-scale general hospital controlled by JD Health.
Continuing to increase the offline "heavy asset" operation mode may bring some pressure to JD Health's profit level.
Whether the omni-channel layout model can bring more incremental space to JD Health, the market is continuing to observe.
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