KamLeungPage15/4/2025RxTrainBringingHealthcaretotheBillionAProposalfore-commerceinChinaKamH.LeungKamLeungPage25/4/2025ContentsPageMarketAnalysis31.3BillionPeopleBuys$18BillionofDrugsAnnually3TheGovernmentNeedsSomeoneelsetopayforTheseDrugs3InternetUsageinChina4e-CommerceinChina4CompetitionandThreats4UnevenQualityofCare5Advertisement6Distributors6Three-leggedDebts6WhollyOwnedForeignEnterprise6TheBusinessModel8BusinessPlan8BusinessPlan:Technology8BusinessPlan:Content8BusinessPlan:Distribution(Fulfillment)9BusinessPlan:Payment10Execution10Assumptions11Risks11ManagementTeam12IPOSchedule12TenYearProforma13ProformaP&L:RxTrainOwnsnoInventory14ProformaP&L:RxTrainOwns80%ofitsSales16Appendix:I.NewspaperCoverageofKatrinaLeung18II.www.1hao.com,February12,200019KamLeungPage35/4/2025MarketAnalysisWhilethediscussionappliesto1.3billionpeopleinChina,itcanapplytothe55millionoverseasChineseinSouthEastAsia,HongKong,andTaiwan.Asthediscussionappliestothepharmaceuticalmarket,itplaysequallywellwithhomecare,clinics,andhospitalsupplies.Similarly,oncethee-commercebrandnameofRxTrainisestablished,thestrategyappliesequallywelltohigh-endglobalconsumerproductsthroughoutGreaterChina.1.3BillionPeopleBuys$18BillionofDrugsAnnuallyRxTrainseekstoprovideworldclassmedicalcontenttoChineseconsumerssothattheycanmakeinformeddecisiontopurchaseWesterndrugs,nutritionals,andChinesemedicinesovertheweb.Saleoftheseclassesin1998were:drugs$12.5Billion,nutritionals$2.5B,andtraditionalChinesemedicine(TCM)$3B.WhileclassificationofhealthsupplementsintonutritionalsandTCM’smakethe$5.5Bfigureunreliable,thereislittleargumentthatWesterndrugsareenormouslypopular.Joint-ventureswithmultinationaldrugcompanies(MNC)captureone-thirdofthemarketbutaccountforhalfoftheprofits.NameslikeXianJanssen,ShanghaiSquibb,andSmithKlinearepracticalhouseholdnamesandtheirproductseasilyavailableinstore-frontpharmacies.Thethinlinebetweenprescriptionandover-the-countermedicineinChinabodeswellforRxTrain.Thestore-frontapproachcreatesneedforconsumereducationandbreeds“fakemedicine.”Asanauthoritativewebsiteprovidingthelatestglobalhealthcareadvance,RxTrainwillcreateinstantaneouscredibilityandbrandrecognition.Auser-friendlygraphicinterfacewillhelp(Chinese)consumerstomakeinformedchoicesamongstdrugs,nutritionals,andTCM’sfortheirailment.Directshipmentorpickupfromdesignatedpharmacieswillguaranteecustomersfreedomfrom“fakemedicines.”TheGovernmentNeedsSomeoneelsetopayforTheseDrugsChinaenjoysuniversalhealthcarecoverage.Theworkunitnegotiatesalevelofcarewithadesignatedhospital.Theworkerandfamilymembersseenatthathospitalanditsoutpatientclinicpayforonlyextrasbeyondthatlevelofcare.Basiccareusuallyincludesthecostofdrugs.Inthecities,approximately70%ofthepopulationiscoveredbysuchworkunit(government)sponsoredhealthinsurance,withthebalanceself-paidpatientsatopenhospitals.Intheruralareas,theratioisreversed.Aselsewhereintheworld,suchthird-partyinsuranceinvitesabuse:fordoctorstoprescribemore,andmoreexpensivedrugs.Withdrugpricesspiralingoutofcontrol,Shanghaipublisheda“1000-druglist”in1996.Itdetailedthe1000drugsapprovedforreimbursementunderthemedicalinsurancesystemandlimitedtheiruse.Generallyregardedassuccessful,themodelismuchwatchedandcopiedthroughoutthecountry.KamLeungPage45/4/2025The“1000-druglist”controlsgovernmentexpenditurewhileshiftingthecosttotheconsumer.Incompliancewith...
