For a long time, there have been consumers complaining about the high cost of pet medical care. How do you view this phenomenon? Why do consumers feel that the fees are high but the companies are not making a profit? What is the current situation of domestic pet medications? Are imported drugs used more frequently in pet hospitals? What is the current status of pet medical talent in our country? How does it compare to other veterinarians in terms of level? What is the role of pet medical insurance? What impact will pet medical insurance have on the industry? What stages does the pet medical industry divide into? What factors restrict the development of the industry? How do you view the prospects of the pet medical industry?
Frost & SullivanFrost & SullivanCao Sijie, a consulting analyst for the consumer industry in Greater China at Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan'), was interviewed by Southern Weekend to discuss the current development status of the pet healthcare market.
Southern Weekend
Q
Currently, there are several pet healthcare companies seeking to go public. The prospectus of Xinruipeng shows that its revenue has been growing year by year, but net profit has been incurring losses for several consecutive years. Moreover, there have always been complaints from consumers about the high cost of pet medical care. How do you view this phenomenon? Why does it occur that consumers feel the fees are high but the company is not making a profit?
For a regular pet hospital, the initial investment cost is very high. In addition to venue rent and renovation costs, the purchase of medical equipment is also quite expensive, with the initial investment for a small community hospital often exceeding one million. At the same time, labor costs are also an important part of hospital operations. A community hospital, in addition to having doctors on staff, usually also requires corresponding assistants, beauticians, front desk staff, etc. Meanwhile, regarding current pet medical services, there is still a relatively high dependence on overseas products in some products. For example, in terms of commonly used vaccines, medications, and health supplements, the main reliance also lies on overseas brands.
These reasons have led to the current low profits of pet hospitals compared to expectations, but they are also related to the industry being in its early stages and a low localization rate of medical devices and products. Pet healthcare is a long-term and challenging field. From the perspective of foreign development, it is believed that future profit levels will gradually return to a reasonable level.
Q
Time ratio between the initial investment in medical devices and the cash recovery phase/What is the cost? Does this also affect the cost of a single inspection?
Usually, based on the size of the pet hospital, it can be divided into150Community hospitals of about [X] square meters,200Specialized hospitals with over 1,000 square meters and central hospitals only available in first- and second-tier cities.
Take community stores as an example. For fixed equipment such as medical devices, at least100Ten thousand yuan, including pet photographyXlightDROne machine15ten thousand~20Ten thousand yuan, a color Doppler ultrasound machine is nearly30Ten thousand yuan; costs of drugs, food, pet supplies, etc.20ten thousand~30Ten thousand yuan. The payback period of community hospitals may be close to2～3In [year], large pet hospitals will need8～10Returns the investment in a year, but the equipment3It will age in about a year, and if it continues to operate, it will require continuous capital investment.
Hospitals of a certain scale have more equipment, and all equipment has depreciation costs, which are converted into the customer's 'bill'. Since the domestic pet healthcare industry started relatively late, most specialized pet equipment and medications rely on imported brands, resulting in high costs.
Q
What is the current situation of domestic pet drugs? Are imported drugs used frequently in pet hospitals? What is the price range of imported pet drugs? How is the research and development of domestic pet drugs progressing?
In the field of pet medications and vaccines, there are no leading domestic enterprises in this sector, and China's pet medication and vaccine industry is still in its infancy. In the past, the pet market was small, with insufficient profit margins to support pharmaceutical companies' research and development. Moreover, new drug development is a high-investment, time-consuming process. Therefore, at present, China's pet medications and vaccines are mainly imported from foreign brands.
In the short term, relying on policy promotion to shift from human and veterinary drugs to pet use can lead to more domestic pet medications being available on the market; in the long run, pet hospitals+The cooperation between pet pharmaceutical companies will accelerate the development of the domestic pet drug market.
Q
Talent has always been a factor restricting the development of pet healthcare. What is the current situation of pet healthcare talent in our country? How does their level compare to that of other veterinarians? Why is it said that there are many pet doctors now, but few high-end talents?
Overall, there is no particularly shortage of talent in pet healthcare, but there is a lack of high-end professionals and experts. This is largely due to the relatively short development time of the pet healthcare industry in our country, and consumers' acceptance of pet healthcare is still in the process of cultivation.
Similar to seeing a doctor with an ordinary person, in the medical field, the importance and influence of senior experts are far greater than those of regular doctors. However, how to cultivate high-end talent and specialists has always been one of the industry's challenges. High-end talent often requires a long career experience and extensive diagnostic skills, but consumers are often reluctant to trust young doctors, making talent cultivation even more difficult. Leading healthcare groups have an advantage in this regard by creating an internal talent development system, organizing learning and training, and integrating internal resources to cultivate high-end talent.
Q
Pet medical insurance is also on the rise. What is its role? What impact will pet medical insurance have on the industry?
In recent years, many commercial insurance companies have been entering the pet insurance market. The products are roughly divided into two categories: one is pet medical insurance, and the other is pet accident insurance. This is mainly because the demand for pet insurance is real, and insurance can reduce the burden on pet owners when their pets are sick.
On one hand, as the pet ownership community continues to expand, high pet medical expenses have added economic pressure on many pet owners. Reducing the medical burden through insurance has become an inevitable need for pet owners. Approximately65%of90later,95Subsequently, it is also the primary audience that has a high acceptance of insurance, as they need insurance to diversify risks and alleviate economic burdens.
On the other hand, the penetration rate of pet insurance in China is currently low. Compared to developed countries such as Europe and America, there is still significant room for growth in pet medical insurance. However, the development of pet insurance in China is still in its initial stages, and business models need further exploration. To move towards standardization, scientification, and planning, the industry needs the joint efforts of all parties to promote the healthy development of the industry.
Q
In recent years, what stages do you think the pet healthcare industry has developed through? What are the factors that have constrained the development of this industry? How do you view the prospects for the pet healthcare industry?
The development of the pet healthcare industry in our country started relatively late.1985Year-end1999The industry has only entered the exploration phase, during which the overall domestic pet consumption market size is relatively small, with only some large animal hospitals having opened small animal clinics; entering21In the century, China's pet healthcare industry began to germinate and activate. The number of domestic pets grew rapidly, and a small-scale industry standard system began to be gradually established;2011Year-end2019In China, the pet healthcare industry began to develop rapidly, especially in2017 - 2018In the industry, China's pet healthcare sector has seen a considerable peak in investment and mergers and acquisitions. Currently, the number of pet hospitals owned by the leading company Xinruipeng Group has exceeded1,800home;2020Since [start year], like all consumer industries, the pet industry has been greatly affected by the pandemic. However, compared to developed countries in Europe and America, the current Chinese pet market still has a significant gap in terms of per capita pet ownership and pet spending compared to these regions. There is still great room for development in the future, especially among leading chain enterprises.
The main factors restricting industry development include the difficulty in cultivating deep-seated pet medical talents, shallow exploration of customer needs, and low supply chain efficiency. These are also areas where leading companies make key investments. In addition, many sub-sectors such as high-end pet food, pet insurance, tourism, and funeral services offer many investment and development opportunities.
*This interview was published in Southern Weekend, with reporter Song Bingchen. Original title is "The Seeing a doctor is more expensive than getting treatment for humans, so why do some pet hospitals find it difficult to make money? >> (Click "Read Full Article" at the end of the text to read the complete report).
