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MedPeer (TSE: 6095), Japan’s Leading Integrated Medical & Healthcare Community Platform – H.E.R.O. Innovators Insights from CEO Dr. Yo Iwami | H.E.R.O. HeartWare | 22 April

What is the future of knowledge sharing amidst the rise of fake news? Quora does not seem any special when Adam D’Angelo left Facebook as the CTO in 2008 to build the Q&A expert community social media platform in 2009. But what differentiates Quora from Yahoo Answers and other Q&A user-generated content (UGC) sites are the influential experts who answer questions on Quora and the authenticity of answers. Quora went on to attract over 200 million monthly active users and command a valuation of US$1.8 billion. Zhihu 知乎, the Chinese Quora founded by Zhou Yuan 周源, Li Shenshen 李申申 and Huang Jixin 黄继新, is valued at US$2.5 billion. Different from most social media platforms where posting a lot regularly is the norm, one piece of high-quality content on Quora/Zhihu can yield long-tail results, thus becoming a powerful marketing tool and platform to establish long-term trust. However, both Quora and Zhihu are estimated by research firm Owler to generate less than US$20 million in revenue and remain loss-making. What would be the value of an Asian Quora/Zhihu specialized community platform that generates higher recurring revenue with healthy profitability of operating margin of 16.9% (1Q FY09/2019 margin 22.8%), positive free cashflow margin of 13.4%, ROE (= EBIT/ Equity) of 28.5%, ROA of 21.4% and boosted by big data and artificial intelligence to create new innovative categories of growth?

This week, we highlight the under-the-radar listed Asian exponential innovator MedPeer (TSE: 6095) who is Japan’s leading integrated medical care and healthcare community platform that aggregates doctors’ knowledge and user-generated content and drug reviews as collective medical intelligence and generates revenue from pharmaceutical companies and other corporate clients. MedPeer operates two key businesses, Doctor Platform and Healthcare Solutions.

(A) Doctor Platform (1Q FY09/2019): 78% of sales, 92.2% of OP, OP margin 40.1%, sales growth +1.3X yoy
MedPeer is a specialist community social media platform (https://medpeer.jp) with over 120,000 member doctors (66,000 in March 2014), or 40% of Japan’s 300,000 physicians, which provides support with medical collective intelligence content in which member doctors share clinical experience (members can post and read posts for free) and online reviews of drugs (first of its kind launched in spring 2010). It is also a knowledge management tool for sharing live information from doctors on the ground. When a doctor encounters difficulty in treating the patient, he or she can reach out to the “collective intelligence” provided via MedPeer by doctors all around Japan, seeking out support in finding an optimal treatment method.

MedPeer generates revenue from over 60 major pharmaceutical client companies (e.g. Takeda Pharmaceutical, Pfizer Japan, Otsuka Pharmaceutical, Sanofi, GSK) and medical device manufacturers by offering access to the accumulated collective medical intelligence information who provide fees in ad placement and by leveraging its collective medical intelligence information to provide extensive marketing support for pharmaceutical companies in their planning, execution and management of marketing strategies. MedPeer generates additional revenue by referring MedPeer member doctors to physician placement agencies.

The MedPeer Doctor Platform includes services such as: (1) an online drug assessment bulletin board for doctors to share information about prescription drugs and contains more than 570,000 posts (293,000 in March 2014) covering about 370 medical areas and 2,700 types of drugs (over 90% of the medicine prescribed in Japan in terms of sales is covered); (2) Q&A Forum; (3) medical consultations (“Meet the Experts”); (4) MedPeer Asahi news (jointly managed with Asahi Shimbun since Feb 2005); (5) research services & Forum Survey; (6) case review meeting; and (7) job-hunting information service for doctors (“MedPeer Career”; https://career.medpeer.jp).

MedPeer is enjoying recurring and rising demand because the pharmaceutical industry is seeing a shift in drug marketing models, from extensive detailing activities by MRs (marketing representatives) to new models leveraging the internet (e-marketing). Doctors spend 39% of their information-gathering time online (compared to 17% with MRs), yet pharmaceutical companies spend some 1.5 trillion yen on MR-related expenses. This is about 91% of total marketing costs, compared to only about 2% or 40 billion yen that is used for internet-related marketing. Importantly, Japan’s Pharmaceuticals Fair Trade Association and the Japan Pharmaceutical Industries Association have tightened regulations regarding admission and visits to doctors by MRs when promoting their products which includes all information provision, collection, communication and entertainment activities to ensure transparency regarding the money transfer from pharmaceutical companies to doctors. Under these circumstances, doctors are required to efficiently collect useful information about medicines without relying on MRs.

(B) Healthcare Solutions: 22% of sales, 7.8% of OP, OP margin 11.9%, sales growth +2.1X yoy
MedPeer utilizes expert networks such as doctors and administrative nutritionists to develop services targeting consumer health promotion and disease prevention areas. The Healthcare Solutions B2B2C business operates three key healthcare support services for health insurance societies, corporate clients and consumers:

(1) Mediplat Inc (51%-owned subsidiary) operates the online healthcare consultation platform “First Call” (https://www.firstcall.md) which was first launched in Feb 2016 and has established since April 2018 a joint venture with Sugi Holdings (TSE: 7649), a leading pharmaceutical retail chain with a network of over 1,000 pharmacies, 6.8 million point members and 4 million app members and a market value of US$2.8bn. MedPeer and subsidiary Mediplat issued new shares through third-party allotment to Sugi Holdings and Sugi Pharmacy (issue price of 352m yen and 350m yen respectively) effective April 2, 2018. As a result, Sugi Holdings possesses 3.0% of the company’s issued shares, and Sugi Pharmacy holds 49.0% of Mediplat’s issued shares.

“First Call” provides healthcare services for companies and health insurance societies on a recurring revenue annual basis, which include online industrial physician service (launched in July 2018) through which patients can connect with doctors via video calls or instant messaging, and an app-based stress-check service (launched in Feb 2019), completing the health and labor management solution to meet the sharp rise in demand for health and labor management solutions ahead of the work style reform law taking effect in spring 2019.

Businesses with 50 or more employees are required by law to have a contract with an industrial physician, but compliance rates have been low. Following the suicide of an overworked Dentsu employee, the government stepped up its enforcement, requiring companies to record consultation logs in addition to having a contract with an industrial physician. MedPeer offers conventional referrals of industrial physicians, and provides online peer support to companies that already have contracts with industrial physicians. Consultations that do not require the professional skills of an industrial physician are referred to the chat-based medical consultation service (chats or video calls with physicians of relevant specialty). Companies that use the service together with the online industrial physician service benefit from a one-stop service that includes everything from an online stress check to an interview-based guidance from a doctor. The stress check system was established as a way to prevent workers’ mental health problems after the revised Industrial Safety and Health Act went into effect in December 2015, making it a legal requirement for businesses with 50 or more employees to conduct stress checks on all employees. Scheduling has become a constraint since industrial physicians only visit these companies on certain days. Bringing these consultations online generates benefits, such as enabling appointments on days other than designated visitation dates and allowing individuals to make their own arrangements with industrial physicians.

At the end of Q1 FY09/2019, MedPeer had 178 ‘First Call’ clients, up 2.7X yoy from 66 (120 at end of FY09/2018 and over 200 as at end of Feb 2019) and provides medical consultations via chat or video calls to over 150,000 people. From 12 Nov 2018, Mediplat collaborated with Sugi to offer the self-care service ‘Sugi Support’ that utilizes Sugi Pharmacy’s store network and other partner companies’ points of contact with customers.

(2) FitsPlus Inc (100% subsidiary) which operates nutritionist platform “DietPlus” (https://dietplus.jp), a business acquired from Cookpad (TSE: 2193) for 227m yen (US$2m) in Oct 2016. DietPlus provides dietary coordination service provided by a network of over 1,500 certified dietitians that includes specific health guidance provided by dietitians either in-person or through a smartphone app; media services with specialized diet-related content; and specified health examination and health guidance service for health insurance societies. As at 1Q FY09/2019, MedPeer grew the business 1.5X yoy (4,054 cases versus 2,639 in Q1 FY09/2018). MedPeer is building a service platform based on Sugi Support Deli (meal delivery), Sugi Support Eats (dietary records), and Sugi Support Walk (pedometer), and the service was launched in March 2019. The core target is the 200 million visitors to Sugi Pharmacy stores each year, who will be offered a variety of preventive health services. MedPeer aims to generate earnings through the Sugi Support Walk and Sugi Support Eats apps in collaboration with companies with individual customers by offering pedometers and dietary advice.

(3) medpass Inc (49%-owned affiliate; https://medpass.co.jp/service), established in June 2016 as a JV with NTT DOCOMO’s Nihon Ultmarc to provide verification services for physicians and other medical professionals.

The only social media platform company operating in both medical care and healthcare
MedPeer is currently the only company operating in both the medical care treatment and healthcare (health promotion, disease prevention, pre-symptomatic care, care during onset, and therapeutic care) fields through all of the stages of a patient. In contrast to competing websites such as M3 (TSE: 2413; 270,000+ member doctors) and Carenet (TSE: 2150) that mainly use and communicate information provided by pharmaceutical companies and other suppliers, MedPeer has distinguished itself as a social media site and a knowledge management tool based on information provided by physician users. The value of the MedPeer website content grows as the number of active users increases. The DAU (Daily Active User) figure for March 2018 was 1.3x the figure at end-March 2017, creating a positive cycle of user generated content (UGC), in which increases in content make the service more attractive and therefore lead to growth in the number of visitors, which in turn results in more content.

By being the first and only company to offer platforms covering both the health and medical fields, MedPeer can expand its customer base from pharmaceutical companies to health insurance societies, companies, and consumers, as well as benefit from being the first to offer linked services. MedPeer considers medical big data generated by each business segment as its core asset and plans to strengthen its business and services by effective utilization of these asset. MedPeer seeks to create new value and make a profit in the process by the synergy effect of lifelogs (medical and nutrition consultation data and diet/exercise data), PHRs (personal health records), offline data (prescription and dosage data), and its collective medical intelligence (reviews of drugs by physicians and clinical consultation data). By utilizing accumulated data, such as analyzing them using AI, MedPeer plans to launch several preventive healthcare services.

The most difficult thing in the Internet era is to create a well-used and valuable community. And the winners who have achieved that are companies with tremendous power to expand the services provided to users. After a difficult initial five years since its 2014 listing, MedPeer has overcome a difficult stage and is at the tipping point for exponential growth.

With the community, circumspection and compellingness exponential edge, MedPeer’s business model generates stable and recurring revenue, achieving a 229% and 831% absolute increase in sales and operating profit in the recent three years and generates healthy profitability with operating margin of 16.9% (1Q FY09/2019 margin 22.8%), positive free cashflow margin 13.4%, ROE (= EBIT/ Equity) 28.5%, ROA of 21.4%, propelling a 18% increase in market value from its split-adjusted IPO price of 2,000 yen in June 2014 to US$194m.

On 13 Feb, MedPeer announced its 1Q FY09/2019 (Oct-Dec 2018) in which sales increased 39.3% yoy to 762m yen and operating profit rose 89.1% yoy to 174m yen. Balance sheet is relatively healthy with net cash of 1.48bn yen (US$13.2m; of which 640m yen or US$5.7m was raised during its IPO) which is around 6.6% of market cap. MedPeer’s FY09/2019 forecast is sales of 3.2bn yen (+45.5% YoY) and operating profit of 540m yen (+46.8% YoY). On 10 April 10, 2019, MedPeer announced a two-for-one stock split of its common stock, with the effective data on 1 July 2019.

Bengo4.com (TSE: 6027). which provides online legal consulting services with a community of 170,000 registered lawyers and generates approximately similar revenue and operating profit to MedPeer (FY03/2019 sales 3.1bn yen and OP 510m yen), has a market value 4.3X of MedPeer at US$833m. Quora, the Q&A expert community website with an estimated revenue of US$8m and over 200m monthly active users (MAU), has a valuation of US$1.8bn.

Growth Strategy: Doctor Platform
To grow the Doctor Platform, MedPeer intends to make its currently “helpful” services “indispensable” to doctors in their clinical practices and research through: (1) Expansion of the MedPeer member base; (2) Transition from ad delivery platform to marketing platform; (3) Content production; (4) Vertical and horizontal rollout of collective medical intelligence platform.

(1) Expansion of the MedPeer member base:
MedPeer plans to form alliances with academic societies, university medical offices, and companies (such as medical publishers and research and recruitment companies) with a member base of physicians. On 11 Jan 2019, MedPeer formed an alliance with Minkore!, which is used by half of the candidates for the National Medical Practitioners Qualifying Examination, to grow its membership among young doctors and medical students, acquiring members at the onset of their careers. The younger generation appreciates the convenience of online services. MedPeer provided solutions to academic societies with large memberships and focused on strategies that could drive step changes in member numbers.

On 7 Nov 2018, MedPeer has entered into a business partnership with Intage Holding’s (TSE: 4326) Anterio (https://www.intage-healthcare.co.jp) and Plamed (https://plamed.com). Anterio develops marketing research support business in the medical and healthcare area for pharmaceuticals, medical devices and health food companies. Plamed conducts surveys commissioned by affiliates such as Intage Group and operates a membership website of physicians who are major survey monitors. This business alliance with Intage enables MedPeer to expand its membership base of doctors and provide information to more physicians, and provide consistent support from strategies in the marketing process to communication and verification of drug effectiveness.

(2) Transition from ad delivery platform to marketing platform & (3) Content production
MedPeer originally operated a doctors-only community website and engaged in content delivery and was not focused on formulating strategy, producing content, creating research questions, or winning projects. MedPeer is strengthening its transition from an ad delivery platform to marketing platform with content production and research capabilities. MedPeer will cover the whole value chain of pharmaceutical marketing by setting up a new content production team and developing new services through alliances with Anterio and Plamed. It will provide an integrated marketing support service covering strategy formulation to content production, content distribution, assessment of effectiveness, and improvement.

Anterio and Plamed excel in drawing out potential needs through research. Combining the functions of the three companies allows MedPeer to offer an integrated service. Previously, all processes were performed by separate companies; for example, one company would discover ideas for MedPeer, and another company would produce the content for MedPeer to deliver. Although MedPeer, Anterio, and Plamed have some overlap and compete with each other, they also have complementary strengths and weaknesses. MedPeer believes that being able to offer an integrated service like its competitors will help it win marketing support contracts with pharmaceutical companies and other clients. Major pharmaceutical companies also prefer integrated services.

MedPeer plans to fully utilize its own unique data, including review data, articles posted by members, and influencer information (doctors who are next-generation KOLs or key opinion leaders). Instead of simply broadcasting a program like on television, MedPeer will also measure the effectiveness of its marketing activities (by establishing a metric that quantifies customer loyalty, observing changes in doctors’ prescribing behaviors through the drug assessment bulletin board), and use the information to adjust strategies. Main content includes webinar plans and web pages containing information such as doctor interviews and disease information that pharmaceutical company ads on the MedPeer site link to. Before forming the alliance with Anterio and Plamed, MedPeer was not involved in producing content linked to by pharmaceutical company ads, but it plans to engage in content production going forward. MedPeer is confident that it can create content that is understandable and easy to view, thanks to the expertise it gained from its website on how to achieve high click rates by adjusting ad presentation (format and wording).

(4) Vertical and horizontal rollout of collective medical intelligence platform
MedPeer is developing the collective medical intelligence platform service by launching support services for business launches and management with YakuMed, a platform for pharmacists. MedPeer has recently launched “Clinic Support” (https://clinic.medpeer.jp), a collective medical intelligence platform for doctors wanting to open their own clinics, with “satisfactory” initial results in terms of Q&A services, content delivery, and registration numbers for matching services. MedPeer is evaluating on the right steps before charging fees and generating earnings.

MedPeer plans to launch YakuMed, a platform for pharmacists to solve problems and challenges they face on the job, in spring 2019. The platform will feature a drug review sharing service (the MedPeer drug assessment bulletin board for doctors adapted for pharmacists) and discussion forums for pharmacists. Alliance partner Sugi Pharmacy constantly has 3,000–4,000 pharmacists on duty, from whom MedPeer can always access live reviews. Doctors’ drug reviews on the MedPeer site are useful and of great interest to pharmacists.

Physicians and pharmacists perceive drugs differently. Although doctors evaluate compliance benchmarks like daily dose frequency (taking a drug once a day is easier to continue than three times a day) and dosage form (size of tablet or pill, powdered medicine is not easy to swallow), pharmacists have a more in-depth understanding of compliance issues. Due to their daily experience handling pharmaceutical products, pharmacists will also provide collective intelligence from perspectives that are different from those of doctors regarding topics such as which generic drugs are easier to remove from bulk packaging. MedPeer believes the pharmacist platform has potential as a marketing business, considering that pharmacists control which generics are dispensed as the government pushes to increase their use.

MedPeer is also planning a platform providing support when dispensing pharmacies transition into “family pharmacies” with an app service that connects patients directly with pharmacies to expand their roles in patient–customer relationship management and patient medication support. A family pharmacy keeps comprehensive information on a patient’s prescription and OTC drug usage and supports the health management of local residents by providing professional pharmaceutical skills and services, such as 24-hour service, home visits and periodic checks on whether patients have any leftover or duplicate medications, or are experiencing side effects. The government has been promoting the separation of medical practice and dispensing so that doctors and pharmacists can separate their functions while maximizing their professional knowledge and skills, thereby improving the quality of medical care. Under these conditions, problems have arisen in recent years due to the increase in “monzen pharmacies” which are dispensing pharmacies located near hospitals. Patients attending a hospital will usually have their drugs dispensed at a nearby pharmacy (rather than one near their home). As a result, pharmacies do not have a full record of each patient’s medications, while patients suffer an increase in medical fees and must go to different pharmacies to have their drugs dispensed.

The government formulated a “Pharmacies for Patients” vision to address this problem in October 2015, pushing dispensing pharmacies to enhance their roles to transition to become family pharmacies. Pharmacies must shift their priority from dealing with goods (dispensing) to dealing with people (such as providing advice and instructions on how to take medication) to attract patients as family pharmacies. This means that dispensing pharmacists must improve their professional knowledge and communication skills. The majority of dispensing pharmacies are small or owner-operated businesses that are not equipped financially or trained to undertake the new role required of pharmacies. Thus, many pharmacies and pharmacists are struggling to cope with the challenge of taking on new functions and providing new value.

On 7 Jan 2019, MedPeer entered into an alliance with EM Systems (TSE: 4820) to link its services such as its drug assessment bulletin board to EM Systems’ medical and dispensing systems provided to clinics and pharmacies. The aim is to expand service range and increase membership among doctors and pharmacists. EM Systems has the leading market share (32% in Japan) in dispensing systems for pharmacies, so MedPeer will display reviews from its drug assessment bulletin board (570,000 posts in aggregate) to link their services. The bulletin board was previously provided only for doctors, but by expanding this to include pharmacists, MedPeer hopes to engender changes from the viewpoint of generating earnings and service value.

Growth Strategy: Healthcare Solutions
The government’s focus on specified health guidance has provided a tailwind for MedPeer’s Healthcare Solutions business. The government has been urgently implementing initiatives, such as increasing the rate at which it collects healthcare support money for senior citizens aged over 75. Deregulation has also simplified the procedures for providing online specified health guidance, which was traditionally provided in person by dietitians. The government’s target rate for implementation of specified health guidance in 2023 is 45% (versus an implementation rate of 18% in 2016). Incentives aimed at encouraging more people to take up specified health guidance include diversifying the guidance requirements (e.g., shorter guidance period, use of ICT, model programs, etc.), setting incentives for insurance societies, and starting distribution of health scoring reports.

DietPlus is a personal dietary guidance service to help people eat properly and lose weight in a healthy manner. It leverages a network of nationally licensed dietitians. DietPlus consists of a business providing services for health insurance societies and companies, a media business (distributing contents emphasizing the importance of proper diet in losing weight and advertising on the website and app to draw customers to the app or to actual stores), and a consumer diet business (provides consumers customized dietary guidance from a personal dietitian, either in person or through an app). With DietPlus, the company aims to help control rising medical costs in Japan by providing preventative medical treatment to ward off lifestyle diseases or stop them from becoming more serious.

For health insurance societies and companies, the cost of specified health guidance services (health guidance given to individuals assessed as requiring lifestyle changes due to a high number of risk factors for metabolic syndrome) per member or employee is typically 20,000–40,000 yen. Face-to-face consultations for consumers are priced at 62,800 yen for two months or 152,000 yen for six months (both excluding tax). For services provided through an app, a one-week trial costs 3,900 yen, a four-week course 12,000 yen, and an eight-week course 23,400 yen (all excluding tax).

MedPeer plans to expand the scope of its specified health guidance service by harnessing its dietitians platform, because physicians prioritize diet in preventative healthcare, and dietitians are more effective at dietary guidance than doctors. MedPeer plans to reduce the workload of insurance societies and business operators through the use of IT, and increase service levels through measures such as affiliated support programs for people with severe diseases. It also intends to devise a system for recruiting and training licensed dietitians.

MedPeer plans to build a lifelog platform that enables personalized, one-to-one marketing based on lifestyle records by deploying Mediplat’s lifelog apps centered on diet and exercise (records the number of steps walked) to partner companies. These apps have been introduced at Sugi Pharmacy stores (Sugi Support Deli, Sugi Support Eats, and Sugi Support Walk). The service will be offered at all Sugi stores starting in March 2019. Although the product is currently provided via OEM, Sugi Pharmacy says it will consider in-house production if the nationwide rollout is successful.

MedPeer also plans to build up its database by taking advantage of the offline incentives offered by Sugi Support Eats and Sugi Support Walk (users collect points that can be redeemed in stores by recording what they eat and how many steps they have walked). MedPeer expects synergies between online and offline elements, because the alliance with Sugi Pharmacy allows it to avoid issues facing online companies without physical stores.
MedPeer’s key weakness in its healthcare solutions business is its low brand recognition amongst consumers for its “First Call” and DietPlus target consumers and companies servicing consumers, which would limit its expansion potential from the present B2B to B2C field. In B2C, Welby (TSE: 4438) provides its smartphone app to medical institutions who ask patients to record health information in the app and share that data for treatment and Welby receive usage fees.

The early MedPeer forum site has been developed on 31 Aug 2007 for individual doctors to share their wisdom and experience to address this issue. The question of one doctor may be a question of many doctors and also likely to be shared by others and I was motivated to help colleagues who were struggling before it was too late. It was also the day when I vowed to contribute to society from the perspective of a doctor as an entrepreneur from a sense of mission of ‘Supporting Doctors, Helping Patients’. Drug assessment bulletin boards, or an online platform for sharing drug reviews, did not exist prior to spring 2010, when MedPeer launched the service. We are proud of the responsible way we run this service. Unlike restaurant reviews, MedPeer cannot afford trouble on the bulletin board, since drugs can be a matter of life or death. We believe that providing unbiased information to doctors will result in a better medical world. If every doctor is empowered by the MedPeer service, more patients should be saved.” –  Dr. Yo Iwami, founder and CEO of MedPeer

MedPeer’s mission has been inspiring and distinguishes it from most social media platforms. Established in Dec 2004 by Dr. Yo Iwami and listed on TSE Mothers in June 2014, Dr. Iwami still works on the ground as a cardiologist physician once a week.

Thus far, of the 69 entrepreneurs and CEOs whom we had highlighted in our weekly research brief HeartWare, around one-third are in our focused portfolio of 40 HERO Innovators, while the rest are in our broader watchlist of 200+ stocks.

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“Since our establishment in December 2004, we have developed our business in accordance with our mission of ‘Supporting Doctors, Helping Patients.’ In August 2007, we launched MedPeer, a doctors-only membership community. The community amasses the experience and knowledge of individual doctors into a nationwide network—a “collective medical intelligence.” We operate this community in the aim of enhancing the quality of healthcare throughout Japan. We will harness the energy of all members of the Group to achieve further growth. At the same time, we will continue to aggressively pursue alliances, such as our business and capital alliance with Sugi Holdings (TSE: 7649)”, comments Dr. Yo Iwami, founder and CEO of MedPeer (TSE: 6095).

Industry Dynamics
CEO Dr. Iwami goes on to elaborate on the industry dynamics positively impacting MedPeer: “The ‘2025-year problem’ in which around 8 million baby boomers turn 75 or above is the tipping point. By 2030, one out of three people in the whole population is expected to be 65 years of age or older. There is concern that medical and nursing care expenses will increase rapidly. Based on this perspective, the Government of Japan is promoting structural reforms aimed at solidifying the foundations of sustainable economic and fiscal policies, and focusing on ‘prevention and health management’ and ‘support for independence’ as an urgent issue of extending healthy life span. The new medical and care system will be put into full operation by 2020, which will improve productivity of medical and care services by utilizing technology. Technology can achieve our vision to ‘reinvent medical care with collective intelligence’, not only to maintain the quality of medical care, but also to control medical expenses, and the services we have operated up to this point are just an introduction to realize our Vision.”

“In 2013, the Pharmaceuticals Fair Trade Association and the Japan Pharmaceutical Industries Association have tightened regulations regarding admission and visits to doctors by MRs (Medical Representatives) and CSOs when promoting their products which includes all information provision, collection, communication and entertainment activities to ensure transparency regarding the money transfer from pharmaceutical companies to doctors. Under these circumstances, doctors are required to efficiently collect useful information about medicines without relying on MRs.”

“Thus, the pharmaceutical industry is seeing a shift in drug marketing models, from extensive detailing activities by MRs to new models leveraging the internet (e-marketing) or a multi-channel approach that pairs MRs and e-marketing. Doctors spend 39% of their information-gathering time online (compared to 17% with MRs), yet pharmaceutical companies spend some 1.5 trillion yen on MR-related expenses. This is about 91% of total marketing costs, compared to only about 2% or 40 billion yen is used for internet-related marketing.”

“Japan’s major pharmaceutical companies tend to have lower operating profit margins than the major pharmaceutical companies in Europe and the Americas, mainly due to the higher SG&A-to-sales ratio in Japan. Pharmaceutical companies intend to improve the productivity of sales activities for healthcare workers, and further strengthen their efforts using digital tools such as websites, apps, and social networks as part of information provision and collection activities. As a result, e-marketing for pharmaceutical companies has changed from being positioned as ‘complementary tool’ to a medical information representative (MR) to a position that is expected to be used as a ‘principal axis’.”

“In the future, we plan to develop a service that is deeply rooted in the ’medical center’. The health tech (medical x IT) industry has unlimited growth potential. In this growth area, we have created a platform to consolidate and share doctors’ experiences and wisdom at a national level. In the future, based on this platform, we will create various services at an accelerated pace while keeping an eye on ‘HealthTech x Medical Center’ and will drive the HealthTech industry.”

CEO Dr. Iwami on the Early Entrepreneurial Period
While MedPeer is profitable and positive free cashflow generative now, CEO Dr. Iwami shared that his personal and entrepreneurial journey to start MedPeer has been full of struggles. CEO Dr. Iwami shared reflectively the inspiring story: “I was born in 1974 in Chiba prefecture. My mother’s family was a doctor’s family, and my mother’s grandfather used to work a hospital in Adachi City. My mother’s brother, or my uncle, had a clinic in Sakura, Chiba prefecture. My cousin is also a doctor and my brother goes to Gunma University’s medical school. My father works for a carpenter company. In the paternal side, four of the six brothers are carpenters. My father often said that ‘good craftsmen gather around good carpenters’. A carpenter is the team leader in building a house. A carpenter is at the center around a tile maker, a painter, a plumber, and so on. So the story ‘if a carpenter is not good enough, the craftsmen around you are also bad’ remains in my mind, which influences later the establishment of the community site MedPeer centered around doctors.”

“After graduating from Shinshu University School of Medicine in 1999, I joined the Department of Cardiology, Tokyo Women’s Medical University Hospital. My research theme is vascular regenerative medicine. However, a scandal called chart falsification occurred at Tokyo Women’s Medical University. The hospital has been denied the approval to provide advanced medical care by the Ministry of Health, Labor and Welfare and patients will no longer be able to come to the cardiovascular internal medicine department. As a result, I was dispatched to Tokai University, and I was to do research on revascularization mainly using mice. This was a big turning point.”

“While serving as a doctor, I established Medical Oblige Co., Ltd. (now MedPeer) in December 2004 based on the idea of building a community where doctors could help each other escape the isolation of one-on-one patient consultations and alleviate uncertainty how to best conduct treatment. The year 2004, when we were established, was a year when the number of medical lawsuits reached a record high in Japan and public trust of doctors had hit a new low. Since then, although the number of lawsuits has begun to decline, I still feel that medical distrust remains strong among the people. Doctors are a very lonely profession. Since our mission is to protect people’s lives, we have mental pressure every day. Dedicated physicians often suffered from burnout. I felt that something had to be done to improve the situation. What has caused such mutual distrust between healthcare workers and the public is the lack of explanation of healthcare workers and the heightened awareness of the confusion of the public and the quality of service provision. We have considered that the root cause of these mutual distrust is the overwhelming information gap between healthcare professionals and the people, which is the peculiarity of healthcare. Then, in order to resolve the information gap, I firstly stuck to the information sharing of doctors in the field. To carefully pick up the voices of each and every doctor who works in the medical field as well as the opinion of a particular prominent doctor. And to deliver those voices without bias to the world ahead of them.”

“At the time there was a mailing list called ‘Total Family Care (TFC)’ with about 2,500 doctors exchanging views and discussing cases. It was a very open mailing list that seriously considers patients. Joining the mailing list allowed me to have a specialist teacher out of over 2,000 doctors for my questions. It was a revolutionary thing. TFC was relying on the late founder Dr. Takumi Tasaka-sensei who declared ‘Making money is dirty, so we will never put ads on our mailing list’. It is so beautiful, but questions remain in the sense of continuity. The atmosphere of the mailing list changed after the death of the founder. MedPeer was a combination of watching this process and watching the rise of SNS such as Mixi that was listed in 2006. I thought that a mixi edition for doctors is absolutely necessary. Actually there is a doctor community in mixi, but it will fade away. The proportion of people who would like to consult a doctor has been increasing, and the number of doctors has been reduced, so the doctors have become busy and have left one after another. Then, it will eventually become a community of people who are interested in doctors. If so, I wanted to create a SNS specialized for doctors.”

“The early MedPeer forum site has been developed on 31 Aug 2007 for individual doctors to share their wisdom and experience to address this issue. The question of one doctor may be a question of many doctors and also likely to be shared by others and I was motivated to help colleagues who were struggling before it was too late. Through MedPeer, doctors address diverse themes, such as the concerns of isolated physicians and their views on the healthcare system. They often need information on subjects outside their fields of expertise, so the website also functions as a source of knowledge reaching beyond the boundaries of specialty and physical location. The basis of collective medical intelligence is to aggregate the wisdom and experience of individual doctors online and redistribute it. I believed that building a network would give doctors a reason to get together to pool their knowledge, and that collective medical intelligence could reinvent medical care. Taking a unique position from the start, MedPeer uses social media (community) to run a user-centered business.”

“It was also the day when I vowed to contribute to society from the perspective of a doctor as an entrepreneur from a sense of mission of ‘Supporting Doctors, Helping Patients’. Even after being listed in 2014 and I became Japan’s first practicing medical doctor and CEO of a listed company, I am obsessed with being an active doctor because I have the conviction that we can spark reform in healthcare as someone who works in a clinical setting.”

“What are the struggles? At first, I thought that doctors would come in more and more once I made the system, just like Mixi. Then there was no such thing at all. I was initially thinking that the website will be fully equipped with the various SNS functions, but at that time, the more functions you add, tens of millions in development costs will increase. Therefore, the system was built with 10 million yen and started with minimum functions, and there was only a bulletin board function and an introduction function. As a doctor, I do not know what features and functions I would like to introduce or what kind of merit it has. Doctors are basically sensitive to personal information and quite sensitive to their reputation, so they don’t offer much referrals. Also, since the quality of user registration has been secured fairly strictly in the first place, such as requiring confirmation of the doctor’s license, it is not a model that explosively increases the number of users like general web services.”

“I displayed at a booth at a conference as well as a pharmaceutical company and I went out distributing leaflets for two years. About 5,000 of the 7,000 members who first started using the service speak directly to myself. The good thing was that I was able to go to the site and get to know the doctor’s raw opinion. Doubters argued ‘How can I take responsibility if the patient’s information is leaked in such an internet world?’ On the other hand, there were many people who supported me very much. I think that few people have talked with 5,000 doctors. The fact that I was able to get a sense of market was a big result.”

“As an entrepreneur in the early days, I especially struggled to manage people. We have been actively recruiting people since around 2007, and I thought, ‘If the number of people increases, it will be easier for me.’ But in reality the opposite is true, and as the number of people increases, the responsibility as a manager becomes heavier and heavier. We have also struggled with funding for six years from 2004 until JAFCO invested 160m yen in September 2010. During the 2011 earthquake, the management of the company is unstable. About half a year after the earthquake was the toughest time in my business life. I had a lot of thoughts and I asked myself, ‘Why are you doing this company?’ I thought that I would do it for ‘Supporting Doctors, Helping Patients’, which is our mission. If you can’t use that as a pillar, it’s better for you to work as a doctor on your own when an earthquake or other disaster occurs. So I wanted to go back to that mission once more. The mission was not told to the members firmly. I met with each member individually at that time. On the other hand, as a result of in-house interviews, telling the mission again, there were seven members left, down by more than half. Only the members who agreed with the philosophy and mission remained, and the organization was renewed. At that time, I thought that the mission of ‘Why do you have this company (Why)’ will become the culture of the company in the future. ‘What do you do (What)’ and ‘How do you do (How)’ are places where everyone thinks. When you start a company and run it, I think there are a lot of hardships. I think the most important thing is that I keep working only for ‘Why’.”

“At that time, light was visible as a business from the drug evaluation service called Drug Evaluation Bulletin Board, which was launched on the MedPeer site in 2010. It was quite sensational at first that the doctor’s evaluation of the drug was made visible, and there was a great deal of reaction from the pharmaceutical companies. It is an inevitable flow of the world that the voices of users (doctors) appear on the web, and above all it is necessary information for doctors. About a year later, I was able to gain the understanding of pharmaceutical companies gradually and came to the point of becoming a lasting business form a little more. Furthermore, the site which had 7,000 members was boosted by the increase of approximately 20,000 members in a business alliance in May 2009 with Nikkei Medical Online, which is run by the major medical doctor magazine of Nikkei BP. After partnering with Nikkei BP, the number of members increased to 70,000. The number of members surpassed 100,000 as we partnered in June 2015 with Medical Tribune , who operates an expert information site ‘MT Pro’ for doctors and medical personnel.”

“After being listed in 2014, I was in a state of depression post IPO. The reason is that I could not go to the next stage as an organization as I was not able to train my middle management. As a result, two downward revisions in earnings have been made, and the expectations of investors have been largely cut off. After that, it is appropriate goal setting and management as an organization and we came to the present re-growth period from around the spring of 2017.”

Doctor Platform Business
On the Doctor Platform business, CEO Dr. Iwami comments: “Drug assessment bulletin boards, or an online platform for sharing drug reviews, did not exist prior to spring 2010, when MedPeer launched the service. We are proud of the responsible way we run this service. Unlike restaurant reviews, MedPeer cannot afford trouble on the bulletin board, since drugs can be a matter of life or death. We believe that providing unbiased information to doctors will result in a better medical world. If every doctor is empowered by the MedPeer service, more patients should be saved. Although it is simply an online version of day-to-day communication between doctors, this service has been revolutionary for drug companies. Although some objected to the service when it first appeared, we were able to convince them by providing information.”

“Ethical drugs rarely develop a bad reputation, since they must be approved by MHLW. MedPeer formed a business alliance with Pfizer in Sept 2011. From there, other companies have come to use it. I think that was the tipping point for us. The marketing support service for pharmaceutical companies was born as a result of content accumulation on the bulletin board and growth in the board’s membership, both of which raised its value as an online medium. Specifically, in the marketing support for pharmaceutical companies using the drug evaluation bulletin board, the drug evaluation bulletin board consists of basic information on medicine and a review written by the doctor who uses the medicine. For example, if you visit a doctor member who wants to know about a particular drug, we provide an inventory where the drug company can post information about that drug. At first, the nature of the service that doctors give their opinion freely about their own medicines is not accepted by the pharmaceutical companies, and the situation where advertising cannot be sold continues for about two years, and enlightenment activity was actively developed for companies to have them understand the value of the service.”

“In academic conferences and scientific meetings, doctors constantly review treatments without bias, questioning whether or not they truly benefit patients. MedPeer does the same online. On the other hand, information based on a supplier perspective is likely to be biased. For example, when doctors hear about a new diabetes drug from a medical representative (MR), many will collect information by communicating with other doctors rather than prescribing the drug to a patient without checking other sources. Even if they do not attend an academic meeting on the subject, they will at least consult with other doctors (their friends and colleagues) about the drug’s effectiveness and adverse reactions. MedPeer is an online platform that serves the same purpose. A radar chart of the evaluation results of six items reviewed by members such as effects, cost performance, frequency and severity of side effects, easiness of drug continuance (drug compliance) etc. about 2,700 types of drugs is displayed together with the comments. Doctors may consider the use of drugs outside of their domain of specialization, depending on the condition of the patient they are seeing. Sometimes, by reading this comment, along with information provided by the drug manufacturer, you will be able to make an accurate decision.”

“The position of the site operated by competing companies is centered on the sales activity support of the pharmaceutical company’s MR. Drug information on the site are structured for each drug company to look at. An analogy could be made using restaurant review sites such as Gurunavi (TSE: 6440), which earns revenue from restaurants and is like MedPeer’s competitors, and Kakaku’s Tabelog (TSE: 2371), which adopts an independent business model as a medium like MedPeer. Consumers use both Gurunavi as well as Tabelog. So, doctors probably use M3 and MedPeer sites with different stances. Although M3 created the world of e-marketing in the medical industry, MedPeer was able to take a different position from them as social media rather than advertising media. Tabelog solidified its business base after it started to charge users. It can earn revenue from users and suppliers (restaurants), because restaurants must pay registration and advertising fees to attract customers. I think the business of Tabelog was also difficult at first. After all, the user will think: ‘Why do I have to pay money to the word-of-mouth review site?’ However, MedPeer does not plan to charge users (physicians), because there are only around 300,000 doctors in Japan and the market would be limited, assuming a monthly charge of around 1,000 yen.”

“MedPeer members (physicians) can earn loyalty points when they register, click on the online drug assessment bulletin board, or reply to questionnaires. Points are awarded for actions that add to the site’s collective medical intelligence. Points can be redeemed for Amazon gift vouchers or donations to Doctors Without Borders or natural disaster relief funds. Amazon gift vouchers are the default option. Costs associated with providing and redeeming points constitute a portion of advertising expenses by broad definition. Points-related costs account for most of MedPeer’s advertising expenses, and the monthly cost is around 10-15m yen. Points are issued within the calendar year and are valid for 12 months. The expiry rate is low and most points are used.”

“The Clinical and “Life” (non-medical topics) online forums are a place for doctors to freely exchange opinions on anything from specialized medical subjects to non-medical topics. The Clinical forum answers questions that arise in treatment and research, while the Life section deals with various issues that arise in the workplace and in private life. Forum Q&A is a service that allows doctors to help solve each other’s problems and answer questions. Over 95% of questions posted are answered, making it an effective problem-solving and discussion forum for members.”

“The ‘Meet the Experts’ case consultation is a place where physicians can directly consult online with around 500 experts in 63 specialized medical categories. The service attracts around 200 questions per month, because physicians can ask questions in any field regardless of specialty.”

“The Forum Survey is a place for conducting surveys in Q&A format to several thousands of doctors. It can collect responses from 3,000–4,000 participants per week. Surveys may target all member doctors or a specific group based on gender, type of work (hospital employed or private practice), age, or specialty.”

“Since the surveys are published on the website, all member doctors can view survey results and comments and exchange views on the results. The benefit for customers who are pharmaceutical companies, medical device manufacturers, marketing research related companies, advertising agencies etc, is that they can quickly collect data useful for collecting opinions on clinical sites and medicines, grasping the market size of specific medicines, planning marketing strategies, etc., and cost less than paper questionnaires ”

“The case review meeting is a place to improve your skills as a physician through online case review meetings with participants from all over Japan, not just certain universities or hospitals.”
“The MedPeer Asahi News service delivers reliable information to member doctors in the form of articles that provide expertise regarding treatment that doctors can use immediately; accounts of problems experienced when treating patients and their solutions; and articles written by journalists on government healthcare policies that will change medical treatment in the future. It also provides members with unlimited free article content from the Asahi newspaper.”

“There are live-streamed webinars hosted by pharmaceutical companies that are free to view and deliver the latest medical information from doctors and other practitioners. They feature a diverse range of topics from patients’ symptoms, diagnosis and treatment methods, and issues affecting the field of medicine as a whole.”

“From 1 April 2019, we released MedPeer Scout, scout-type career change support service in which job information is sent directly to doctors who are interested in job change from multiple recruitment agents. Agents, instead of waiting for a doctor’s job application, search for a doctor who matches their job offer and approach the doctor with a potential career shift. Doctors can also understand their own market value.”

“On 4 Feb 2019, we launched ‘Clinic Support’ (https://clinic.medpeer.jp), a collective medical intelligence platform for doctors wanting to open their own clinics. In Japan, more than 7,000 clinics are opened annually, but about 45% of them, or about 3,000, are new openings that are not inherited from relatives or third parties. For busy doctors who wish to open a business, voices of fear that they can not make appropriate decisions themselves have risen due to lack of information. From April 2019, we collaborated with Comu Comu (https://comu-comu.com), a specialized property information website for medical institutions which has over 1,000 listings.”

“MedPeer has a business alliance with Health 2.0 LLC, a company based in California, in the medical and health technology fields. This is related to the holding and operation of the world’s largest global medical and healthcare conference ‘Health 2.0’, which will be an exclusive contract of MedPeer in Japan. The first ‘Health 2.0 ASIA-JAPAN’ was held in Tokyo in November 2015, and more than 500 participants gathered from home and abroad. The number of participants has doubled to 1,000 in 2018. The significance of the company involved in holding the conference is to gather information on a global level and create a new business of its own by creating a place to gather various business ideas and expertise on IT in the medical field.”

Healthcare Solution Business
On the Healthcare Solution business, CEO Dr. Iwami comments: “MedPeer has been providing services for doctors since its inception, and we further expand the domain based on the platform we have built up into providing services to manage lifestyles to improve health and prevent illness. We would like to provide services in a straightforward manner from enlightenment activities to online medical consultation when we have developed an illness. In other words, we want to support people’s health, to help them recover if they become ill, and to do everything they can in the value chain to return to a healthy lifestyle again.”

“Launched in May 2017, ’First Call’ is an online medical consultation service through which users can consult with doctors via instant messaging or video calls. About 50 doctors are available for live consultations. Subsidiary Mediplat Inc. operates the service.”

“We primarily sells the service to health insurance societies, including JAL Health Insurance Society, and companies which include major apparel and IT companies, who pay fees on behalf of their members or employees through their human resources departments; the service is also offered through collaboration with partnering companies. Individual consumers have the additional option of becoming members for a monthly fee of 500 yen, excluding tax, which gives them access to unlimited instant messaging and video calls.”

“Mediplat’s telemedicine consultation service is a service that promotes the health checkup behavior by directly linking the platform of the doctor and the platform of the patient, and as a result raises the efficiency of medical services for doctors (‘Supporting Doctors’), which in turn will lead to ‘Helping Patients’. From 12 Nov 2018, as a joint project of Mediplat and Sugi Pharmacy, we have started offering self-care service ‘Sugi Self Care’. In addition, FitsPlus’s nutrition consultation business directly leads to ‘Helping Patients’ by intervention from the aspect of diet in each process from health promotion to prevention of disease. We believe that it will lead to supporting doctors by reducing the burden on doctors through proper division of labor by medical workers.”

“In May 2017, ‘First Call’ launched a collaborative web service with the home blood test service DEMECAL (http://www.sunpre.co.jp/kitall.html) for the health insurance association. If you collect and mail it, you will be able to check the results and consult on a dedicated site. Currently, five health insurance unions have been introduced and we have plans to expand in the future. In July 201, we also launched the health consultation services for overseas expatriates in conjunction with the healthcare program provided by Prestige International (TSE: 4290).”

“In May 2018, we began collaborating with ‘dHealthcare®’ (https://health.dmkt-sp.jp) provided by NTT DOCOMO (TSE1: 9437). dHealthcare® is a service provided by NTT DOCOMO for free to manage daily steps and weight and members pay a monthly fee of 500 yen (excluding tax) for unlimited access to information on health and diet. dHealthcare has surpassed 2.5 million downloads in about 10 months as of March 8, 2019. On 3 April 2019, a new service was launched in which members pay 300 yen per month to use ‘First Call’ online & mobile chat consultation (not for video consultation). In ‘dHealthcare (300 yen)’, you can earn d points if you clear daily health missions such as step counts and weight records. Sports clubs can also be used at special prices.”

“Some notable client wins: On 18 March 2019, First Call is provided to Tokyo Equipment Health Insurance Association which targets establishments whose business is manufacturing or selling machine tools and forging machines and has 570 companies and the number of subscribers is 95,000. On 14 March 2019, First Call is provided to Daiwa Securities Group Health Insurance Union which has 28,000 members. On 1 May 2018, First Call is provided to Japan Aviation Health Insurance Association (JAL Health Insurance) which has over 74,000 members.”

“On 4 April 2019, the number of implementation of specific health instruction of FitsPlus surpasses 30,000, up 3.2X in three years. Specific health guidance targets those who are judged to have a high risk of developing lifestyle-related diseases and can expect a preventive effect by improving lifestyle habits as a result of the specific medical checkup for people aged 40 to 74. Specialized staff such as dietitian and public health nurse support revision of lifestyle. The number of people targeted for specific health guidance is increasing year by year, but the implementation rate remains at 19.5%. In the specified health guidance service provided by MedPeer, a registered dietitian acts as a dedicated trainer to promote improvement of eating habits, thereby helping to improve test values. Based on the concept of ‘eat properly’, it is characterized by helping each other to develop a proper eating habit. We also work with our business sites to achieve an improvement in the implementation rate.

“Based on the Act on Assurance of Medical Care for Elderly People (1982, Article 80), specified health examinations and health guidance have been provided since 2008. The introduction of specified health guidance services that use technology, such as our DietPlus, has become easier due to recent systemic reforms. Specified health examinations refer to medical checkups focused on diagnosing metabolic syndrome to prevent lifestyle diseases that are the cause of roughly 60% of deaths among Japanese. The examinations are offered to individuals aged 40–74. Specified health guidance is provided to those identified as having high levels of risk for lifestyle diseases based on the results of specified medical examinations and for whom lifestyle changes are expected to be significantly effective in preventing lifestyle diseases. Professional staff including public health nurses and dietitians provide support for changing lifestyles.”

“According to data published by the Ministry of Health, Labor and Welfare, around 54 million individuals were identified as eligible for specified medical examinations in 2015, and of those, around 27 million actually underwent the examination (implementation rate of 50.1%). Of those who underwent the examination, around 4.5 million were assessed as eligible for specified health guidance (eligibility rate of 16.7%). Of the eligible individuals, 792,655 completed specified health guidance. Supposing specified health guidance costs 25,000 yen per person, multiplying the cost per person by the number of individuals who had completed the guidance (792,655) indicates that the actual market size of specified health guidance is roughly 20 billion yen. Further, multiplying the cost per person by the number of individuals eligible for guidance (4.5 million) suggests that the potential market size exceeds 110 billion yen. This means that the size of DietPlus’ target market is massive.”

“What MedPeer has done up to now is to create social media. I would like to integrate it into the field of electronic medical records (EMRs). I want to make EMRs into social media. EMRs should be able to connect doctors and patients. What I imagine is that EMR data that was conventionally stored on computers at each facility is placed in a database on the cloud and used by doctors at each medical institution at the same time. Patients can view their test results and prescriptions from their own page (Patient Portal), and they can also be linked with PHR (Personal Health Record) owned and managed by patients individually.”

“In Oct 2015, MedPeer signed a business capital alliance agreement with clinical platform CLIPLA to develop a cloud-based medical treatment platform. CLIPLA provides a cloud-based electronic medical record that can be used only in a browser for clinics, and we aim to build a new service that is a combination of MedPeer’s collective intelligence and medical data stored in CLIPLA to connect doctors, patients and companies, and provide services along life stages of the individual.”

Artificial Intelligence Initiatives
On MedPeer’s artificial intelligence initiatives, CEO Dr. Iwami shares: “On 4 Dec 2017, we collaborated with EXA Wizards (https://exawizards.com) to utilize MedPeer’s collective intelligence data to provide an artificial intelligence solution in MR (medical representative) education for pharmaceutical companies and mental health support for employees of ‘First Call’ clients. Clinical experiences and knowledge posted by doctors from all over the country are formed as collective intelligence on MedPeer with over 570,000 review posts on medicines. In addition, in the online health consultation platform ‘First Call’ by doctors, consultation content from consumers in chat consultations and doctor’s responses are accumulated as text data, and a total of over 40,000 cases of consultation including monitor usage Is accumulating. In this partnership, by analyzing text data (collective intelligence) by physicians and consumers owned by MedPeer using AI technology, we will develop various AI solution. These include:

(1) Education support of MR for pharmaceutical companies: Along with the spread of generic drugs, the shift from primary to specialty development for new drug development, and the introduction of regional comprehensive care systems, there is a need for changes in the role of MRs and the way information is provided. Under these circumstances, ‘HR for MR’, which utilizes the collective intelligence of MedPeer doctors, will be developed for pharmaceutical companies. Specifically, AI analyzes all human resource data of each pharmaceutical company, enabling the setting of new MR evaluation indicators and prediction of active human resources. In addition, AI learns excellent MR findings from in-house and analyzes word-of-mouth data on medicines from doctors submitted to MedPeer to provide doctors with ‘what kind of communication method’ and ‘what kind of information’. The AI will coach you and provide ability development support. AI learns the know-how including tacit knowledge of high performers and sends a video of an education target person.

(2) Mental health support for employees of First Call clients: The mental health problems of employees are on an increasing trend, according to the Ministry of Health, Labor and Welfare, and the importance of measures in health promotion and prevention of employees in companies is increasing. Under such circumstances, the mental health of employees can be analyzed by ‘HR-kun’ which performs AI analysis by combining health consultations from employees who are sent to ‘First Call’ with health checkup, stress check, and labor data such as attendance. We predict health condition automatically and prevent the aggravation by prompting measures as needed. It can be used for prevention, relapse prevention, reinstatement support, etc. Also, the AI will learn the accumulated data on consultations and responses, and AI will automatically present to physicians an example of responses according to the content of the consultation, enabling doctors to improve their response speed and quality.

“On 31 July 2018, we collaborated with Rozetta (TSE: 6182) to include the medical thesis search and sharing service ‘JOURNAL’ in our MedPeer community site for doctors to search with Japanese keywords for medical papers and abstracts published overseas, such as the representative literature information database “PubMed” in the medical field prepared by the US National Library of Medicine (NLM). This is possible due to Rozetta’s super-high-precision AI automatic translation site ‘AI-Chan’. It is also possible to read a dissertation based on the commentary on MedPeer site of a specialist doctor.”

Summing Up on the Origin & Mission of MedPeer
CEO Dr. Iwami summed up by sharing a touching personal life story to emphasize MedPeer’s origin, philosophy, and mission: “My maternal grandfather died of gallstones when I was in sixth grade. I remember that I felt fear while I was a child. On the day of my grandfather’s funeral, my aunt forced my hand close to my grandfather’s face and made me touch his face. She said, ‘Because this is Grandpa’s last, I will do my goodbye firmly.’ When I touched his face, it was very cold and I was truly surprised that there is no human body temperature even though there is a human body. I noticed later that this is like a ceremonial practice to let the child touch the coldness and to be made conscious of death. The essence of this personal life story is related to doctor support. I am a doctor and I run MedPeer with the thought that I want to be close to doctors, to “touch” them in providing services that support doctors in the medical treatment. Support is a result, something we can not control. What should I do to get the result? What goals should I draw?  It is definitely close to the essence to ask questions from your senses, including the sense of touch, whether there is a cold sensation.”

“The essence is simply to ‘deliver the voice of each doctor fighting in the clinical setting without bias’. Aside from the reality of the shortage of doctors, what I felt most sad then around 2007 when MedPeer was launched was the distrust between doctors and patients. Many doctors work at the expense of their personal lives to save patients in front of them at weekends and at night. I also went to the hospital on weekends. Can we somehow bridge the gap between this medical crisis and the patient’s distrust? I would like MedPeer’s postings to be a mirror that reflects medical practice. Basically we don’t claim anything as a MedPeerian, we share with you the discussion. We would like to think together with you. By supporting the doctor and at the same time deepening the patient’s level of understanding, I would like to create a medical world where everyone can be convinced as quickly as possible.”

“It is really hard to create a platform business based on user-generated content. This is not something you can create with money, it is a service that other companies cannot easily create. The doctor-oriented service created over time and the culture of the high quality community are valuable. MedPeer has a lot of hardships. I think I’ve been lucky enough to be able to come to this stage. I was lucky enough to meet a good person, our angel investor Mr. Toru Shimada. There were a lot of mistakes but I could not go back. I hope to continue contributing to society by continuing to provide useful things to doctors in the field.”


It started with rethinking a few questions. Question No. 1: Can the megacap tech elephants still dance? Or is this the better question: Is there an alternative and better way to capture long-term investment returns created by disruptive forces and innovation without chasing the highly popular megacap tech stocks, or falling for the “Next-Big-Thing” trap in overpaying for “growth”, or investing in the fads, me-too imitators, or even in seemingly cutting-edge technologies without the ability to monetize and generate recurring revenue with a sustainable and scalable business model? How can we distinguish between the true innovators and the swarming imitators?

Question No. 2: What if the “non-disruptive” group of reasonably decent quality companies with seemingly “cheap” valuations, a fertile hunting ground of value investors, all need to have their longer-term profitability and balance sheet asset value to be “reset” by deducting a substantial amount of deferred innovation-related expenses and investments every year, given that they are persistently behind the innovation cycle against the disruptors, just to stay “relevant” to survive and compete? Let’s say this invisible expense and deferred liability in the balance sheet that need to be charged amount to 20 to 30% of the revenue (or likely more), its inexactitude is hidden; its wildness lurks and lies in wait. Would you still think that they are still “cheap” in valuation?

Consider the déjà vu case of Kmart vs Walmart in 2000s and now Walmart vs Amazon. It is easy to forget that Kmart spent US$2 billion in 2000/01 in IT and uses the same supplier as Walmart – IBM. The tangible assets and investments are there in the balance sheet and valuations are “cheap”. Yet Kmart failed to replicate to compound value the way it did for Walmart. Now Walmart is investing billions to “catch up” and stay relevant. Key word is “relevancy” to garner valuation.

We now live in an exponential world, and as the Baupost chief and super value investor Seth Klarman warns, disruption is accelerating “exponentially” and value investing has evolved. The paradigm shift to avoid the cheap-gets-cheaper “value traps”, to keep staying curious & humble, and to keep learning & adapting, has never been more critical for value investors. We believe there is a structural break in data in the market’s multi-year appraisal (as opposed to “mean reversion” in valuation over a time period of 2-5 years) on the type of business models, the “exponential innovators”, that can survive, compete and thrive in this challenging exponential world we now live in. Tech-focused innovators with non-linear exponential growth potential are the most relevant multi-year investment trend and opportunity.  

During our value investing journey in the Asian capital jungles over the decade plus, we have observed that many entrepreneurs were successful at the beginning in growing their companies to a certain size, then growth seems to suddenly stall or even reverse, and they become misguided or even corrupted along the way in what they want out of their business and life, which led to a deteriorating tailspin, defeating the buy-and-hold strategy and giving currency to the practice of trading-in-and-out of stocks. On the other hand, there exists an exclusive, under-the-radar, group of innovators who are exceptional market leaders in their respective fields with unique scalable business models run by high-integrity, honorable and far-sighted entrepreneurs with a higher purpose in solving high-value problems for their customers and society whom we call H.E.R.O. – “Honorable. Exponential. Resilient. Organization.”, the inspiration behind the H.E.R.O Innovators Fund, (surprisingly) the only Asian SMID-cap tech-focused fund in the industry.

The H.E.R.O. are governed by a greater purpose in their pursuit to contribute to the welfare of people and guided by an inner compass in choosing and focusing on what they are willing to struggle for and what pains they are willing to endure, in continuing to do their quiet inner innovation work, persevering day in and day out. There’s a tendency for us to think that to be a disruptive innovator or to do anything grand, you have to have a special gift, be someone called for. We think ultimately what really matters is the resolve — to want to do it, bring the future forward by throwing yourself into it, to give your life to that which you consider important. We aim to penetrate into the deeper order that whispers beneath the surface of tech innovations and to stand on the firmer ground of experience hard won through hearing and distilling the essence of the stories of our H.E.R.O. in overcoming their struggles and in understanding the origin of their quiet life of purpose, who opened their hearts to us that resilience and innovation is an art that can be learned, which can embolden all of us with more emotional courage and wisdom to go about our own value investing journey and daily life.

As the only Asian SMID-cap tech-focused listed equities fund in the industry, we believe we are uniquely positioned as a distinctive and alternative investment strategy for both institutional and individual investors who seek to capture long-term investment returns created by disruptive forces and innovation without herding or crowding to invest in the highly popular megacap tech stocks, and also provide capital allocation benefit to investors in building optionality in their overall investment portfolio.

The H.E.R.O. HeartWare Weekly highlights interesting tech news and listed Asian emerging tech innovators with unique and scalable wide-moat business models to keep yourself well-informed about disruptive forces and innovation, new technologies and new business models coming up, and the companies that ride on and benefit from them in some of the most promising areas of the economy in Asia as part of our thought leadership for our Asia HERO Innovators Fund to add value to our clients and the community. Hope you find the weekly report to be useful and insightful. Please give us your candid feedback and harshest criticisms so that we can improve further to serve you better. Besides the BATTSS (Baidu, Alibaba, Tencent, TSMC, Softbank, Samsung), do also tell us which Asian tech entrepreneurs & CEOs whom you admire and respect and why – we will endeavor to do up profiles of them for sharing with the community. Thank you very much and have a beautiful week ahead.

Warm regards,
KB | kb@heroinnovator.com | WhatsApp +65 9695 1860
www.heroinnovator.com

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About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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