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Welby (TSE: 4438), Japan’s #1 Personal Healthcare Record (PHR) Platform & SaaS Cloud Innovator – H.E.R.O. Innovators Insights from CEO Takeru Hiki | H.E.R.O. HeartWare | 6 May

What is the value of possessing a highly profitable personal healthcare record (PHR) big data platform of over 530,000 users’ patient-recorded outcome (PRO) data and utilizing artificial intelligence (AI) to analyze this big data asset to create further value for the ecosystem of patients and their families, medical institutions, healthcare professionals, governments, pharmaceutical companies, medical device companies and clinical researchers in new drug development?

This week, we highlight the under-the-radar exponential Asian innovator Welby (TSE: 4438), Japan’s #1 pioneering PHR platform & SaaS (software-as-a-service) cloud innovator that supports patient self-management in the treatment of various diseases where PHR utilization needs are high, including lifestyle diseases, such as diabetes and hypertension; chronic diseases; autoimmune diseases; central nervous diseases; rare diseases; and cancer treatment. Welby’s unique business model generates stable and recurring revenue and health profitability with operating profit margin of 19.3% in developing PHR platform services in B2B for pharmaceutical and medical devices companies and B2M (business-to-medical) & B2B2C for medical institutions (hospitals, clinics, pharmacies, medical examination agencies), local governments, health insurance and corporate customers.

Welby’s smartphone apps are introduced and recommended by the doctor to patients who record and use the health information and PRO data (e.g. blood pressure, blood glucose level, weight, diet, insulin injection amount, prostate specific antigen, pain level, fatigue, nausea, dizziness, shortness of breath, numbness, skin symptoms, swelling, defecation status, depression etc), giving consent for the data to be shared with medical institutions for more effective and efficient evidence-based medical treatment advice, guidance and treatment continuation of patients, as well as for clinical research at university hospitals (with future plan in the recurring service-provision of real-world data at the statistical level (without disclosing patient’s individual information) for pharmaceutical companies in the field of clinical research and new drug development).

Welby’s platform connects over 530,000 patients whose PRO data are utilized at over 9,000 medical institutions (out of 60,000 in Japan; 1,200 in 2016), as well as 14 of the top 20 pharmaceutical companies and with automatic data linkages established with over 30 medical devices (e.g. Omron’s blood pressure monitor, ARKRAY’s blood glucose meter, Tanita’s body composition analyzer) and EHR (electronic health record). Management targets 1 million users in March 2020. User active rate (those who use the app more than once a month) is healthy, especially amongst the elderly (age group 50s to 70s), at 21% (20s), 26% (30s), 27% (40s), 35% (50s), 38% (60s), 37% (70s). The high active rate stands out amongst the various mobile PHR app downloaded on an interest-oriented basis with very few active users continuing to use the app, and is a result of the strategy of cultivating the doctor-prescribed app approach to the users and the cooperation in data linkage with medical institutions to use the data for better medical treatment advice which motivates the user to continue to use the app.

Welby’s unique business model generates stable and recurring revenue and health profitability in two core areas: (1) Disease solution service (B2B), contributing around 70% of sales, and (2) Welby My Carte service (B2B2C), accounting for around 30% of sales.

(1) Disease solution service (B2B)
Welby develops PHR platform and apps at the request of pharmaceutical client companies in lifestyle-related disease area (AstraZeneca), such as Type 1 & 2 diabetes and high blood pressure (Takeda Pharmaceutical), specific chronic disease areas (e.g. chronic pain), autoimmune diseases (e.g. IBD, ulcerative colitis/Crohn’s disease with J&J’s Janssen, rheumatoid arthritis with UCB Japan), central nervous disease (e.g. schizophrenia with Meiji Seika, ADHD for adults with J&J Janssen, Parkinson’s), rare disease areas (e.g. pulmonary arterial hypertension with Nippon Shinyaku, spinal muscle atrophy with Biogen, hereditary angioedema with Shire), and cancer treatment area (general cancer with Shionogi & Co, prostate cancer with J&J’s Janssen).

Welby receives requests from pharmaceutical companies to promote the appropriate use of medicines associated with the launch of new drugs and to promote disease awareness via the apps. Welby generates revenue from initial platform development cost and recurring monthly usage fee, as well as additional recurring information provision and marketing fees from further improving the PHR platform for existing pharmaceutical companies’ clients in providing related information materials for medical personnel and patients, which is calculated by multiplying the yearly number of projects by the year-earlier actual unit price. 15 disease apps have been developed thus far for pharmaceutical companies and Welby is preparing new apps that include atrial fibrillation and arrhythmia, cancer-related pain, non-alcoholic steatohepatitis (NASH)/ non-alcoholic fatty liver disease (NAFLD), Parkinson’s disease, pregnancy diabetes, pregnancy hypertension, etc.

(2) Welby My Carte cloud service (B2B2C)
Welby My Carte medical service supports self-management of patients’ living habits, such as diabetes and hypertension, generating revenue from:

(I) Recurring usage fees (B2M or Business-to-Medical) charged monthly (inclusive of an initial introduction fee) to medical institutions centering on hospitals, pharmacies, clinics, and medical examination agencies in the support for continuation in treatment of patients, improvement of patient treatment outcome, and business support (data management/sharing) to improve the efficiency of medical care work.

(II) Recurring usage fee as a tool for preventing lifestyle-related disease aggravation for residents of local governments, health insurance unions, and general companies (management estimates to increase 2X yoy in FY2019). For instance, Welby released “Digital Health Management Service” for employees of Dainippon Sumitomo Pharma, Welby My Carte’s “Specific Health Guidance Program” is jointly implemented by Adachi City and KDDI.

(III) Advertising and marketing fees from providing information useful for medical institutions and patients to the treatment of lifestyle-related diseases. Welby’s customers are equipment manufacturers and medical companies such as testing companies (management estimates to increase 3X yoy in FY2019). The usage fee is calculated by multiplying the estimated annual number of customers by the actual unit price in the previous year.

Given that Welby’s services deal with important personal information of many patients and users, it has obtained ISO 27001 certification, an information security management system. With regard to medical information obtained by the app, Welby provides statistical information such as the number of patients using the app to the drug company co-developing the app for the purpose of marketing the drug company. However, patient’s individual medical information is not disclosed outside the company.

Welby acquired a medical device manufacturing and marketing license in Aug 2015, and took measures for its medical software apps to be regulated because medical information that is mishandled could result In an accident. In order to be used as medical software, Welby worked with several university hospitals to verify the effects of using Welby. Various apps have been released, but it is currently difficult to understand whether it is medically correct. Welby’s PHR platform in collecting and accumulating reliable data from demonstration experiments is a factor in measuring differentiation.

The market for PHR health management system to improve the daily health level of people (QOL) leading to a reduction in medical expenses is estimated at 38.5bn yen in 2017 (PHR service penetration rate is around 6.7%) and a long runway for growth is indicated when penetration rate reaches 100% with the economic effect expanding to 1.927 trillion yen, according to Nomura Research Institute.

Welby’s medium to long-term growth strategy is to become a comprehensive medical IT platform and is expanding into the new fields of:
(1) Service provision of real-world data in the field of clinical research and new drug development. Welby is also the only App Connect Partner in Asia that Medidata Solutions, Inc. (NASDAQ: MDSO) approves as a clinical trial app development company, and can also develop custom apps that run on Medidata Clinical Cloud.
(2) Launching a new dedicated platform in oncology (cancer) and other diseases areas (diabetes, Parkinson’s).
(3) Improvement of PHR business added value, including M&A opportunities, such as personal B2C services (product sales and coaching) and CRM functions for medical institutions.

Welby is in partnership to develop and utilize artificial intelligence (AI) technology with (1) strategic shareholder Digital Garage (TSE: 4819), who owns 19.95% of shares, in using AI in users’ diet data to prevent lifestyle-related diseases from becoming severe, and (2) Tokushima University Advanced Enzyme Research Institute’s Diabetes Clinical Research and Development Center in using AI in diabetes prevention and management. Tokushima prefecture has the worst diabetes rate in Japan.

With the community, circumspection and compellingness exponential edge, Welby’s business model generates stable and recurring revenue, achieving a 70% absolute increase in sales yoy and generates healthy profitability in FY12/2018 with operating margin of 19.3%, ROE (= EBIT/ Equity) 12.5%, ROA of 11.1%, propelling a 200% increase in market value from its IPO price of 5,200 yen on 29 March 2019 to US$278m.

Management guided FY12/2019 sales to increase 34% yoy to 1,083m yen and operating profit to rise 28.2% to 200m yen. Balance sheet is relatively healthy with net cash of 995m yen as of 31 Dec 2018 (before the IPO) which is around 3.2% of market cap. The IPO raised 347m yen (US$3.1m) in cash (66,700 new shares at IPO price 5,200 yen) for the company.

Welby is a “mission-impossible” business model that should not be able to survive at all, yet Welby is not only highly profitable, it has built multiple recurring revenue streams and is scalable with network effects. Welby has solved these “mission-impossible” critical pathways for the viability and scalability of the business model:

(1) How will patients and users get to know about the app?
(2) Why will patients and users want to download the app?
(3) Why will patients and users want to continue to actively use the app? How to get the elderly users (the target group of patients who need treatment the most) to be active users?
(4) Why will patients and users agree to consent to share their health data with medical institutions, authorized relevant medical personnel, pharmaceutical companies and clinical researchers?
(5) How to connect the users to medical institutions, pharmaceutical companies, medical device companies, local governments, enterprises etc to the PHR platform?
(6) How to monetize the data in a recurring and scalable way?

Welby has business partnerships with SMS Co’s (TSE: 2175) pharmacist community site and Carenet’s (TSE: 2150) doctor community site) in data linkage of services for healthcare workers and patients of both companies to improve convenience for both users. Welby also has partnership with NTT DoCoMo’s ‘d account’ and 5G open partner program. Japan Post Capital is a strategic shareholder with 5.93% stake. Welby and SRL Co. has a joint service PLANET x My Carte which enables the patient to view the test results performed at the medical institution using the smartphone application.

We find founder and CEO Takeru Hiki’s North Star in Welby’s mission of “empowering the patients” to be inspiring:

“Learn, log/record, communicate, encourage. The first step of medical treatment or prevention is to getting to know his or her own body. I established Welby in 2011 to develop specialized services in sharing daily data with doctors and family members in a timely manner for the purpose of personal health management, and exchange of ‘support’ icons and comments is possible. Doctors and nurses and family members  who saw the contents recorded by patients return comments and often send stamps such as ‘you did your best!’”

“People who are suffering from illness can not escape from treatment, so we wanted to help patients by creating a more convenient environment. I witnessed how during the medical treatment of cancer, various physical and mental ‘suffering’ occur, including depression, feeling fatigue, nauseous, and numbness. Not many patients would communicate with doctors and healthcare professionals regarding such ‘suffering’. Our app makes the patient easier to communicate with healthcare professionals at the clinic/hospital.”

There are some side effects of cancer patients who receive chemotherapy, which may or may not be visible in the test. Subjective pain and invisible side effects make it difficult for family members and co-workers to be aware of it and it’s also difficult to tell the doctor. If the unseen side effects are underestimated and the response is delayed, the quality of life during treatment may even decrease. Therefore, it is important to emphasize that PRO (Patient Reported Outcomes) allows patients to directly report diseases and symptoms. In particular, complaints such as anorexia, constipation and dyspnoea tend to be underestimated by doctors. The average DAU (daily active users) rate was 50.9%, and it was found that more than half of the people used the app every day, which is higher than Facebook. Cancer patients want this app.”

“In diabetes medical care where patient’s motivation has a big influence on treatment, maintaining motivation and behavior in diabetes care is important. At the Annual Meeting of the Japan Diabetes Society, Aichi Medical University School of Medicine gave a presentation that Welby’s PHR has had a certain positive effect on motivation, consciousness change and behavior change of diabetes patients.”

“The mission to promote ‘empower the patient” kept us going. We have launched a service with social significance and market needs in mind in improving quality of life and controlling medical expenses.”


DO NOT invest in tech, that’s our first message to investors. Tech investing is overhyped, overcrowded, and illiquid in the private equity and venture capital space where entrepreneurs building me-too ‘We are the Uber for X’ loss-making and cash-burning business models have the entitled mindset of demanding an ever-richer valuation which is also egged on by dealmakers chasing increasingly fewer quality deals. The subsidized-till-you-are-profitable hyped-up model of growing quickly by raising money at rich valuation and burning through cash is proving to be increasingly unviable.

However, not only do the listed liquid and transparent H.E.R.O. innovators generate high profitability at the inflection point of their exponential growth trajectory, more importantly, they 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. The massive investment alpha in the years ahead is definitely in the overlooked listed public markets where there is transparency and liquidity, and long-term farsighted investors can avoid the FOMO (fear of missing out) with profitable innovators.

Many Value 2.0 value investors are unaware that they are complacent (and harming their clients) when they dismiss things which they do not understand or appreciate enough the long-lasting structural profound impact, even though the rules of the game has changed. Last week, we discussed briefly the rise of Square and the POS SaaS cloud innovators such as Smaregi whose recurring-revenue subscription-based  business models have profoundly impacted the legacy business models. These disrupted conventional companies include Ingenico (EPA: ING), Taiwan’s Flytech (TWSE: 6206) and Posiflex (TWSE: 8114), HK-listed PAX Global (327 HK), Malaysia’s Cuscapi (KLSE: Cuscapi) and a number of Value 2.0 value investors have invested in them due to their seemingly decent historical quantitative financial numbers and healthy balance sheet – and all have seen their market cap halved and becoming cheap-gets-cheaper value traps. For instance, PAX Global is down 62% while Square is up 460% since Nov 2015.

Another example is Nearmap (ASX: NEA) vs Singapore-listed Boustead (whose Geospatial/Geographic Information System GIS business contribute 28.2% and 46.3% of FY2018 revenue and profit respectively). Nearmap has a recurring-revenue subscription-based business model vs the project-based business model of Boustead. Nearmap is up 700% while Boustead is down 56% in the recent five years.

How can we value exponential innovators? DCF analysis can be complemented by the lifetime value (LTV) of contracted subscribers. LTV is calculated by multiplying the annualized contract value (ACV) of its portfolio of customers by its gross profit margin and dividing it by the churn rate of the customers. ACV is the forward looking sum of all subscriptions from paying subscribers over the 12 months ahead, while churn is the number of clients leaving divided by the total number of clients. In other words, if ACV and gross profit margins are rising while churn is falling, three key operating metrics are moving in the right direction to produce a multiplier effect that delivers exponentially growing compound growth in LTV.

For example, Nearmap’s LTV is calculated by A$104 million in ACV multiplied by 82% gross margin divided by 6% churn equals A$1.42 billion in LTV. Nearmap’s LTV has grown from A$480 million as at December 30 2017 to A$1.07 billion as at December 30 2018 to over A$1.4 billion as at March 31 2019. This LTV valuation metric acts as a valuation support and guide for Nearmap whose market cap is now A$1.67bn. While Nearmap remains loss-making and is in our broader watchlist of 200+ stocks, Welby is profitable. As an example in applying this to Welby’s recurring-revenue capability to generate US$8-10m in ACV in the short- to medium-term with 68% gross margin and 2% churn rate from its portfolio of paying customers, its LTV would be US$272-340m (its current market value is US$279m).

The legacy business models that Value 2.0 value investors tend to feel comfortable/complacent investing in will likely be stunted cheap-gets-cheaper value traps in the exponential world of Value 3.0 because:
(1) Fundamental reason: The project-based business model is disrupted by recurring-revenue innovators as customers have the compelling choice to subscribe at an affordable monthly fee for the Adobe and Microsoft 365/Azure at a fraction of the cost instead of coughing up with huge upfront investment;
(2) Investment & multi-year market appraisal/valuation reason: Long-term investors/market now have a choice to invest directly in the disruptive innovators which are drawing the sunshine and nutrients away from legacy business models. 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; and
(3) Psychology reason: Old guard Asian CEOs will be frustrated and cry aloud that “Hey, I work so hard but the market does not recognize my value/worth”, so they succumb to temptations and distractions to invest in non-core/personal investments; or worse, work with syndicates to expropriate/tunnel out cash/asset from the listed entities which they treat as their personal ATM machine.

Cashflow from core business is not reinvested back into business to build competitiveness, creating a vicious cycle with an ever-larger invisible expense that needs to be deducted from under-investing or not-investing in innovation-related capabilities, and they find themselves persistently ever further behind the innovation cycle against the disruptors. The inexactitude of the deferred invisible expense is hidden; its wildness lurks and lies in wait. If comfortable/complacent Value 2.0 “value investors” were to keep learning and reassess their portfolio companies, would they still think they are “cheap” in valuations and would they perhaps view their investments in “cheap” stocks as reckless and risky?

Real quant and programming lovers would always remember the seminal Richard Sloan’s (1996) “abnormal accruals” (AA) anomaly that has seen over US$60 billion in assets deployed at its peak into the long-short strategy of “buying companies with high quality earnings as proxied by low abnormal accruals and shorting companies most dependent on accruals” since it is empirically shown that firms with high AA are predictive of negative future returns. This proved a good strategy that has clarity (as opposed to quant funds that hid behind the opaque “black box” and clients usually find it difficult to redeem their money from such funds) until the market figured it out and the anomalous returns get arbitraged away, especially in the long positions.

Quant philosophers would empirically discern that exponential innovators have been and will continue to be one of the biggest structural mispriced anomalies in generating double-digit excess returns by simply going long into the portfolio of recurring-revenue business models whose OCF (operating cashflow) is greater than the accrual accounting-based profit and who have passed the “Rule of 40” test (“recurring revenue growth” plus “FCF or OCF margin” should exceed 40%), restoring economic viability to the long position of the investment strategy which is critical, given short-selling constraints and limits to arbitrage in the short position. We believe that tech-focused innovators with non-linear exponential growth potential are the most mispriced and most relevant multi-year investment trend and opportunity.

Thus far, of the 71 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.

Our emotional labor of love over the past months in sharing openly our research ideas (to battle-test our ideas by critiques and avoid blindspots in investing) and setting up the proper regulated and transparent UCITS fund structure to protect investors’ interests has deepened our conviction for the positive change that we will make together with H.E.R.O. – and we are now in the final stage of giving birth in May 2019 to H.E.R.O., the only Asia SMID-cap tech-focused fund in the industry and guarding investors’ interests in the regulated UCITS fund structure with daily NAV & daily liquidity and no exit fees.

To our interested clients who have been asking, we sincerely apologize for the prolonged labor in the birth of HERO over the past months as we have been preparing for a coordinated delivery of our whole family of Swiss fund series and HERO will also be invigorated with the healthy seed from farsighted committed long-term institutional clients to journey far to compound value for investors. Do watch out in the coming weeks for our press release on the birth and launch of H.E.R.O.

If you are not moving forward in this exponential world, you are going backwards. If you want to join us at the leading edge of opportunity, if you identify yourself in the values and bigger sense of purpose in H.E.R.O., or you wish to tell from your heart to your most important person, son, daughter, wife, husband, or best friend that you are a farsighted and thoughtful explorer in the H.E.R.O.’s Journey participating in the long-term exponential growth of a selected group of outstanding entrepreneurs, standing up for the embracement of the human spirit, please contact us via email or WhatsApp at +65 9695 1860. Thank you very much for your patience and support and we look forward to growing exponentially with you as we explore the H.E.R.O.’s Journey together.


“We have set ‘Empower the Patients’ as our business mission since establishment, realizing a society where we provide support for patients and their families ‘get information themselves’, ‘act themselves’, and ‘determine themselves’ to continue treatment and improve outcomes through utilization of our PHR platform service. What we have seen in the course of talking with many medical staff, patients and families is not only to rely on the medical staff unilaterally in order to provide optimal medical care for various needs and cases, but also for the patient and the family to learn by themselves and to manage themselves and to act by themselves. With advances in technology, the information needed to treat your disease will be easily accessible, and you will be able to easily record and save vital figures that you can manage, such as activity history, diet history, medication, and even communication you need. Welby will take full advantage of these technologies to help patients, families and healthcare providers realize better care in disease treatment. We will provide an opportunity for disease education so that we can provide optimal information for improving ‘health literacy’, which is largely dependent on our understanding and experience with the disease. We will daily discussions with many patients, families, and medical personnel in order to provide services that are evaluated in the clinical setting. We will provide better services to patients and medical professionals in cooperation with various medical institutions and companies, focusing on ‘improvement of patient treatment outcomes’ as a core concept,” comments Takeru Hiki, founder and CEO of Welby (TSE: 4438) who owns 45.07% of the shares.

CEO Hiki on the Early Entrepreneurial Period
While Welby is profitable and steady now, CEO Hiki shared that the entrepreneurial journey to start Welby has been full of struggles, especially in the initial four years. CEO Hiki shared briefly and reflectively the story: “After graduating from Doshisha University law department in 1996, I joined Sumitomo Corporation where I was responsible for the joint venture of US high-tech venture companies in Japan, and the business development, product development and promotion of Silicon Valley companies for the Japanese market with a focus on CATV industry. I resigned from Sumitomo and enrolled in the University of Virginia MBA in 2005. In 2007, I joined Rakuten where I was engaged in business strategy and organizational reform work. I resigned from Rakuten in 2008 and participated as a founding member in the launch of the doctors community site MedPeer (TSE: 6095) and I was also the founder of Health 2.0 Tokyo.”

“Learn, log/record, communicate, encourage. The first step of medical treatment or prevention is to getting to know his or her own body. I established Welby in 2011 to develop specialized services in sharing daily data with doctors and family members in a timely manner for the purpose of personal health management, and exchange of ‘support’ icons and comments is possible. Doctors and nurses and family members  who saw the contents recorded by patients return comments and often send stamps such as ‘you did your best!’

“The asymmetry of information is high in the medical field. Early services were developed for doctors to correct the bias of information between specialists and general doctors, but I realized that the essence of the problem is the relationship between the doctor and the patient.”

“Welby’s applications have sufficient benefits for doctors as well. The number of hospitals with inpatient facilities continues to decrease, while the no-floor clinic continues to rise, and competition is severe in recent years. Welby’s PHR works as a tool to connect patients and doctors. In addition, from the ability to unify data, it is also responsible for improving the efficiency of medical treatment for doctors.”

“In the founding four years of Welby, It’s hard every day. The mission to promote ‘empower the patient” kept us going. We have launched a service with social significance and market needs in mind in improving quality of life and controlling medical expenses.”

Welby’s Business Model
When asked to elaborate on Welby’s business model, CEO Hiki shares: “Welby is a business model that allows patients to input blood pressure and pain levels using the app and patient personal health record (PHR) data is shared with the medical institutions who use it for medical treatment advice and medical institutions pay for the use of data. The app platform is a mechanism to record patient-reported outcomes and improve the convenience of patients and to support patients’ self-management in the treatment field of various diseases including lifestyle-related diseases such as diabetes and hypertension and connect them to continuous use in their medical treatment. The PHR platform services will also contribute to the motivation of the treating physician.”

“Doctors recommend or ‘prescribe’ the app service at the time of visit, and the patient manages the information in his or her own smart phone, and medical institutions check the data remotely. In addition to managing various information such as medication management, the hospital can remotely instruct medical treatment using a chat function, and can motivate treatment and increase the continuation rate. The accuracy of daily data of patients with high blood pressure and diabetes is very important for medical examination. Some diabetes medicines have side effects that cause weight loss. In such cases, there is a need for an app that can manage both blood sugar and weight. It is a way of thinking in prescribing the app together with the medicine. The effect of patient behavior change can also be expected.”

“Necessary data are different for each disease, and 15 smartphone applications are provided. Welby’s apps have been downloaded by nearly 600,000 users and used by over 9,000 medical institutions. There are approximately 60,000 medical institutions in the country, indicating a large growth market.”

“Medical institutions benefit from patient retention. Proper communication between the doctor and the patient using these apps will prevent the patient from switching to a medical institution or leaving the treatment. The other benefit is medical care. With Welby, you can gather more information faster. Medical institutions that have introduced Welby apps have given positive feedback evaluations such as ‘communication has become easier’ and ‘time has been reduced.’”

“We emphasize the number of registered members, the number of active members who actually use the service, and the rate of continuous use as our KPIs as the app platform is effective only when used actively and continuously. Users who started using it after being recommended by a doctor are about 60% active rate of more than once a month at first, and about 40% even after three months. Because it becomes a customary habit to continue using for three months, there is not much decrease after that. The continuity rate after three months is about five times higher when linked with a medical institution. In diabetes medical care where patient’s motivation has a big influence on treatment, maintaining motivation and behavior in diabetes care is important.”

“The rate of continuation of use varies depending on the service, but it is an average of 40%, far higher than common healthcare apps. There are also a number of introductions at medical institutions. It is because referral by a medical institution leads to a motivation for the use by patients. One of the challenges of mobile PHR is the utilization of the elderly who may find it difficult to use smartphone. Welby’s usage rate increases as the age increases and it’s not true that mobile PHR is not suitable for the elderly. The elderly have more time to spare, and they tend to be serious in data and lifestyle records.”

“The business model is B2B, B2M and B2B2C. In B2B, Welby has already cooperated with major pharmaceutical companies with various applications and information services and we receive recurring usage fees. In B2M, Welby provides services to hospitals and pharmacies who pay a monthly fee. These two businesses account for the majority of revenue. In B2B2C, patients use the apps free of charge, and the number of users is increasing. It is also used for corporate health management, targeting healthy people and sick people, and it is possible to use data even if you change jobs or retire. There is also a movement to expand the app as a medical device that can be used by public medical insurance.”

“The superiority of the Welby platform lies in the coordination and security of in-hospital examination data that requires specialization and strictness. We are in charge of information collaboration as there is no compatibility between manufacturers of various sensor devices such as blood pressure monitor and blood glucose meter. We have also cooperated with NTT DoCoMo in data, and we are also promoting cooperation with hospital electronic medical records in which health information can be acquired without going to the hospital, and can be centrally managed by the application. Accumulation of patient data makes it possible to use that data when visiting another hospital.”

“As in the case of Tokushima prefecture, which is the worst in diabetes, Tokushima University Hospital and nearby hospitals use Welby’s platform, and data efficiency in the area has been enhanced by improving data efficiency. Welby also leads the regional project in blood pressure monitoring for hypertensive patients in Fukushima prefecture (Kitakata City). According to the demonstration, results such as patient behavior change and blood pressure stability are beginning to appear, and use in the cardiovascular area is beginning to spread. Similar efforts are being conducted in Setagaya and Adachi Ward, Tokyo, in the clinics of Yokohama and Kawasaki City, and so on. The community-wide efforts that use Welby’s My Carte in watching the health of the residents have been started all over Japan.”

Mobile PHR increases the quality of consultations. In the case carried out at Kokubunji Sakura Clinic with the cooperation of Jichi Medical University, the improvement of HbA1c and neutral fat and weight change are also interesting. The dietary style has changed. Specifically, when the time allocation at the time of consultation such as interview, guidance, goal consultation and decision is compared between the user group and non-user group of mobile PHR, in the user group, the interview time before entering the guidance decreases. It is said that they can spend their time on teaching and setting goals. It’s a result of the visualization of data by mobile PHR and communication is possible every day because it is connected by the app, so it can be said that the quality of medical examination has improved.”

“In order to create effective applications in this field, medical evidence for a certain period of time is required as the foundation in a society. We believe Welby is at least 3 to 5 years ahead of other companies. It will take two to three years to create a platform. In addition, it may take about 3 to 5 years to bring out the treatment effect by the evidence in the academic society, medical institutions and the continuous use.”

“All ideas for application development are in-house production. The member registration function, the database, and the function to aggregate information from electronic medical records are made into a common platform and are streamlined to improve quality. There are many target diseases, and the potential as a business is also large. We will be focusing on the development of new smartphone applications such as cancer platform and Parkinson’s disease platform.”

“The revision of the Pharmaceutical Affairs Law and the introduction of the new Pharmaceutical Equipment Law in Nov 2014 had the greatest impact on Welby when software was subject to regulation. As a result, we acquired a medical device manufacturing and marketing license in Aug 2015, and took measures to formally respond to our apps being regulated. In order to be used as medical software, Welby worked with several university hospitals to verify the effects of using Welby. In the case of Welby, collecting and accumulating reliable data from demonstration experiments is a factor in measuring differentiation. Various apps have been released, but it is currently difficult to understand whether it is medically correct. These factors are quite important, and I think the best way is to show that they are approved as medical software. After all, as medical information is handled, if an accident occurs, the industry itself will be adversely affected.”

Handling the Personal Information of Patients and Users
On handling the personal information of patients and users, CEO Hiki comments: “In our patient PHR platform service, various PRO data of patients are accumulated. In the disease solution service, PRO data of patients is provided to healthcare professionals on the premise of individual consent of the patients for sharing clinical information between patients and healthcare professionals. For pharmaceutical companies, we provide statistical information such as the number of patients using the jointly developed target service for marketing purposes, and do not provide individual patient data (including personal information). The Welby My Carte Health Record Service provides medical staff with the individual consent of the patient for sharing clinical information between the patient and the medical staff, and lifestyle-related disease for local governments and general companies.”

“The number of patients used as effect verification for prevention of aggravation, provision of statistical information on recorded data (blood pressure, average value of body weight, etc.) and individual consent of patients are obtained, and then limited to academic use purposes. Information is provided to hospitals, medical institutions, research institutes, etc. In PHR platform services dedicated to clinical research that are limited to academic purposes, patient PRO data is provided to academic societies, university hospitals, medical institutions, research institutes, etc. after obtaining patient consent.”

“In our business, we handle important personal information from many patients and users. We believe that it is our duty to ensure the security of these personal information sufficiently and use it as reliable information, and have acquired ISO 27001 certification, an information security management system (ISMS). We consider the trust from patients and healthcare workers to be the first priority, and we do not plan to provide third parties without patient consent for patient PRO data, including the use of anonymous processing information.”

Welby’s Smartphone Apps for the Various Diseases
On Welby’s smartphone apps for the various diseases, CEO Hiki shares: “Welby has developed PHR app platform in lifestyle-related disease area, cancer area, specific chronic disease area. For lifestyle-related disease area, we have ‘Welby Blood Glucose Note’, ‘My Care’, ‘Maizapo’, and ‘Easy Blood Pressure Dairy’.”

(1) Lifestyle-Related Diseases
“‘Welby Blood Glucose Note’ application mainly supports the treatment of Type 1 diabetes patients. Type 1 diabetes is a type in which cells that make insulin in the pancreas are destroyed and insulin secretion is almost lost. Japan has over 10 million diabetic patients, or over one of out every adults. In addition to blood sugar level, we support the record management of each data related to Type 1 diabetes treatment such as insulin injection amount and glucose intake.”

“‘My Care’ application supports the treatment of diabetic patients. Entering your own data allows you to know how to treat your own diabetes treatment, and to learn more about diabetes and treatment with the learning function. You can also record daily activities such as weight and blood pressure, diet and exercise, and test values measured at the hospital.”

“‘Maizapo’ is a smartphone application developed with AstraZeneca for patients with lifestyle-related diseases such as Type 2 diabetes and hypertension. You can easily record body information, medication status, daily meals, and exercise. By linking with the body composition meter of Tanita Co., it is possible to automatically record daily weight. The app learns these records and supports diet, exercise and treatment record management. ‘Easy Blood Pressure Diary’ is a smartphone application developed with Takeda Pharmaceutical  for patients with high blood pressure. Data can be recorded automatically in the application by using the sphygmomanometer linkage function for home use, so it is possible to save time and effort in recording blood pressure as compared to the past. Also, the recorded data is graphed automatically. In addition to linking with a sphygmomanometer that has a communication function, it is also possible to read measured values with a camera for some models. In addition, they can share data with registered medical institutions and allow doctors to make better treatment. At the Annual Meeting of the Japan Diabetes Society, Aichi Medical University School of Medicine gave a presentation that Welby’s PHR has had a certain positive effect on motivation, consciousness change and behavior change of diabetes patients.”

(2) Cancer
“For cancer area, we have ‘Gland Note’ and ‘Support’. ‘Gland Note’ application supports communication between prostate cancer patients and medical professionals. Patients can record their medication status, daily physical condition, examination/ measurement values, such as prostate specific antigen, in the application and use them to communicate with doctors. The recording method can choose either a personal computer or a smartphone application according to each lifestyle.”

‘Support’ is an application that supports the cancer patient to record the information in the application and appropriately communicate it to the doctor about various ‘immediateness’ that occurs in the body and mind during cancer treatment. During the treatment, the patient shares with the doctor various pain states such as pain, fatigue, nausea, depression, skin symptoms, numbness etc. which can lead to a more accurate treatment. There are some side effects of cancer patients who receive chemotherapy, which may or may not be visible in the test. Subjective pain and invisible side effects make it difficult for family members and co-workers to be aware of it and it’s also difficult to tell the doctor. If the unseen side effects are underestimated and the response is delayed, the quality of life during treatment may even decrease. Therefore, it is important to emphasize that PRO (Patient Reported Outcomes) allows patients to directly report diseases and symptoms. In particular, complaints such as anorexia, constipation and dyspnoea tend to be underestimated by doctors. The average DAU (daily active users) rate was 50.9%, and it was found that more than half of the people used the app every day, which is higher than Facebook. Cancer patients want this app. The communication between doctors and patients will improve if these apps are used in clinical settings. Furthermore, because it is possible to reduce the time taken to hear adverse events, which are undesirable symptoms, it may also contribute to eliminating waiting time.”

(3) Chronic Diseases, Chronic Pain
“For specific chronic disease area, we have apps for central nervous disease (schizophrenia, adult ADHD, Parkinson’s), chronic pain, autoimmune disease (IBD supplement, rheumatoid arthritis) and rare disease (pulmonary arterial hypertension, spinal muscle atrophy, hereditary angioedema).

“For chronic pain, ‘Itami Contact Directory’ is a service to check daily chronic pain in shoulders, hips and knees and support treatment and medication. Even if you have pain, you can set goals, record their activity, visualize and report data, show them to a doctor at the hospital, and share your physical condition. Millman Inc., one of the world’s leading provider of actuarial and related products/services, health insurance, life insurance, property and casualty insurance, financial services, and consulting services for employee benefits, carried out data analysis from the target application in combination with other clinical data and showed that Welby’s app contributed to treatment selection including drugs and observed the verification of treatment effect. Millman announced their results in the HTAi (Health Technology Assessment International) Annual Meeting in June 2017 about the pharmaceutical management of chronic pain patients using Welby’s PHR and its usefulness in drug therapy selection.“

(4) Autoimmune Diseases
“For autoimmune disease, we have  ‘Rheumatoid Arthritis Diary’, ‘En Dairy’ and ‘IBD Supplement’. ‘Rheumatoid Arthritis Diary’ Is an application developed with UCB Japan that supports symptom check, medication management and medical examinations for rheumatoid arthritis patients. It can be used for habituation of medication, management of symptoms and physical condition, and communication with a doctor at the time of medical examination. ‘En Diary’ is an application for patients with rheumatoid arthritis who are using Enbrel® which is a biological preparation used to treat rheumatoid arthritis, and is a standard treatment for rheumatoid arthritis patients who do not respond well to existing treatments. We support patient self-management through notification of injection record date and time and reminder function, symptom recording function such as swelling and pain, and reflection function.”

”‘IBD Supplement’ is a smartphone application developed with J&J’s Janssen for patients with inflammatory bowel disease (IBD) such as ulcerative colitis and Crohn’s disease. The number of patients with ulcerative colitis is over 181,000 and the number of patients with Crohn’s disease is over 42,000. By visualizing symptoms such as defecation status and communicating the status and progress of at home to medical workers through the application, it is expected to promote appropriate communication between the doctor and the patient.”

(5) Central Nervous Diseases
“For central nervous disease, we have ‘Mind Care’ (Schizophrenia), ‘AOZORA’ (Adult ADHD) and ‘Rehab Journal’ (Parkinson’s). ‘Mind Care’ is a smartphone application developed with Meiji Seika Pharma that supports the recovery of everyone involved, with the ability to support daily medications and the ability to support self-management of sleep conditions and symptoms related to the recurrence of schizophrenia. The number of patients with schizophrenia in Japan is said to be over 713,000.”

“‘AOZORA’ is a smartphone application for adult Attention Deficit / Hyperactivity Disorder (ADHD) parties. It has functions such as daily medication support, schedule management such as going to the hospital, work and interpersonal relationships, and self-checking of daily life, and supports troubles due to symptoms such as lack of attention and hyperactivity disorder.”

‘Rehabilitation Diary’ is an application developed with Dainippon Sumitomo Pharma that supports the treatment of Parkinson’s disease, which can be used for continuing rehabilitation of Parkinson’s disease patients and for recording daily anxious symptoms. Parkinson’s disease is a chronic, progressive neurodegenerative disease with motor symptoms. The main motor symptoms are: (1) tremor (rest tremor), (2) slowing or diminishing movement (slowness, immobility), (3) muscle stiffness (muscle stiffness), (4) Non-motor symptoms that are difficult to cope with changes in balance (postural reflex disorder) and are not related to body movement include autonomic nervous symptoms, sensory disorders, psychiatric symptoms, and sleep disorders.”

“Although there are individual differences in the progression of these symptoms, early initiation and continuation of appropriate treatment centered on medication and rehabilitation can improve the quality of life. The application allows patients to plan and manage rehabilitation activities according to their own symptoms, manage the number of steps of walking, etc., and can also record and reflect on symptoms of concern, take medication records, and manage hospital visits.”

(6) Rare Diseases
“For rare disease, we have ‘PAH Care Note’ (Pulmonary Arterial Hypertension), ‘SMAiLEE’ (Spinal Muscle Atrophy), and ‘HAE Notebook’ (Hereditary Angioedema). ‘PAH Care Note’ is developed with Nippon Shinyaku for patients with Pulmonary Arterial Pulmonary Hypertension (PAH) and can record and reflect daily symptoms (shortness of breath, fatigue, pain, swelling, dizziness, etc.), medication status, and as a communication tool with a treating physician at the time of examination. It can be used to improve medication adherence and streamline interviews.”

“‘SMAiLEE’ is an application developed with Biogen Japan that allows a family member with spinal muscular atrophy (SMA) to take videos taken at home by a family member at the time of doctor’s examination, and can easily capture and edit exercise videos of patients at home. The registered members of this application will also be provided with services such as consultation when visiting a local hospital or clinic, and acting on behalf of the investigation of the local social security system and barrier-free information. SMAiLEE also won the ‘Good Design Award 2018’ and was selected from among the winners as the ‘Best 100 Best Design 2018’. In SMA medical care, it is important to get a proper understanding of the patient’s motor function.”

“Especially in infants, it is often not possible to confirm sufficient movement depending on mood or physical condition at the time of medical examination, and accurate condition evaluation may not be led, but through an application that can easily capture and record ‘exercise that physicians want to confirm’. The aim was to improve the treatment environment by improving the medical communication in the hospital. SMA is a rare disease with a proportion of 1 to 2 out of 100,000 patients suffering from SMA from infancy to childhood, so there is little information on the disease or specialists. SMAiLEE allows you to record the patient’s at home as a video.”

“We hope that communication with patients will be smoother by being able to share information that the doctor’s office alone can not know. The present situation is that some patients do not have sufficient access to the treatment environment, and we believe that through this kind of effort, we will create an environment where patients and their families can access more information. The disease, diagnosis and treatment methods are not yet fully known and this support service can lead to early diagnosis of SMA patients, and thus can contribute to treatment of patients by early treatment.”

“‘HAE Note’ is an application developed with Shire Plc that provides recording and imaging services for hereditary angioedema (HAE) patients’ symptoms, enabling them to understand their own symptoms more specifically, and treating the symptoms when they are not referred By showing them to the patient, the medical practitioner can accurately understand the patient’s symptoms, which leads to smooth communication. In addition, there are functions of ‘Convey HAE’ and ‘Create Family Tree’, which are intended to reduce undiagnosed and protect the patient’s family and relatives. HAE is a hereditary disease that causes swelling and swelling and severe pain in various parts such as the face, lips, hands and feet, and digestive organs. The incidence rate is 1 in 50,000, and the number of domestic patients is an estimated 2,500.”

(7) Dermatological Disease
“On 4 Mar 2019, Welby jointly developed the ‘Acne Log’ app with Maruho Co., an Osaka-based pharmaceutical company specialized in the dermatological field. Acne Log records symptoms of patients suffering from acne on photos, and combines them with daily behavior records to visualize changes in symptoms, support patients’ self-management, and support treatment continuation. We also publish content that can be used to solve questions about acne, including care, such as makeup and skin care information, and to deepen understanding.”

Welby My Carte
On Welby My Carte, CEO Hiki shares: “Welby My Carte Service is a cloud service built and operated by our company that supports self-management of patients with lifestyle-related diseases such as diabetes and hypertension, as well as lifestyle-related disease backup forces. By linking data with a sphygmomanometer, blood glucose meter, and wearable device that has a communication function, it is possible to measure blood glucose levels, blood pressure, body weight, etc., and data necessary for treatment of diseases such as diet and exercise. It is easy to record. You can also share the data recorded by patients with your own family and registered medical institutions, and receive medical treatment support from your doctor.”

“The convenience of Welby’s products has been improved by linking with the medical institutions and patients through the Welby’s medical records and the measurement equipment and examination data etc. of the relevant medical device companies. Welby’s My Carte has been introduced at major domestic conferences such as the Japan Diabetes Society and the Japan Hypertension Society. In addition, at Tokushima University and Fukushima Prefecture Medical Association, in collaboration with local public organizations and medical association, sphygmomanometer is loaned to patients for citizens to introduce self-management of lifestyle-related diseases such as diabetes and hypertension and used as a tool of regional collaboration to be shared to the doctor-in-charge through Welby’s My Carte.”

“We also offered the service ‘Welby My Choice’ to support Shared Decision Making (SDM) between patients and doctors. ‘Welby My Choice’ is a selection of evidence-based treatment options and information presented to patients from a large number of treatment options. Physicians pick up the treatment options based on efficacy, side effects, costs, medication methods and schedules. We collaborated with Teikyo University Chiba General Medical Center, Hematology and other departments and offered ‘Welby My Choice’ for patients with multiple myeloma, a type of blood cancer. Multiple myeloma is a disease in which new drugs are being released one after another in recent years, and the treatment options are becoming more complicated and diversified, and the number of patients in Japan is 18,000.”

Welby’s Artificial Intelligence (AI) Partnerships with Digital Garage and Tokushima University
When asked to elaborate on Welby’s artificial intelligence (AI) partnerships with Digital Garage (TSE: 4819) and Tokushima University, CEO Hiki comments: “On 1 Aug 2018, Welby began a capital and business alliance with Digital Garage to jointly develop PHR services that utilize AI (artificial intelligence) and blockchain technologies in which DG Lab conducts the R&D. As part of the partnership, DG’s co-founder, Koichi Ito, will be appointed as Welby’s advisor.”

“The blockchain technology is an element of enhanced security in the healthcare field that manages the data stored in PHR. We believe that using AI to analyze the data and outcomes in the medical field will be applied to the further development of medical care. We aim to build a platform for health and medical information centered on individuals by linking PHR with local governments, health insurance, medical institutions, care providers, pharmacies, insurance companies, pharmaceutical companies, health-related business operators, promoting services and infrastructure for chronic illness and preventive medical treatment as well as medical care and long-term care.”

“Joint research and demonstration experiments using artificial intelligence (AI) to support self-management of diabetic patients have begun at Tokushima University Hospital Advanced Enzyme Research Institute’s Diabetes Clinical Research and Development Center from Jan 2019. We grasp blood sugar levels, blood pressure, diet measured at home through smartphone app and automatically send messages to promote frequency improvement and continuation. It leads to accurate medical treatment and the reduction in work burden of the doctor. AI also analyzes and assists with dietary analysis and information. Welby’s PHR platform will be integrated with HER (electronic health record) to output behavioral change support information. The Tokushima University AI experiments are supported by the Ministry of Internal Affairs and Communications budget. Ultimately, by achieving the prevention of diabetes complications, we aim to improve the QOL of the person and reduce medical expenses.”

“We will expand into the new service of providing evidence generation solution using PHR/PRO for clinical research. Welby is the only App Connect Partner in Asia that Medidata Solutions, Inc. (NASDAQ: MDSO) approves as a clinical trial app development company, and can also develop custom apps that run on Medidata Clinical Cloud.”

Expansion into the Service Provision of Real-World Data for Clinical Research
On Welby’s expansion into the service provision of real-world data for clinical research for pharmaceutical companies and government hospitals, CEO Hiki comments: “In clinical trials, together with the objective data of the subjects, the importance of PRO, which is a subjective evaluation by patients themselves as well as the outcome evaluation by medical personnel, has been recognized by FDA. Under such circumstances, we believe that the need for PHR/PRO to generate evidence will increase. We provide solutions that meet the needs of each phase, from research and planning of PHR/PRO, system construction, and system development.”

“Welby has developed and provided treatment-supporting digital services for patients in various disease areas, including lifestyle-related diseases, oncology, central nervous system, autoimmune diseases, and rare diseases. As we expand our service provision, we receive more inquiries about tools to collect PHR/PRO for research purposes from pharmaceutical companies and healthcare workers, and we have already started working on several projects in the clinical research field. In order to support the creation of evidence to realize patient-centered medical care in the clinical research area, we will strengthen the clinical research area business, provide data collection technology from measurement equipment such as blood pressure monitor, body composition monitor, wearable device and various services. We also provide the ePRO system ‘Welby Smart-PRO’, which can collect data continuously without load on subjects’ daily lives based on our experience. Welby hopes to contribute to the active participation of patients and support for medical personnel by utilizing the results of PHR service development and operation for patients with various chronic diseases including lifestyle-related diseases.”

“On 14 Feb 2019, Welby My Carte was adopted by Osaka City University’s Hepatobiliary and Pancreatic Internal Medicine, Graduate School of Medicine, in clinical research aimed at improvement of fatty liver by motivation management for non-alcoholic fatty liver disease (NAFLD) patients. With the increase of the obese population, the number of patients with fatty liver is also increasing. Although some NAFLDs progress to liver cirrhosis and liver cancer, there is no specific treatment, and weight loss through diet and exercise is effective. However, the therapeutic effect of weight loss is limited, and even if the effect is temporarily seen, there are many patients who fall into rebound due to a decline in motivation when observed for a long time. The ‘Welby My Care Chart’ can be linked with various portable wearables, and can record data such as patient’s number of steps, distance, calories burned, weight, blood pressure and so on.”

“Patients can expect to maintain their motivation for treatment by ‘visualizing’ data such as calorie consumption and the degree of treatment achievement using portable wearable devices and Welby My Carte. A large number of portable wearable devices and smartphone applications have been developed that can measure daily activities such as steps and calorie consumption in the healthcare field, but their effects have not been scientifically proven. This clinical study is expected to prove the usefulness of treatment medically because it measures the degree of hepatic steatosis before and after intervention.”

Welby’s Partnerships with Various Companies
When asked to comment on the various partnerships of Welby with NTT DoCoMo, Japan Post, SMS Co (TSE 2175), Carenet (TSE: 2150), SRL Co and Dainippon Printing, amongst others, CEO Hiki shares:

NTT DoCoMo
“In Oct 2018, Welby and NTT DoCoMo cooperate with each other’s services to promote the development and diffusion of PHR  services. Welby’s PHR application in diabetes and hypertension management is introduced to DoCoMo’s ‘d account®’ in which members can log in. In addition, in the ‘Maternal and Child Health Handbook Application’ provided by the non-profit organization Himawari no Kai and DoCoMo, we will provide content related to pregnancy hypertension and pregnancy diabetes, and propose the use of Welby’s My Carte. In this way, women in pregnancy and postpartum can learn the risk and treatment of pregnancy hypertension syndrome and gestational diabetes with the ‘mother and child health handbook app’. If they receive a diagnosis of the disease, users can manage blood pressure management, diet, medicine, and other information necessary for treatment. Welby uses the function of NFC (Near Field Communication) and you can easily manage the data measured to the corresponding blood pressure monitors and activity meter.”

“From 2019 onward, the blood pressure, blood sugar level and activity information of diet and exercise registered in the database of ‘Welby My Carte’ and the database of ‘Maternal and Child Health Notebook Application’ are linked, and. We will consider sharing information such as weight and medical checkup of pregnant women registered in In this way, and we offer advice according to the treatment situation in ‘Welby’s My Carte’ and contribute to support for diseases such as pregnancy-preventive hypertension and pregnancy diabetes that develop in perinatal women.”

“’Pregnancy hypertension syndrome’ occurs at a rate of 1 in 20 pregnant women and is likely to become severe if it develops from 20 weeks of pregnancy to less than 34 weeks of gestation. It may cause seizures, cerebral haemorrhage, and dysfunction of the liver and kidneys. In addition, both mother and child may be in dangerous state, such as fetal dysfunction, fetal dysfunction, and in some cases fetal death. In addition, postpartum blood pressure management may be required. By promoting the ‘Mother and Child Health Handbook’ and PHR, we can visually identify changes in the weight and blood pressure of the mother during pregnancy and changes in the estimated weight of the baby in the stomach. Even if pregnancy is accompanied by an abnormality such as gestational diabetes, changes in blood pressure and blood sugar can be confirmed more carefully by both pregnant women and medical personnel, which is useful.

“Through this partnership, by linking DOCOMO’s existing services and membership base with Welby’s medical PHR service, it will be possible to widely disseminate services necessary for pregnant women, individuals, and patients. The new value of PHR that comes from the efforts of both companies will lead to the treatment support of patients and medical staff who deal with diseases. Welby and DOCOMO will continue to evolve the PHR service through cooperation between the two companies’ services, aiming to build a platform for personal health and medical information.”

“Welby has also participated in the DOCOMO’s 5G open partner program. We believe 5G will lead to better service delivery of Welby’s PHR platform services. Welby will quickly build and verify 5G services prior to 2020, and take advantage of the 5G features such as high speed, large capacity, low latency, and connection with many terminals. We will use it to improve the quality of our products and create new services.”

Japan Post Group
“In Dec 2017, Japan Post Group becomes a strategic shareholder and Japan Post Capital currently owns 5.93% of Welby’s shares. Welby intends to further spread and promote PHR by utilizing the Japan Post Group’s brand and network, and to contribute to medical sites, communities and local governments.”

SRL Co.
“In May 2018, Welby and SRL Co. announced a joint service PLANET X My Carte. PLANET NEXT and My Planet are test results reference systems for doctors provided by SRL. This joint service enables the patient to view the test results performed at the medical institution using the smartphone application without the operation of the medical staff. The fact that the test results at the medical institution can be promptly and accurately communicated to the patient and confirmed by the application can be expected to improve the patient’s convenience as well as the awareness of treatment.”

SMS Co.
“SMS Co. (TSE: 2175) and Welby entered into a business alliance in data linkage of services for pharmacists and services for patients. By encouraging the pharmacist to use the specific disease treatment app for patients with specific diseases (for example, the application for diabetes patients ‘Welby blood sugar level note’) that cooperates on SMS Co’s BBS bulletin-board support service for pharmacists ‘Kokoyak’ where pharmacists can discuss and solve business questions with each other, communication between the pharmacist and the patient, including medication guidance, is strengthened, and the patient’s understanding of medication significance and motivation for treatment are enhanced. SMS Co and Welby will develop new services and products for pharmaceutical companies by combining the membership base, content and know-how of ‘Kokoyak’ and Welby’s disease treatment apps for patients with specific diseases.”

Carenet
“Carenet Co (TSE: 2150), which operates the medical care portal site CareNet.com with 144,000 doctor members, and Welby collaborated in linking services for healthcare workers and patients of both companies and improve and activate convenience for both users in disease treatment. By combining the membership base, content and know-how of Carenet’s services for healthcare workers and Welby’s disease treatment tools for patients with specific diseases, we will develop new services. We will conduct joint sales and promotion to pharmaceutical companies and medical device manufacturers.”

Dainippon Printing
“In May 2017, Welby and Dainippon Printing cooperated to provide PHR service for patients who can obtain medication records automatically. The PHR service provided by Welby is equipped with ‘DNP Monitoring System: Your Manager’, and records of medications that had to be manually input by patients can now be automatically acquired. It is configured with an NFC card reader that reads the record, and an application that manages data. Information is recorded with the time by pushing the button on the card and taking out the medicine from the package. By holding this card or package over an NFC reader, data is transferred to a personal computer or smartphone, enabling patients to automatically link and view information. The communication method uses the Bluetooth method that can automatically transmit data.”

CEO Hiki summed up by emphasizing Welby’s mission of “empowering the patients” as the driving force that kept them going: “People who are suffering from illness can not escape from treatment, so we wanted to help patients by creating a more convenient environment. I witnessed how during the medical treatment of cancer, various physical and mental ‘suffering’ occur, including depression, feeling fatigue, nauseous, and numbness. Not many patients would communicate with doctors and healthcare professionals regarding such ‘suffering’. Our app makes the patient easier to communicate with healthcare professionals at the clinic/hospital. The mission to promote ‘empower the patient” kept us going. We have launched a service with social significance and market needs in mind in improving quality of life and controlling medical expenses.”


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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