Shanghai Evans Investment Management Limited

Interview with Dr. Francois Fong | Neo-Health Group’s APAC expansion plans

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We are speaking for a third time with Dr. Francois Fong, who is the Founder and CEO of the Neo-Health Group in Hong Kong, a holistic health provider, also a world leading specialist in the area of sexually transmitted diseases. Today, we have a more specialized topic, because Neo-Health has embarked on an expansion plan, both in terms of geography and in terms of increased services provided. So, we thought it would be useful for viewers, to listen to Dr. Fong’s plan, particularly for people who have an interest in private health care.

You can see the first interview with NHG here:

You can see the second interview with NHG here:

Script of Interview

Interviewee                                                                  Dr. Francois Fong (FF)

Position                                                                        Managing Director

Company name                                                          Neo-Health Group

Company website URL                                    

Interviewer                                                                  John D. Evans, CFA (JE)

Interview conducted on                                           15 October 2021

JE  Good afternoon to this further episode of SEIML Ventures Interview Series. And today we have our third interview with Dr. Francois Fong, the General Manager of Neo-Health Group located in Hong Kong. Just as a bit of background, we’ve done two interviews before, so when you click on the website, you will see links to those two previous interviews. But Neo-Health is a full-service GP clinic, and a world leader in the research and treatment of sexually transmitted diseases, or STDs, as they’re abbreviated. It has expanded in recent years to include executive health screening and other specialists testing services. However, from its base in Hong Kong, it’s now looking to grow its business, both geographically and through telemedicine, and it’s exploring this expansion that is the purpose of today’s interview. So good afternoon Francois, how are you?

FF  Good, how are you, John?

JE  I’m doing well, doing well as well.  Autumn is coming in, things are down. So, the hot weather is gone. So just to start things off, you’ve done two interviews before, but just for the benefit of the viewers who haven’t seen those two interviews, give us a general overview of Neo-Health Group in Hong Kong today, as it is, location, facilities and the clientele it serves.

FF  Yes, of course, we start off with medical service clinic, providing general medical services and we specialize in sexual medicine. So that covers area of sexually transmitted disease, HIV treatment, diagnostics, and also a patient with sexual dysfunction, relationship problems and anything basically related to any sexual problem. So, in recent years, we expand into our R&D areas by developing our own IP in diagnostics. So, we set up an NH Life Science company at Science Park in Hong Kong. And we recently have got some funding from regional innovation and technology commission of Hong Kong to provide to us to start some research in STD diagnostic development.  So, and also, we have expanded into our own pharmaceutical, wholesale business in, in particular, HIV prevention drugs. So, we are now a wholesaler and exclusive distributor for HIV prevention medication for Hong Kong and China. So, expand our business, our medical service to our collateral business in terms of pharmaceuticals, also about biotech research. So, with this background, we hope to expand our business further into other countries with a strong home and our intellectual property.

JE  Okay. So, it’s really a bit of a misnomer, just to call you a GP clinic as that is really just one element of a much greater array of activities that are going on at Neo-Health, as you’ve just said. So, with that as background, just in general terms, what is the nature of the expansion that you were undertaking in the near term?

FF  Well, with the COVID situation, we have basically been holding back our expansion plan, which was started about two years ago. So, with this COVID situation and also, restrictions on travel we stopped our expansion for two years into Taiwan, Malaysia, perhaps Singapore and other Asian countries. So, but we’ve still have a Malaysian company, operating at the moment, and hopefully, things will start, the border will start to be reopened.

JE  Okay. So, there’s a geographical expansion, but I think that’s only one aspect of it, because it’s not just a geographic expansion. You’re going to be doing some new things or transitioning the business in some way. What is that second component about?

FF  Well, the other component is tele-diagnostic service. So, what we are what we’re developing at the Science Park is partly also further expanding services for patients who are able to take samples for themselves at home and that would mean to take away the embarrassment they have to go to doctors, by having samples taken at the convenience of their home. We have a female sampler that will allow a woman that can take a vaginal sample at home and then send it to our laboratory for testing. And with that service will be able to detect over 30 different bacteria in the vagina or other infection in the vagina. So, for women who have discomfort or irritations or things that they think they there’s something not right, then can do it at home, and then send it to us. So that would create a borderless service, so without geographic locations, and also, we will not necessarily need to establish official locations within those areas.

JE  Okay, now I understand that, but I think there’s another component about the GP consultation and that’s moving from a pure face-to-face model to some sort of hybrid model with telemedicine and face-to-face.  Maybe you can expand on that a bit more.

FF  Yeah, so with the expansion of the diagnostic service, the tele diagnostic servers, for patients who will have their results discussed by teleconference with a doctor. So, we’re also providing consultations so the patient does not necessarily have to be located in Hong Kong.

JE  Okay, so telemedicine, which we’re hearing a lot about, I mean, is this just a temporary change until international travel or travel resumes? Or is this going to be a permanent new aspect of your business model, face-to-face and telemedicine?

FF  I think with the world evolving, this will become a norm for telemedicine service. So, patients who would be looking around to international experts, and also particularly some of our tests are very unique in our field.  So, I think patients will be able to get to know about having our service without leaving their home.

JE  Are we ever going to get to the point where GP’s are going to stop doing face-to-face meetings and it’s all purely tele-medicine? Is it ever going to go to that extreme?

FF  Well, I don’t think so. Face-to-face elements, there’s still certain parts of examinations, physical examination, which will require some sort of physical contact. But, if we are looking at some services, which mainly are depending on the laboratory diagnostics, then those services will primarily replace face-to-face with telemedicine service.

JE  Okay. Very interesting. Now, in terms of the geographic expansion, which you’ve already mentioned, you’ve mentioned the company in Malaysia, you’ve also mentioned Taiwan. I mean, is there is there a big market outside and are you also looking at Mainland China as well?

FF  Well, I think the whole of Asia, either Southeast Asia or east Asian countries, the need for sexual health services is still in demand. And we’re looking at the statistics by the WHO and the STD numbers are increasing, including HIV numbers of new cases increasing in many Asian countries. So, I think from what we do is mostly prevention, early diagnosis, and also early treatment, all these aspects are important for Asian countries. I think we can repeat our experience in Hong Kong and expand it to other Asian countries.

JE  And mainland China in particular?

FF  Yeah, I think Mainland China also, the regulations and compliance are a little bit different for China.  But, it is certainly is a huge market that we cannot ignore.

JE  Okay. So, to summarize, there’s two elements of your new growth strategy. One is a geographic expansion to deliver your services in other markets that you’re not currently covering and, also, to change the method of delivery, expand the use of telemedicine to support all of these other diagnostics and an increased and a different way to provide GP services. So, two distinct elements to it.

FF  Yeah, that’s right, John.

JE  Okay, so let’s, let’s go on to sort of the timing and the financing that may be involved. When are you going to start implementing this expansion? We still have travel restrictions, or are you ready to go?

FF  Yeah, I think with the tele diagnostics and telemedicine service, this is the best time to do it when there’s travel restrictions. So that is something that we are planning and we will be soon executing and expanding the service.

JE  Okay? And will this start in Hong Kong and then move after you’ve perfected it in Hong Kong to other offices? Or, are you going to grow all these different areas Malaysia, Taiwan, Hong Kong, China sort of together?

FF  I think in terms of the phases, we need to move out the operations part. So, what we’re doing now is for patients in Hong Kong, some of them we are providing teleservice already.  So, for patients, for example, which want to review the health check results, they don’t actually need physical examination.  So there, we are providing teleservices already. And second group of patients, those patients who used to live in Hong Kong, but they have left and they are living in other countries. So, in the past, we had a lot of patients actually, they come down to Hong Kong regularly for business travel.  When they come into Hong Kong, they will drop into our center for their checkup and medical consultations.  I think that those will be the second group of patients that we are already connected with them. So, we can provide continuity of service to them. And then the third group will be new patients, when they become aware of our services.  But that will require some marketing into different locations, and that takes time. And even, we used to get a lot of referrals from our patients. So, for patients who have moved to other locations, they can become a source of referral as well.

JE  Okay. So, this becomes also a form of patient retention, not just getting new patients.

FF  That’s right.

JE  So, this sounds like there’s a lot going on. And you said, you’re starting already now with the telemedicine conversion. So, the plan that you have in the pitchbook, which we’ll show selective slides to the viewers of, how long do you think this will take when do you think this initial expansion will be complete?

FF  I think our plan is, within this year, we’re fine-tuning the servers in terms of logistics, how to complete consultations and also receiving the payments and also the final processing if we need to send them any medications or other prescriptions, so that they can get it at the location at their resident location. So, I think there’s still a few things that we’ll need to fine tune. But the key with our servers is that we not only providing feeds of online consultations or patient at the same time, at the same time, we also provide also providing diagnostic servers as well as treatment.

JE  Okay. So, with this going on, starting now, potentially new physical locations Malaysia, Taiwan, and maybe in mainland China, is this something that can be accomplished by the end of 2022? Is that a reasonable timeframe? Or, or will it require a bit more time?

FF  Well, I think that will be a reasonable timeframe. In different locations, we’re also trying to locate or to recruit, a small number of doctors in the geographic locations. So, they can also provide some offline services for patients if they need it.  So, for example, for patients potentially with cases, situation where they might want a minor surgery, obviously, we cannot do that over the phone online.  Then we’ll require some local expertise to help them

JE  And to get this local expertise, will you have to go down and meet these doctors and interview them? So, will that require you to wait for travel restrictions to be removed?

FF  I don’t think so, I think we can recruit them online. And we’re starting that process already. With some doctors, we already know them in Malaysia or in Australia. We have some of them providing service already. I think that just requires some more solid collaboration models so that we can work it out as a business model.

JE  Okay. Very interesting. So, A lot of things being done virtually these days, even recruitment for doctors in other countries. Very interesting. So, let’s turn to another aspect. We talked about the implementation, what about the financing? Now, the Neo-Health Group has been very profitable over the years, even though profits went down during the protests and the pandemic, you remained profitable. Is this something that can be financed out of internally generated funds or do you need to raise external financing?

FF  I think with external financing, we will need it if we want to move faster. So, for these few areas, if we have extra funding it would shorten the development process. For example, our diagnostic test, which can be faster with extra funding, the whole thing, the whole multinational expansion will require a medical system, where it can be used for cross border and therefore standardize the standards of practice, and also standardize the procedure. So that IT development will also require some fundings. I think to put it into one piece, we don’t want different locations to run things separately with different systems. That will also require some extra funding. And also, if we want to move faster into different locations, marketing and also recruitment would also be requiring some extra funding.

JE  Okay, so there will be a funding requirement in the near term, what the next three to six months to get things going? Is that a, a timeframe to close this to get the funds you need?

FF  Yeah, I think so. So, if we get extra funding in the next six months, or by the time the border reopens, then we can move along a lot then.

JE  Okay. Boy, we’ve been talking about borders reopening for so long.  I hope it happens this time.

FF  Well, it’s getting almost two years now.

JE  Yeah. So, if you’re seeking outside investment, what would be your ideal source of funds? I mean, are you talking directly to VC funds who are pure financial investors? Or do you have a preference for maybe a strategic industry partner that could provide things other than just money? Is there any government financing or support available in these areas? What your focus there?

FF  Well, I think, any sort of funding we would welcome. But, in terms of priorities, I think, for partners, strategic partners who are able to provide the funding, and also the connections in different geographical locations that will be ideal.  Or our partners who also have the funding and technological knowhow, the technical party will also lift our R&D, that will also be good. So even government funding, from local governments if they are interested in our projects, which will help to help also from the public health point of view, which is to reduce STI and HIV prevention, then government funding would be particularly helpful if we were able to move into different locations.

JE  Okay. Do any of these locations you know, Malaysia, Taiwan, or maybe Hong Kong for the expansion, are government grants available? Is that a reasonable probability of occurring?

FF  Well like in Hong Kong, what are trying to get there are a few government funding potentials we can make use of. So, innovation and technology commission funding we already got.  There’s also business development funding for expansion into Asian countries, also provided by the Business Council in Hong Kong. I think those are the  things that we can make use of for the time being.

JE  Okay.

FF  And for most government funding that will actually go into the local company.  So, I think in Malaysia, there’s also some funding, mostly on R&D projects. We haven’t quite looked into those areas yet.

JE  Okay. So, a lot of areas to investigate. And it’s been interesting for me being involved with you and others in Hong Kong and other jurisdictions, there’s a lot of government incentives around there, but they take sometimes a long time to apply to and things like that. So, it’s a long process, but hopefully, it can be successful. So, after being in Hong Kong, just with the facility in Hong Kong since you started in, I guess, around 2007, this is a big move. This is a big expansion geographically. And in terms of all the new services that you’re rolling out, and implementation is always a key. So, tell the viewers that are out there who are watching this, why do you think this your expansion will be successful? What’s key and what’s going to make it happen?

FF  Well, I think, to put everything into context, our expansion plan started in 2016. At that time, we have our different projects incubating like the pharmaceutical distribution in the R&D project, they were incubating the project.  And now, we already have, for example, the wholesale license granted.  Research is much more in an advanced stage now with much more focus.  So, with this area now bearing fruit, I think it makes the whole company a lot stronger. And also, now we have much more market differentiation than our competitors.  With the expansion plan, I think we are in a much more unique position to do it now then say previously.

JE  Okay, so it’s not really a new expansion starting now, you’ve actually been laying the groundwork, as you said, from 2016, in in a lot of different areas. And this is just sort of moving it forward at a faster pace to get to the end. And I think there’s little doubt that you have a very differentiated offering from GP services, because obviously GP services is just one component of a very comprehensive life science offering. So that sounds very, very interesting. So, I always close off with the same final question, which is about this sounds very interesting. Is there anything else that you just want to take about the viewers tell the viewers who are watching this and learning about your expansion? Anything else that you want to comment on or say that I didn’t think to ask you?

FF  Well, I think so far, the most difficult thing that we encounter is finding the right health professionals to work with us. Quite often doctors have their own mindset. To think innovatively and differently can be a challenge to a lot of them. So, we need like-minded viewers, and also people who are people to think outside the box to join us.

JE  So, I’m almost certain that in 99% of service organizations, success is driven by the people involved, and you seem to confirm that. Okay, well, that’s very interesting. And I look forward to following this process with you. We will put this video out on our various social media channels so people can look at it. And hopefully, to sort of assist the process that you’re already managing, some of the people in the investment community, in the industry or doctors abroad may see this and hopefully that will bring some additional resources to you to help drive this forward. But it’s very interesting. And thank you very much for your time, and best of success.

FF  Thank you, John.