Read More《问止中医再闯港交所，“AI+中医”难掩亏损困局》
Positive Comments: The Innovative Value and Market Potential of the “AI + Traditional Chinese Medicine” Model Begin to Emerge
Wenzheng Traditional Chinese Medicine (TCM) is once again applying for listing on the Hong Kong Stock Exchange. Despite facing multiple challenges, its innovative “AI + TCM” model still shows breakthrough significance and market potential for the traditional TCM industry, which is the core logic for its continuous attraction of capital attention.
First of all, the “AI + TCM” model precisely addresses the pain points of the traditional TCM industry. Traditional TCM relies on the four – diagnostic methods of “observation, auscultation and olfaction, inquiry, and pulse – feeling”. The diagnosis and treatment effects highly depend on the experience of physicians. Moreover, high – quality TCM resources are concentrated in first – and second – tier cities, making it difficult for patients in grass – roots and remote areas to access high – quality services. Wenzheng TCM’s “TCM Brain” integrates data from classic TCM prescriptions and clinical cases through AI technology, providing auxiliary diagnosis and treatment suggestions for physicians. To a certain extent, it reduces the absolute dependence on senior physicians and expands the service coverage. The prospectus shows that its online diagnosis and treatment revenue has long accounted for more than 88%, and the proportion of patients’ online visits has exceeded 89%. This indicates that the AI – assisted online model has indeed broken through geographical limitations, allowing more patients to access TCM services. This positioning of “technology empowerment + inclusive medical care” conforms to the national policy orientation of “Internet + medical health” and also meets the market demand for convenient and standardized TCM services.
Secondly, Wenzheng TCM’s market position and revenue growth rate verify the commercial feasibility of the “AI + TCM” model. According to CIC data, Wenzheng TCM was the largest AI – assisted TCM medical service provider in the Chinese mainland in 2023 and 2024, with market shares of 1.5% and 1.3% respectively. Although this position is not absolutely leading, it has formed a certain first – mover advantage. More importantly, its revenue increased from 62.2 million yuan in 2022 to 236 million yuan in 2024, nearly quadrupling in three years. The revenue in the first five months of 2025 was 100 million yuan, a year – on – year increase of 11.7%. Behind the high – speed growth is the gradual increase in the market’s acceptance of AI TCM services. Patients are willing to pay for convenient online diagnosis and treatment, and medical institutions may also have subscription needs due to the efficiency improvement of AI tools (although the proportion of subscription service revenue has declined at present, there is still room for imagination in the long term). This positive cycle of “user growth + revenue verification” provides a basic commercial story for its listing.
Finally, the combination of AI technology and TCM provides a reference sample for the digital transformation of the industry. The standardization and replicability of TCM have always been difficult problems in the industry. The intervention of AI is expected to promote the standardization of TCM diagnosis and treatment processes through data – based means. For example, the “TCM Brain” generates standardized syndrome differentiation results and prescription suggestions by analyzing patients’ symptoms, tongue images, and pulse conditions, reducing the diagnosis and treatment deviations caused by differences in human experience. This attempt not only helps to improve service efficiency but also provides data support for TCM academic research and efficacy evaluation. If Wenzheng TCM can make further technological breakthroughs (such as improving the collection accuracy of four – diagnostic data and enhancing the interpretability of syndrome differentiation logic), its model may become a benchmark for TCM digitization, promoting the entire industry to develop in a more scientific and standardized direction.
Negative Comments: The Loss Dilemma and Model Hidden Dangers, the Commercialization Road of “AI + TCM” is Long and Difficult
Although Wenzheng TCM shows innovative vitality, the financial data and business concerns disclosed in its prospectus expose the deep – seated challenges in the commercialization of the “AI + TCM” model. If these problems are not solved, they may become the core obstacles to its listing and long – term development.
The most prominent issue is the continuously expanding losses and the fragile profit model. From 2022 to 2024, Wenzheng TCM’s net losses were 154 million yuan, 194 million yuan, and 45.367 million yuan respectively. Although the loss narrowed in 2024, the net loss in the first five months of 2025 soared by 1734.3% year – on – year to 43.841 million yuan, with a cumulative loss of about 437 million yuan in three and a half years. One of the main reasons for the loss is the change in the fair value of convertible and redeemable preferred shares (affected by valuation fluctuations), but more crucially, the cost control has failed. In the first five months of 2025, the sales expenses increased by 113.9% year – on – year, far exceeding the revenue growth rate (11.7%), and the customer acquisition cost soared. At the same time, the labor cost remained high to attract TCM physicians. This reflects that its “investment for growth” model is unsustainable. If it cannot reduce costs through economies of scale or increase the value per customer, the losses will become a long – term burden.
Secondly, the business structure is highly single, and the risk – resistance ability is weak. About 90% of Wenzheng TCM’s revenue depends on TCM medical services. The growth of TCM lifestyle products (accounting for less than 10%) and TCM Brain subscription services (the proportion decreased from 9.1% to 3.3%) is sluggish. This “dominant industry” structure means that once the medical service business is affected by policies, competition, or user trust issues (such as frequent patient complaints), the overall performance will fluctuate sharply. More notably, the core of TCM medical services is “diagnosis and treatment + medicine sales”, and its profit essentially still relies on the traditional TCM “medicine fee sharing” model. AI technology is more of a customer acquisition or auxiliary tool rather than a real profit engine. If it cannot open up a second growth curve through subscription services (such as outputting AI tools to hospitals) or value – added services (such as health management), its “AI + TCM” story will lack technological premium and be difficult to gain high – valuation recognition from the capital market.
Moreover, the dual bottlenecks of the supply chain and human resources limit expansion. On the one hand, Wenzheng TCM’s dependence on the top five suppliers (especially the largest supplier) has continued to rise. In the first five months of 2025, the procurement of the top five suppliers accounted for 65.3%, and the largest supplier accounted for 32.4%. The highly concentrated procurement has weakened the bargaining power, and the rising procurement cost has compressed the profit. If there are quality problems with the suppliers or the cooperation breaks down, it will be difficult to find a substitute in the short term, and the business continuity will be threatened. On the other hand, the shortage of qualified TCM physicians has become a hard constraint on expansion. There are only 760,000 practicing TCM physicians in the Chinese mainland (data from 2024), and the proportion of senior TCM physicians is less than 5%. Due to resource and brand disadvantages, Wenzheng TCM has difficulty competing with public hospitals, resulting in a shortage of physicians. The shortage of physicians not only limits the service scale (especially offline clinics) but also forces Wenzheng TCM to increase the salary cost, further exacerbating the losses.
Finally, the patient trust crisis and the doubt about the reliability of technology shake the foundation of the business model. According to the Heima Complaint Platform, Wenzheng TCM has been frequently complained about for problems such as “poor efficacy, severe side effects, and poor service” and “false advertising”. Some patients even claim to have had serious adverse reactions after taking the medicine. These complaints point directly to the core – the effectiveness and safety of AI – assisted diagnosis and treatment. TCM emphasizes “syndrome differentiation and treatment”. Although AI can integrate data, key links such as “observing the tongue” and “feeling the pulse” rely on online pictures or videos, which may lead to information distortion. In addition, whether the logic of AI prescriptions conforms to TCM theory and whether it has undergone sufficient clinical verification currently lacks transparency. More importantly, the supervision of “AI + TCM” is still in a blank stage, and the responsibility division (such as whether a medical accident is the responsibility of the physician or the AI system) is not clear. Once a major medical dispute occurs, Wenzheng TCM may face legal risks and brand collapse.
Suggestions for Entrepreneurs: Focus on the Dual – Wheel Drive of “Technology + Service” and Consolidate the Foundation of Commercialization
The case of Wenzheng TCM provides multi – dimensional inspiration for entrepreneurs in the “AI + medical” field. Combining its pain points and industry trends, the following suggestions are worth referring to:
- Optimize the business structure and cultivate a second growth curve: Avoid over – relying on a single business (such as Wenzheng TCM’s medical service revenue accounting for more than 90%). It is necessary to expand diversified monetization paths around the core technology (such as the AI diagnosis and treatment system). For example, AI tools can be output to small and medium – sized TCM clinics (subscription services), or TCM health management products (such as personalized health preservation plans) can be developed. Improve the risk – resistance ability through “technology licensing + product sales”.
- Strengthen cost control and improve the quality of profits: High – speed growth should not be at the cost of “burning money for scale”. It is necessary to pay attention to the balance between customer acquisition cost and customer lifetime value (LTV). In the first five months of 2025, Wenzheng TCM’s sales expense growth rate far exceeded the revenue growth rate. It is necessary to optimize the marketing investment strategy (such as precise customer acquisition and increasing the repurchase rate of old customers). At the same time, reduce the labor cost through technological optimization (such as AI automatic triage) to avoid salary inflation caused by the shortage of physicians.
- Build a diversified supply chain and talent system: To address the problem of high dependence on suppliers, risks can be diversified by introducing alternative suppliers and signing long – term framework agreements. In the construction of the physician team, cooperation with TCM colleges and universities can be carried out to train targeted talents, or the model of “online platform + offline clinic” (such as cooperation with community hospitals) can be adopted to expand the coverage of physicians and reduce the absolute dependence on senior physicians.
- Improve AI technology and service processes and rebuild user trust: The core of AI diagnosis and treatment is “safety + effectiveness”. It is necessary to enhance technological transparency (such as disclosing AI syndrome differentiation logic and clinical verification data) and make up for the deficiency of the four – diagnostic methods through the “online initial diagnosis + offline follow – up consultation” model (such as having a physician confirm the tongue image and pulse condition offline after collecting symptoms online). At the same time, establish a perfect patient feedback mechanism (such as tracking the medication effect and warning of adverse reactions) and respond to complaints in a timely manner to avoid a trust crisis.
- Pay attention to regulatory dynamics and make compliance arrangements in advance: The regulatory rules for “AI + TCM” are not yet perfect. Entrepreneurs need to actively participate in the formulation of industry standards (such as jointly issuing AI TCM diagnosis and treatment specifications with universities and hospitals) and establish a risk – bearing mechanism (such as medical liability insurance) to clarify the responsibility boundary between AI and physicians and reduce legal risks.
In summary, the innovative direction of “AI + TCM” is worthy of affirmation, but its commercialization requires a balance between technological ideals and market realities. If Wenzheng TCM wants to successfully list and achieve long – term development, it needs to make breakthroughs in key aspects such as technological reliability, profit model, and user trust. Otherwise, the halo of the “first TCM AI stock” may be difficult to cover the shadow of losses and doubts.
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