The work between the factory, the warehouse and the ward

Our systems exchange electronic delivery notes, invoices and code lists with the pharmacy and materials systems of 1,420 hospitals, built on the products of 27 software vendors and countless local customisations. No hospital will change its system to suit a distributor, and none should. I run an integration team of 46 people whose job is to meet each hospital where it is: a mapping of our product master to the hospital's drug dictionary, an interface tested in the hospital's own test environment and a named contact in the hospital's technical team. I learnt the other side of this as a hospital director of information, when twelve distributors each wanted a different interface. We now publish a standard interface specification that hospital software vendors can implement once, and 61 per cent of hospital connections use it. The rest are maintained individually, at a cost I report every year, because forcing the last hospitals onto our standard would cost them more than it would save us.

Almost every pack of medicine sold in China now carries a traceability code, and since 2024 China's National Healthcare Security Administration has required, in phases, that designated hospitals and pharmacies capture those codes when medicines are dispensed under medical insurance. A code that is missing, unregistered or seen twice now matters at settlement, not only in an inspector's audit. A distributor sits in the middle: we receive cartons whose codes manufacturers have associated with the packs inside, and we pass those associations to hospitals with our delivery notes. I run verification at receipt in all nine logistics centres, sampling reliable manufacturers and fully checking those whose error rates exceed 0.3 per cent. Each manufacturer receives a monthly scorecard. The programme cost RMB 46 million of equipment and adds about RMB 31 million a year in labour, and it is the investment I would defend first.

Our pharmacies, especially the 42 that dispense high-cost medicines direct to patients, hold prescriptions, diagnoses and insurance details. The Personal Information Protection Law treats such medical and health information as sensitive personal information, which needs a specific purpose, separate consent and stricter protection. Health-sector rules have long expected population health information to be stored inside China, and sending personal information abroad requires one of the routes the law provides, such as a security assessment, a standard contract or certification, together with an impact assessment. My approach is to avoid the question wherever we can by not collecting or sending what we do not need. We keep a catalogue of 1,140 data items, each classified by sensitivity, owner, purpose and permitted recipients. I review every new external data flow with our legal and compliance colleagues, and roughly a third of requests end up being met with aggregated or de-identified data.

China's multi-level protection scheme requires each information system to be graded by the harm its compromise could cause and protected to the corresponding level, with periodic assessment by accredited testing bodies for the higher grades. Of our 276 systems, 23 are graded at level three, including the order platform, the warehouse system, the pharmacy dispensing system and the hospital-services platform. I treat the grading as a floor rather than a description of our risk. Our most serious incident, ransomware at a regional warehouse in 2022 that entered through a contractor's remote-access account, affected a system graded at level two. We restored it from offline copies in thirty hours without data loss. Since then every supplier's remote session passes through a single recorded gateway, and we rehearse recovery of the order and warehouse systems twice a year, once without warning the business in advance.

A distributor's IT budget comes out of a gross margin of about 7 per cent, and volume-based procurement has made that margin thinner on the medicines it covers. Our 2025 IT spend was RMB 236 million, about 0.5 per cent of revenue. I manage it as two budgets. The first funds what the business cannot operate without: order capture, warehousing, delivery notes, traceability, settlement and security. The second funds everything discretionary, from analytics to new customer portals, and every yuan in it has to compete. When the margin fell, I cut the second budget and the application estate behind it, and protected the first. Each year I also show the president the cost of serving each hospital connection and each manufacturer's reporting requirements, because many of our costs are created by customer requests that were never priced.

Since 2019 I have built the technology for our hospital supply services, in which we manage medical consumables inside the hospital, from receipt at its central store to the ward cupboard and the patient's bill. The service runs in 58 hospitals. Each deployment sits within the hospital's own network and protection grading and connects to its clinical and resource-planning systems through the hospital's integration platform. The hospital owns the usage data, including which patient received which implant; we receive item-level consumption without patient identifiers, which is enough to replenish stock and invoice. The design is slower to deploy, about fourteen weeks against six for a hosted service, and it cost us tenders in 2020. Hospital information directors have since told us it is why they let us into their wards. Ward stock has fallen by about a third, on average, within a year of each deployment.