(Bloomberg) -- Babylon Healthcare has pulled back from China, where it had a partnership with Tencent Holdings Ltd.’s WeChat, after the company “couldn’t come up with a commercially viable model,” Chief Executive Officer Ali Parsa said.
“The Chinese government and the Chinese partners insist on them taking most of the shares of any partnerships,” Parsa said in an interview. “I don’t think the balance is right at the moment.”
A representative for Tencent confirmed that it no longer has a partnership with Babylon and declined to comment further. Tencent backs a competing service, WeDoctor, whose business spans insurance policies, medical supplies and online-appointment booking.
Babylon’s app lets users schedule a video chat with a doctor, check symptoms or book time with specialists, such as therapists. A $550 million cash infusion led by Saudi Arabia’s Public Investment Fund in 2019 valued the company at about $2 billion. It put Babylon in a position to grow when the coronavirus pandemic hit last year, offering access to doctors from the safety of patients’ living rooms when many offices were closed, as well as a way for people who suspected they had the virus to track their symptoms.
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Babylon said it will continue to expand in Asia, and has an agreement with Prudential Plc in the region offering its symptom checker and other products in markets including Hong Kong, Thailand, Singapore, Indonesia, and Malaysia.
U.S. President Joe Biden’s administration has pledged to take a harder stance against practices such as forced technology transfers that require foreign businesses to share technology and intellectual property in return for access to the Chinese market. Treasury Secretary Janet Yellen has said that this gives China an “unfair technological advantage.”
Still, Babylon’s main focus will be growing in the U.S. this year, Parsa said.
Babylon’s U.S. partnerships and recent rollouts give it access to about 3.5 million patients, Parsa said. In January, the company hired Steve Davis, the former head of technology at Expedia Group Inc., as chief technology officer, and Stacy Saal, who helped build Amazon.com Inc.’s Fresh and Prime Now businesses, to help run the U.S. expansion.
Revenue is increasing about fourfold a year, and the company’s expecting to take in about $300 million in 2021, up from about $20 million in 2019. While Babylon is ready to go public, Parsa said he’s concerned about how the market would react to the company’s growth.
“The reality is, as a private company, whichever way I grow, I’ve done phenomenally well. But as a public company, if I say I’m growing at 400% and I do 300%, that’s bad,” Parsa said in an interview. “But the pressure on us to go public, just because the public markets are flying right now, as you can imagine is significant.”
Parsa said the company is primarily focused on developing its AI, and is pushing forward with a plan to create an centralized “AI brain” that will integrate the different algorithms Babylon uses and help manage users’ health more holistically.
Still, the patient-facing AI that’s currently available, the symptom checker, has been the target of criticism that it’s capable of missing serious health problems. A dispute with one of its most vocal critics came to a head early last year when Babylon hit back against a U.K. doctor who’d been posting screenshots of what he said were errors in the app on his Twitter account. The company downplayed the mistakes, saying the doctor found only 20 occasions of “genuine” inaccuracies out of 2,400 tests.
While Parsa stands by the accuracy of the app, he said he ultimately isn’t “a big fan of the way we responded” to the critic. The trials exposed issues that have since been fixed, he said. Babylon’s also careful to say that the tool provides general information and not a medical diagnosis.
“This idea that AI is going to be amazing immediately is just a fallacy. AI is like every other technology it’s going to disappoint in the short term and it’s going to disappoint big time,” Parsa said. “And I think, more than any other technology, AI is going to surpass our wildest imagination in the long term.”
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