[Edaily Reporter NA EUN-KYUNG ] “A competitor has offered a product we were supplying for 3.5 million won at around 1 million won. At that price, there’s virtually no way for us to compete.”

Price competition to secure a foothold in the domestic artificial intelligence (AI) patient monitoring market is heating up. Not only are companies offering prices 10–20% lower than their competitors, but there have even been cases where bidders have participated with terms that fall below half the existing supply price.

Industry observers believe this cutthroat competition could impact the value chain of the AI patient monitoring industry, which is still in its early stages. While developers typically hold the upper hand in the early market phase by focusing on technology, analysts suggest that if hospital sales and customer management become firmly centered on distributors, added value and bargaining power are likely to shift over time to pharmaceutical companies that own distribution channels.

“A ‘Let’s All Go Down Together’

Competition

”… ‘Half-Price Bids’ That Sacrifice Margins

According to industry sources on the 29th, price competition to win hospital bids in the AI patient monitoring market has recently become increasingly fierce. The industry explains that there have been a series of cases where companies are going beyond simply lowering prices below competitors’ levels—effectively sacrificing their margins—in an effort to secure hospitals first.

An industry official said, “We understand there are cases where vendors are offering prices 10–20% lower than competitors to secure hospital contracts.”

In some bids, price cuts have expanded to levels well below half the existing supply price. There are also claims that even in subscription-based business models, terms are being offered that effectively sacrifice profitability.

An official from another AI monitoring developer lamented, “We’ve even seen a structure where hospitals take 98% of the revenue and the company gets only 2%,” adding, “It’s at a level where we incur losses the more we operate.” He continued, “I understand that following University Hospital A, University Hospital B also received a price proposal based on a similar model,” and added, “We’re currently witnessing a cutthroat price war where everyone is essentially trying to drive each other out of business.”

AI patient monitoring is a service that uses wearable devices to measure vital signs—such as ECG, respiration, and oxygen saturation—in real time, with AI analyzing abnormal signs and alerting medical staff. Currently, in the domestic market, SEERS TECHNOLOGY(458870)is collaborating with DAEWOONGPHARMACEUTICAL(069620)on hospital sales, MEZOO Co., Ltd. is partnering with Donga ST(170900)(Dong-A ST), and AT Sens is targeting the market in partnership with MEDIANA Co.,LTD(041920).

Industry analysts note that as market leaders have gained recognition for their competitiveness in hospital settings, price competition among latecomers has intensified. An industry insider pointed out, “Leading companies have secured a competitive edge by integrating various vital sign monitoring solutions into a single platform,” adding, “Since it is difficult for latecomers to differentiate themselves based on technology alone, price competition is becoming even more intense.”

Cases of cutthroat competition, such as that seen in the AI patient monitoring market, are not unprecedented in the domestic healthcare industry. In the botulinum toxin market, price competition to secure contracts with hospitals and clinics persisted for a long time, and recently, there have been a series of cases in the skin booster market where manufacturers and distributors are implementing aggressive pricing strategies to expand their market share among hospitals and clinics. However, there are concerns that the AI patient monitoring market could have a greater ripple effect across the entire industry, as the burden of price competition may extend beyond the sales stage to affect developers as well.

A Fierce Battle to Capture Market Share… Why Are Pharmaceutical Companies Sacrificing Margins

? Some observers argue that since the current price competition is a phenomenon typical of the early stages of a market, it is unlikely to persist for long. They suggest that once hospitals have accumulated references and a product’s competitiveness has been verified, service quality and operational capabilities will become more important competitive factors than price.

Another factor fueling price competition is the lack of a strong lock-in effect, which is characteristic of an early-stage market. Since clinical trust in specific products and experience with their use within hospitals have not yet been sufficiently established, hospitals can switch to competing products offering better terms or performance at any time. It is pointed out that, since securing a hospital early on does not guarantee long-term customer retention, sales companies are pursuing aggressive pricing strategies right from the initial bidding stage.

The full-scale entry into the market by pharmaceutical companies—which possess nationwide hospital sales networks and bidding experience—is also cited as a factor intensifying competition. This is because pharmaceutical companies, backed by stable cash flow generated from their existing prescription drug businesses, can afford to sacrifice some short-term profitability in order to secure hospital partnerships first.

From a pharmaceutical company’s perspective, the AI patient monitoring business serves more as a foothold for future digital healthcare ventures than as an immediate source of revenue. This is because decisions regarding AI patient monitoring are made collaboratively by various hospital departments—including not only physicians but also hospital directors, nursing departments, medical information offices, digital innovation centers, and IT departments—allowing companies to build relationships with decision-making bodies that were previously difficult to reach through traditional pharmaceutical sales alone.

In fact, global big pharma companies are trending toward strengthening their “digital partner” strategies, which go beyond drug supply to support hospitals’ digital transformation. Industry observers believe that the ability to expand into areas such as remote patient management (RPM), digital therapeutics (DTx), and medical AI—using these connections with hospitals as a springboard—is another reason why pharmaceutical companies are engaging in aggressive sales efforts.

An industry insider predicted, “Since the market is still in its early stages, sales companies are aggressively marketing to secure a foothold, but once the market stabilizes to some extent, it will be difficult for this current trend to continue.”

Channels Over Technology… A Repeat of the Biotech Dilemma?

However, even if the cutthroat competition ends, the concerns of developers may not disappear. On the contrary, some point out that the sales structure formed during the race to capture market share could place a greater long-term burden on AI patient monitoring developers.

Currently, the AI patient monitoring market operates under a structure where developers provide the technology, while pharmaceutical companies and medical device firms handle hospital sales and bidding. As the market grows, if distributors accumulate hospital contracts, customer relationships, and sales data, market access is likely to naturally shift toward the distributors.

From the perspective of AI developers, given their limited in-house sales networks, they have no choice but to continue relying on sales agencies for hospital sales. Once a structure takes hold in which hospital clients are managed primarily through specific sales agencies, it may become increasingly difficult to switch sales agencies or transition to independent sales.

This structure bears some resemblance to the situation where domestic biotech companies develop new drug candidates but entrust overseas commercialization to global pharmaceutical companies, thereby weakening their bargaining power. Although the contractual structures differ, there is a similarity in that companies with established end customers and sales channels may wield greater influence than those possessing the technology.

We cannot rule out the possibility that prices resulting from cutthroat competition will become the new market standard. In the botulinum toxin and skin booster markets as well, price competition to secure a foothold in hospitals did not remain a temporary phenomenon over time but became established as an industry standard. Lowered supply prices subsequently solidified as the pricing benchmark for hospitals and clinics, creating a structure in which latecomers have no choice but to compete on those terms.

Of course, since most current contracts between AI patient monitoring service developers and distributors are multi-year agreements, the immediate impact of price competition on developers’ supply prices is limited. However, if the current low hospital supply prices become entrenched as market prices, there is a possibility that distributors will pass the burden of price reductions onto developers during contract renewal processes. It has been pointed out that the more AI developers rely on pharmaceutical companies responsible for hospital sales, the weaker their bargaining power may become.

Ultimately, it is argued that if developers want to avoid being swept up in price competition, they must build products and services that hospitals cannot easily replace. An official from an AI patient monitoring company stated, “The current market is essentially a game of chicken,” adding, “Rather than simply lowering prices, we are striving to differentiate ourselves from competitors by offering integrated solutions tailored to hospital workflows and continuously enhancing our services.”