In recent years, the wave of AI medical projects going public in Hong Kong has created various "first stock" myths, from "AI pharmaceutical first stock" XtalPi Inc. (2228.HK) to "medical large model first stock" iFlytek Medical Technology (2506.HK).

However, previous AI medical projects have mainly focused on Western medicine and digital transformation of medical institutions. Now, AI winds are blowing toward traditional Chinese medicine (TCM).

Weisen TCM, which recently submitted IPO application materials to the Hong Kong Stock Exchange, has core business centered on providing consultation and prescription services through its self-developed "TCM AI Brain" assisted diagnosis and treatment system, with revenues already reaching substantial scale.

From 2022 to 2024, Weisen TCM's revenues were 62 million yuan, 189 million yuan, and 236 million yuan respectively, with net losses of 154 million yuan, 194 million yuan, and 45 million yuan during the same periods.

However, AI TCM still faces numerous controversies. Weisen TCM plans to reduce dependence on renowned doctors through the TCM AI Brain, achieving low-cost TCM clinic operations, even advertising "assisting physicians, rapidly creating renowned doctors."

In fact, the "TCM AI Brain" has not obtained medical device approval from drug regulatory authorities, and its actual effectiveness remains to be verified. Moreover, Weisen TCM's main treatment focus is on serious illnesses like cancer, potentially facing compliance challenges in actual operations.

**AI TCM for Cancer Treatment?**

Weisen TCM's core business is TCM medical services, contributing over 80% of revenue during the reporting period. From 2022 to 2024, this business generated revenues of 50 million yuan, 167 million yuan, and 211 million yuan respectively.

Weisen TCM's TCM medical services mainly include online and offline TCM consultation, prescription, treatment, and follow-up services. Currently, Weisen TCM has opened 11 offline clinics, but main services are completed online.

Online TCM diagnosis and treatment is an important feature of Weisen TCM, generating 188 million yuan in 2024, accounting for nearly 90% of TCM medical service business. This differs significantly from traditional TCM diagnosis and treatment.

The core of TCM diagnosis is the "Four Diagnostic Methods" (observation, listening/smelling, questioning, pulse-taking), where "pulse-taking" involves direct finger contact with the patient's wrist artery to sense pulse patterns, which is difficult to complete online.

Weisen TCM responded: "Many patients are 'superstitious' about pulse diagnosis, which is actually unnecessary. Pulse diagnosis is the least important of the four diagnostic methods, and the 'TCM AI Brain' data model can accurately deduce patient pulse diagnosis information."

The "TCM AI Brain" is precisely the technical support for Weisen TCM's online diagnosis and treatment services. As of the end of May this year, the "TCM AI Brain" has accumulated 10,000 initial prescriptions, covering over 3,000 diseases and symptoms, with data types including electronic medical records, prescriptions, tongue and facial diagnostic images.

Although Weisen TCM's physicians still bear full responsibility for diagnostic results, they all rely on the "TCM AI Brain" to provide consultation and prescription services to patients.

Notably, Weisen TCM also focuses on cancer and difficult diseases with higher average transaction values. In 2024, the average cost per visit for cancer and difficult disease patients reached 1,422 yuan and 1,118 yuan respectively.

However, whether Weisen TCM's AI TCM cancer treatment story can continue remains uncertain. On one hand, data shows revenue from cancer and difficult disease patients has declined. In 2024, Weisen TCM's revenue from cancer and difficult diseases was 58 million yuan and 67 million yuan respectively, down 5.26% and 5.95% year-over-year.

General practice, mainly covering common chronic diseases, is becoming the main revenue contributor for Weisen TCM, generating 86 million yuan in 2024, up over 70% year-over-year.

On the other hand, the cancer treatment effectiveness of the "TCM AI Brain" remains to be verified. The "TCM AI Brain" is a system developed by Weisen TCM co-founder and Chief Medical Officer Lin Dadong under the guidance of Ni Haixia.

According to public information, Ni Haixia was an American TCM practitioner who previously caused controversy on social media for proposing medical views contrary to common sense, such as claiming drinking milk causes various cancers. Lin Dadong also "changed careers midway," originally being a Silicon Valley engineer who only obtained acupuncture-related certificates from the California Acupuncture Board in 2011.

Clinics under Weisen TCM have been penalized for illegal practice. In May this year, Jinan Weisen Chuyue TCM Clinic Co., Ltd. under Weisen TCM was penalized by local health authorities for "using non-medical technical personnel to engage in medical and health technical work."

Moreover, the certification qualifications of the "TCM AI Brain" are also questionable. Although the "TCM AI Brain" is the first and only TCM AI-assisted diagnosis and treatment system in mainland China to pass clinical consistency research at a tertiary hospital and expert review by the Information Institute of the China Academy of Chinese Medical Sciences, it has not obtained relevant approval from drug regulatory authorities.

According to the drug regulatory authority's "Guiding Principles for Classification and Definition of Artificial Intelligence Medical Software Products," artificial intelligence medical software used for auxiliary diagnosis needs to pass Class II or III medical device approval. This may all be compliance challenges that Weisen TCM will face in the future.

**Can Renowned Doctors Be Created Through AI?**

Weisen TCM places high hopes on the future of the "TCM AI Brain," aiming to achieve low-cost TCM clinic establishment through this system. Weisen TCM founder and CEO Cui Xiangrui previously stated that many TCM clinics' underlying logic was hiring renowned doctors. However, after adopting digital systems, opening a clinic no longer depends on a specific person, as the system replaces the previous role of renowned doctors, allowing ordinary doctors to support a TCM clinic.

With "TCM AI Brain" support, Weisen TCM has greatly improved efficiency, which is also one reason for better gross margin performance compared to asset-heavy offline TCM hospitals. In 2024, Weisen TCM's TCM medical service business gross margin reached 57.6%, over 40 percentage points higher than Beijing Tongrentang Medical and Health Investment Co., Ltd., the largest TCM hospital in China.

Furthermore, Weisen TCM previously envisioned that after the "TCM AI Brain" helps TCM achieve low-cost store opening, the business model could extend from self-operation to franchising, thereby rapidly expanding business scale.

In 2019, Weisen TCM established the "Weisen TCM Artificial Intelligence Alliance," where franchised TCM clinics could receive alliance brand endorsement support and "TCM AI Brain" services. On Weisen's "TCM AI Brain" official website, the system's advertising slogan is "assisting physicians, rapidly creating renowned doctors."

However, this model has not succeeded, with "TCM AI Brain" subscription service annual revenue only in the millions. From 2022 to 2024, this business generated revenues of only 5.69 million yuan, 8.15 million yuan, and 9.97 million yuan respectively, accounting for less than 10% annually.

In fact, the TCM AI-assisted diagnosis system market is highly competitive, with many companies already launching similar products. For example, iFlytek Medical has launched a TCM intelligent auxiliary diagnosis system that has been applied in 107 primary medical institutions in Bozhou City.

Perhaps for this reason, Weisen TCM's current expansion model still focuses on self-operation. In this IPO, one of Weisen TCM's fundraising purposes is to establish 16 new offline clinics in mainland China by 2031 to deepen offline market penetration, while also planning to invest 55 million Hong Kong dollars in four TCM rehabilitation centers.