Alibaba, one of the leading companies when it comes to the online shopping platform, has announced that they are going to be diving into the web pharmacy sector a bit more. This comes after Alibaba had announced that their sales for the first quarter of 2015 were not what they expected. In fact, the competition seems to have done a bit better than Alibaba.
The founder of Alibaba, Jack Ma, decided to close on the deal with a Web pharmacy business, that was a $2.5 billion dollar deal. The idea is to make health care available to anyone and everyone. Right now, Alibaba can sell over the counter drugs that anyone can get without a prescription. However, China is facing an influx of illnesses throughout its citizens, and the days of buying prescriptions online is steadily approaching. Alibaba is hoping to dominate this area once the government approves this type of buying to happen.
A consultant at McKinsey & Co, Alexander Ng, stated:
“This is actually one of the right pieces of the jigsaw puzzle to piece together.”
As many people are expected the government to start talking about the legalizing of prescription drugs and supplements to be sold online, as this would take care of the problem of many people being without the needed medications. In addition, it is a the right decision to make for Alibaba, who saw a huge 81% soar in their shares within the Health Information Technology aspect of their business. The largest that they have seen in over 10 years.
The deal is between Alibaba Health and Beijing Chuanyun Logistics Investment Ltd., which is owned by Ali JK Investment. Beijing Chuanyun Logistics Investment Ltd. had a profit of 71 million yuan last year. With the purchase of the group, Alibaba is given the right to run this web pharmacy on the Tmall platform. In return, Alibaba is not supposed to open up their own health store online that would be in direct competition with the company.
It is estimated if the government were to allow online pharmacies to take shape and allow them to sell more than just over the counter medications, this could expand the market in a way many could not imagine. Analysis International has estimated that by 2017, it could result in the market bringing in 36.5 billion yuan. But, the current estimates for this year are only at 15.7 billion yuan. In addition, this could offer a convenience to consumers which would be extremely helpful to those who simply cannot get to the hospital in order to purchase their prescriptions that affect the quality of their life.
Marbridge Consulting, founder and managing director, Mark Natkin stated:
“Online and mobile health care is an area with enormous potential in China.”
Right now, Tmall has 186 pharmacies online which sell over the counter prescriptions, as well as devices, and other health related products. In terms of Alibaba entering into this market, Natkin stated:
“Alibaba is particularly well position to bring great efficiency to the health care industry…”
Whether the government decides to allow for online pharmacies to sell prescriptions and other medications is still up in the air. However, with the product able to be sold with these online pharmacies, Alibaba is making a strong stance in a sector that is only going to increase in popularity.