JD, Meituan, and Alibaba Platform for Innovative Drugs: The Battle for E-commerce Dominance in China's Pharmaceutical Sector

This Year, Internet Giants and Pharmaceutical Companies Have Joined Forces to Launch a Campaign in the Pharmaceutical SectorThe 618 Battle.

On one hand, pharmaceutical giants are partnering with major internet companies to launch an increasing number of “globally unique” and “world’s first” new drugs exclusively on e-pharmacy platforms.

For example, in late May 2024, Xingqi Pharmaceutical’s “miracle drug for myopia,” 0.01% atropine sulfate eye drops (brand name: Xingqi Meioupin®), was officially launched exclusively on Alibaba Health Pharmacy. It is reported that this is currently the only low-concentration atropine eye drop approved in China for slowing the progression of myopia in children.

In March 2024, Pfizer’s next-generation oral targeted therapy for migraine-specific treatment, rimegepant orally disintegrating tablets (brand name: Nurtec ODT), made its online debut on Meituan Pharmacy, JD Health, and Alibaba Health Pharmacy. As the world’s first and only calcitonin gene-related peptide (CGRP) receptor antagonist utilizing patented orally disintegrating tablet technology, this medication effectively blocks key pathways involved in migraine pathogenesis, offering rapid onset and sustained efficacy.

Furthermore, several blockbuster innovative drugs have made their online debut on pharmaceutical e-commerce platforms, including Leifunuo®, the world’s first and only approved innovative therapy for simultaneous treatment of severe alopecia areata in adolescents aged 12 years and older and adults; Oubida®, the first domestically developed targeted oral drug approved in China for the treatment of psoriasis; and Liraglutide Injection, the first domestically produced GLP-1 receptor agonist.

On the other hand, major internet companies have joined forces with pharmaceutical enterprises to compete in this year’s 618 shopping festival by offering substantial financial subsidies and increasing marketing investments.

For instance, a vast array of pharmaceuticals—including Huadong Medicine’s liraglutide injection (brand name: Liluping), dapagliflozin tablets for diabetes, nifedipine controlled-release tablets for various types of hypertension, and umeclidinium/vilanterol inhalation powder for chronic obstructive pulmonary disease (COPD)—participated in the “Billions Subsidy” or 618 promotional campaigns on medical e-commerce platforms such as Alibaba Health and JD Health, igniting price wars. During the 618 event, Meituan Maiyao also extended its subsidies to cover well-known brands including AstraZeneca, Bayer, Pfizer, and Swisse.

No Pain, No Gain. Data from Meituan Medicine shows that since the launch of the campaign, sales volumes for multiple categories, including chronic disease medications, have increased by over 100% year-on-year. Among these, three major categories topped the sales charts: Forxiga (dapagliflozin) for chronic diseases, Fu'erjia medical aesthetic facial masks, and By-Health protein powder supplements.

JD.com also released the “JD Health 618 Kickoff Best-Sellers List.” Among the items listed are prescription medications such as Novo Nordisk’s semaglutide injection, metformin hydrochloride tablets and dapagliflozin tablets for diabetes; tadalafil tablets and sildenafil citrate tablets for the treatment of male erectile dysfunction and pulmonary arterial hypertension; and Propecia (finasteride) tablets for male pattern hair loss.

A Single Leaf Foretells Autumn; Small Signs Reveal Major Trends. Recent moves by pharmaceutical companies and new strategies adopted by medical e-commerce platforms indicate that an increasing number of innovative drugs are being rapidly launched on these platforms. Moreover, sales volume and revenue of innovative drugs on medical e-commerce platforms have surged, making e-commerce a significant emerging sales channel for such products.

For years, the hospital market has remained the core focus of pharmaceutical companies’ marketing and promotion efforts. Whether through clinical academic promotion or relationship maintenance with healthcare professionals, the ultimate goal is to encourage physicians to prescribe their innovative drugs more frequently within hospital settings.

However, pharmaceutical companies are not only adjusting their marketing strategies and intensity in the hospital-based market but also actively expanding into the out-of-hospital market by listing innovative drugs on internet platforms for sale via e-commerce channels.

Why Are Pharmaceutical Companies Prioritizing E-commerce Channels? Why Are More Innovative Drugs Being Launched for Online Sales? Clues May Be Found in the Shifting Market Landscape.

First, as reform policies are implemented, the growth rate of drug sales in the hospital market has slowed down.. For instance, following the comprehensive elimination of drug markups, hospitals are required to sell medications to patients at procurement prices without imposing any additional fees; the “Two-Invoice System” has eliminated intermediary distribution links, while volume-based procurement (VBP) has constrained winning bid prices and profit margins for pharmaceuticals; furthermore, DRG/DIP policies mandate that physicians standardize clinical care pathways and ensure the rational use of prescription drugs. Moreover, policies such as VBP and national medical insurance negotiations have shortened the lifecycle of pharmaceutical products and raised the barriers and time costs for pharmaceutical companies to gain hospital access.

Data best reflects the market changes brought about by policies. According to the latest data from the Menet database, in 2023, the total drug sales across China’s three major healthcare terminals reached RMB 1.8865 trillion, representing a year-on-year increase of 5.2%. Among these, public hospitals held the largest market share at 61.3%, but experienced relatively slow growth, with a year-on-year increase of only 4.8%. In contrast, within the out-of-hospital market, online pharmacies achieved a growth rate of 30.8%, marking the fastest growth among all segments, including public hospitals, retail pharmacies, and primary healthcare institutions.

Secondly, driven by multiple factors including national policy support, the development of internet healthcare, and enhanced patient choice, the out-of-hospital market has rapidly increased its share.. For example, the state encourages the development of internet-based diagnosis and treatment, guiding internet hospitals to explore the implementation of online medical insurance payments; pharmacies are included in the outpatient pooling system to promote the outflow of prescriptions.

Furthermore, pharmaceutical e-commerce platforms have increased the penetration rate of online medication purchases and driven sales growth for online pharmacies through various promotional activities. On the patient side, factors such as online consultations, medical science popularization, and patients becoming knowledgeable about their chronic conditions have narrowed the information asymmetry between doctors and patients, thereby enhancing patient engagement in medical decision-making and expanding their autonomy in medication selection.

Guided by policy directions and market trends, the rapid growth of the out-of-hospital market has become an industry consensus. Zhang Buyong, General Manager and Chief Researcher at Menet, previously stated, “It is projected that by 2029, the scale of China’s out-of-hospital market will reach RMB 1.6 trillion, surpassing the in-hospital market.”

Meanwhile, in the out-of-hospital market, the pharmaceutical e-commerce channel has demonstrated the fastest growth. According to data from Menet, sales at retail pharmacies exceeded RMB 553.3 billion in 2023. Among this, the sales volume of online pharmacies, represented by Ali Health and JD Health, reached RMB 66.3 billion, a year-on-year increase of 30.8%. Their share of the total market sales across all channels also rose from 2.8% in 2022 to 3.5% in 2023.

To date, the market share of online pharmacies continues to grow. Pharmaceutical e-commerce has become a significant sales channel for retail terminals and is expected to emerge as a key distribution channel in the out-of-hospital market.

Finally, since the launch of anti-corruption campaigns in the pharmaceutical sector, traditional marketing approaches have been hindered, prompting pharmaceutical companies to actively explore new marketing models and pathways.. In the past, prescription drug marketing primarily targeted physicians. However, since the launch of anti-corruption campaigns in the pharmaceutical sector, unethical practices have been subject to focused rectification. As these anti-corruption efforts continue to deepen, traditional marketing approaches face significant challenges.

However, marketing promotion is key for pharmaceutical companies to rapidly penetrate the market after launching new products. In this context, pharmaceutical companies are actively exploring innovative marketing models and pathways. Digital marketing,Internet SalesThis is one of the directions collectively chosen by pharmaceutical companies.

For example, after Hua Medicine launched its global first-in-class novel diabetes drug, Huatangning, online for the first time in late 2022, its first-day sales through digital channels far exceeded expectations for traditional channels. Subsequently, digital marketing generated substantial revenue for the company. Dong Qing, Vice President of the Pharmaceutical Marketing Department at Hua Medicine, stated, “Over the past year, Huatangning’s sales were split roughly 50/50 between the in-hospital and out-of-hospital markets.”

In addition, pharmaceutical companies such as Pfizer, AstraZeneca, Eli Lilly, BeiGene, Huadong Medicine, Green Valley Pharmaceuticals, HEC Pharm, and Leo Pharma have all explored listing innovative drugs on e-commerce platforms for sale.

In summary, with the in-hospital market experiencing slowing growth and the out-of-hospital market growing rapidly, pharmaceutical companies are choosing the latter as their new source of market growth. Additionally, faced with traditional marketing methods that have suffered significant setbacks and carry high risks, versus emerging, compliant digital marketing and internet sales, pharmaceutical companies are clearly more inclined to adopt compliant digital marketing strategies.

Long ago, Alibaba and JD.com had already made strategic moves in the pharmaceutical and healthcare sectors. Today, platforms such as Meituan, Douyin, Kuaishou, Baidu, and Pinduoduo have also entered the pharmaceutical e-commerce market, seeking to capitalize on the rapid growth of online pharmacies.

More market entrants mean fiercer competition. At this stage, major internet companies have set their sights on the steadily growing out-of-hospital market and the rapidly expanding online pharmacy sector, anticipating that as online drug purchasing penetration increases, platform GMV will accelerate, driving corresponding growth in corporate revenue.

It can be said that, against the backdrop of a mature market and sluggish growth across multiple business lines, major internet companies have identified pharmaceutical e-commerce as one of their new growth engines. Consequently, to capture greater market share, these tech giants have launched a new round of commercial competition in the healthcare sector. So, what are the specific tactics employed by pharmaceutical e-commerce platforms?

In the race to launch new products, major pharmaceutical e-commerce platforms have showcased their unique strengths, engaging in fierce competition. In late May 2024, Ali Health partnered with Xingqi Pharmaceutical to exclusively launch online the first low-concentration atropine eye drops approved in China for slowing the progression of myopia in children.

During the same period, JD Health launched Megace® (megestrol acetate oral suspension) online for the first time. This medication is specifically indicated for the treatment of anorexia associated with acquired immunodeficiency syndrome (AIDS), as well as significant weight loss due to cachexia in patients with AIDS or cancer. Notably, Megace is currently the only drug in China with clearly defined oral dosing for the treatment of cachexia and has been directly recommended by the CSCO Guidelines for Diagnosis and Treatment of Cancer Cachexia (2021).

In fact, the two major platforms had previously launched multiple new products exclusively online on their respective platforms. For instance, Alibaba Health collaborated with renowned pharmaceutical companies such as Roche, Daiichi Sankyo, Pfizer, and Huadong Medicine to launch several blockbuster innovative drugs online, including the novel anti-influenza medication Xofluza, the orthopedic analgesic loxoprofen sodium patch, the new migraine treatment Leifunuo, and liraglutide injection (Chinese brand name: Liluping).

JD Health has partnered with pharmaceutical companies such as AstraZeneca, Teva Pharmaceuticals, and BeiGene to launch the online debut of new diabetes medication Forxiga, deutetrabenazine for the treatment of Huntington’s disease, the BTK inhibitor Brukinsa (zanubrutinib), and the innovative oncology drug Xgeva (denosumab injection).

In addition, Pfizer has previously launched its next-generation oral targeted therapy for migraine, Lutaikai, on Meituan Medicine, JD Health, and Alibaba Health Pharmacy. This indicates that collaborations between major platforms and large pharmaceutical companies have not yet resulted in an “exclusive choice” scenario.

Notably, in late December 2023, JD Health held a signing ceremony in Beijing for the inaugural launch of new products in the first quarter of 2024. During the event, it signed agreements with 86 well-known brands, including Swisse, Tongrentang, Yuwell, BMC Medical, Mandi, and China Resources Double-Crane, for the debut of their new products, reaching consensus on product development and resource allocation.

As an increasing number of new drugs are launched online first, the variety of pharmaceutical products on e-commerce platforms is gradually becoming more comprehensive. According to JD Health’s latest annual report, in 2023, JD Health achieved full coverage of all drug categories available for online sale.

Generally, after a new drug is launched, it requires long-term academic promotion and marketing to generate sales. However, on the internet, this cycle has been significantly shortened.

Zhao Jing, Head of Viatris China’s E-commerce Division, once shared a case study: after a high-quality pharmaceutical product made its debut on the JD.com e-commerce platform, digital marketing efforts propelled it to the No. 1 spot on JD’s Top Medicines List within just one week of launch. Within one month of market entry, it rose to become the second-best-selling product in the OTC glucosamine category.

For another example, Lutaixia, Pfizer’s innovative migraine-specific targeted therapy, sold 1,000 boxes on its launch day at JD Health Pharmacy, which was 1.5 times the total sales volume across all other channels combined.

This is partly due to the increased penetration of online pharmaceutical purchases, which has led pharmaceutical companies to allocate certain marketing expenses; and partly due to the traffic support provided by platforms such as JD.com and Alibaba for third-party merchants and new drugs.

Taking Alibaba Health as an example, the Tmall Health platform launched the “New Product Boom Plan” in April 2024, announcing an investment of tens of millions of yuan and a dedicated team to provide key support for 100 new health products. For ten of these blockbuster new products, it adopted a “one product, one strategy” approach, formulating phased support strategies, incentives, and operational plans tailored to each individual product.

According to reports, the “New Product Explosion Plan” will add a site-wide dominant “New Products Tab” to the homepage, search, and recommendation features. During the cold-start phase for new products, green channels will be opened for the premium search-and-recommendation pool and the Little Black Box new product pool to provide public domain traffic support. Meanwhile, during the new product cultivation phase, the platform will customize precise user acquisition campaigns, develop exclusive marketing tools, and implement cross-segment marketing initiatives to integrate precise free traffic from the Taobao ecosystem.

In addition, the “New Product Breakout Plan” includes incentives for initial sales, target audience engagement, IP collaborations, and social seeding, helping pharmaceutical companies and merchants create blockbuster products.

Not only Alibaba Health, but other pharmaceutical e-commerce platforms are also strengthening traffic support to help enterprises and merchants on their platforms increase sales volume and revenue. For instance, JD Health increased its traffic support for third-party merchants in 2023. By optimizing traffic distribution mechanisms and integrating and opening up more on-site channels and sales scenarios, JD Health has enabled high-quality merchants and products to gain greater exposure.

With drug supplies fully stocked and buyers in place, major platforms have begun engaging in intense service competition to create a high-quality online pharmaceutical shopping experience and increase market share. Specifically, e-commerce platforms are enhancing their services by focusing on logistics, online medical consultations, and medical insurance payment integration.

For example, in 2023, Ali Health further optimized the layout of its pharmaceutical logistics network to maintain a high level of next-day delivery service, and upgraded to next-day home delivery in core cities such as Shanghai, Hangzhou, Suzhou, Wuxi, and Changzhou, providing customers with more stable and convenient services.

JD Health continues to expand its nationwide warehouse network and the scope of its full-temperature-range delivery services. According to reports, leveraging 24 pharmaceutical warehouses, JD Pharmacy fulfills over 90% of its orders with same-day or next-day delivery, while its cold-chain logistics cover more than 300 cities across China. Meanwhile, JD Health is focusing on its instant retail business, offering consumers a service experience with an average medication delivery time of 28 minutes to their doorstep. By the end of 2023, JD Health’s instant retail services had expanded to over 480 cities, partnering with more than 120,000 offline pharmacies to provide 24/7 responsiveness to user demands.

In terms of medication experience, e-commerce platforms provide patients with 24-hour pharmaceutical services through internet hospitals, contracted physicians, and online consultations. Taking Ali Health as an example, by the end of March 2024, it had signed cooperation agreements with over 220,000 licensed physicians, licensed pharmacists, and nutritionists to offer online health consultation services to consumers on its platform. In 2023, the average daily number of consultations (excluding prescription issuance) on the Ali Health platform increased to more than 11,000. Leveraging internet hospitals, e-commerce platforms can provide a series of services such as online follow-up visits, online prescription issuance, and online purchase of innovative drugs, thereby facilitating patients’ access to and use of innovative medicines.

Furthermore, under policy guidance, pharmaceutical e-commerce platforms are actively exploring online medical insurance payment options. For instance, in May 2024, the Beijing Municipal Healthcare Security Administration announced that it was organizing tests of an online payment system for over-the-counter (OTC) drugs on two medication purchasing platforms, JD.com and Meituan. Previously, provinces and municipalities such as Shanghai, Zhejiang, Liaoning, Anhui, and Guangdong had already begun piloting online medical insurance payment functions. Notably, JD Health has enabled online medical insurance payments at nearly 700 pharmacies in Shanghai, providing local consumers with an online medical insurance reimbursement experience for medication purchases.

As e-commerce platforms continue to refine their services, patients will gain easier access to innovative drugs. Fundamentally, this represents a genuine enhancement in the accessibility of innovative therapies, which will significantly boost both their market penetration and sales revenue.

The commercialization of innovative drugs in China has not progressed as smoothly as biotech companies had anticipated. Some innovative drugs have even rapidly hit a growth bottleneck after their initial launch.

This is because the commercialization of innovative drugs involves numerous intermediaries and high channel costs. For instance, companies must overcome hurdles such as pricing, reimbursement, and market access one by one. Furthermore, when innovative pharmaceutical companies allocate more funds to traditional channels and information dissemination methods, such as medical representatives and academic conferences, in order to penetrate the market, their profitability will be significantly constrained.

Currently, the rules of the game in the pharmaceutical market, which previously operated under a closed system, are beginning to change. Compared with traditional channels and solutions, an increasing number of innovative pharmaceutical companies are intensifying their efforts to launch pharmaceutical e-commerce projects, aiming to capture dividends from the rapidly growing pharmaceutical e-commerce platforms.

However, innovative pharmaceutical companies need to start from scratch to learn how to achieve higher sales volume and revenue, how to effectively conduct marketing and promotion on pharmaceutical e-commerce platforms, and how to convey product information to patients in a more scientific manner.