Ebang Health Files IPO Prospectus, Empowering Over 3,000 Independent Pharmacies with Digital Transformation
Many of life’s and society’s major changes often stem from seemingly accidental, minor decisions. In 1998, Zhong Yi, who had already spent many years deeply entrenched in the pharmaceutical industry, made the decision to step onto the front lines as a pharmaceutical sales representative. At the time, he could not have imagined that ten years later he would create a leading third-party drug trading platform in China, developing it into the only startup to rank among the top three in the internet pharmaceutical distribution sector solely through self-generated revenue.
1998 marked the starting point for the development of China’s pharmaceutical e-commerce sector. With the opening of “Shanghai No. 1 Pharmacy,” the country’s first online pharmacy, pharmaceutical e-commerce began to take shape. Policy serves as a barometer for the market; although this initial foray into online pharmacies was forced to halt due to regulatory constraints, it revealed a new pathway for pharmaceutical sales. In 2005, the Interim Provisions on the Approval of Internet Drug Transaction Services were issued. While only over-the-counter drugs were permitted for sale, this represented a qualitative leap in online drug transactions. It was at this time that Zhong Yi’s entrepreneurial aspirations began to take root.
Over eight years of experience in clinical and pharmacy sales, Zhong Yi has worked extensively with various pharmacies, gaining in-depth knowledge of their operational and management practices. He keenly recognized the market opportunities hidden within small, fragmented, and disorganized small and medium-sized pharmacies. Over the following two years, Zhong Yi engaged in startup preparations, defining development strategies, analyzing market demands, and recruiting an R&D team. In February 2007, Yibang Health was officially established, focusing on building an “Internet + Healthcare” business ecosystem. Guided by the philosophy of being a “Health Guardian,” it aims to help consumers obtain needed medications affordably and conveniently, while uniting small and medium-sized pharmacies to create a “virtual chain pharmacy.”
Zhong Yi graduated from the School of Public Relations at Hunan Normal University. After eight years of experience in clinical practice and pharmaceutical sales, he embarked on an entrepreneurial journey, accumulating extensive expertise in the management and operation of “Internet Plus” pharmaceutical enterprises. To meet the growing needs of his business, Zhong Yi pursued an Executive Master of Business Administration (EMBA) at the Tongji University–United Business Institutes (UBI) Joint Business School, graduating in December 2020. Notably, Yaofangwang Mall was included as a teaching case study by an associate professor from the Department of Management Science and Engineering at the School of Economics and Management, Tongji University, owing to its keen identification of market pain points and its clear business model.
Retail pharmacies are one of the three major endpoints for pharmaceutical consumption, bridging pharmaceutical manufacturers or wholesalers with consumers of medicines, medical devices, and other healthcare products. Compared with hospitals, retail pharmacies are smaller in scale and offer greater flexibility in layout; however, they suffer from lower levels of informatization, limited influence, and significant constraints on development. The emergence of the “Internet” has become an important tool and means for them to expand their service radius and improve efficiency. However, due to high costs associated with capital and technology development, it is clearly impractical for them to pursue internet-based growth by traditionally purchasing third-party information systems.
“To facilitate public access to medications and address the operational challenges faced by small and medium-sized pharmacies, we need to unite these pharmacies, provide them with internet-based tools, and establish connections with patients,” said Zhong Yi. He believes that the key to success in pharmaceutical e-commerce lies in demonstrating professional expertise, enabling rapid access to the most accurate drug information, and helping consumers find the products they wish to purchase at the earliest opportunity.
Subsequently, Zhong Yi led his team to continuously explore and summarize their experiences during working hours. In 2012, they officially launched the B2C third-party trading platform—Yaofang.com Mall—which began facilitating pharmaceutical distribution and transactions for a broad user base. It also became one of the first legitimate online pharmacies in China to hold the “Internet Drug Transaction Service Qualification Certificate” issued by the State Food and Drug Administration (SFDA). This certificate was among the first batch of Class A certificates issued nationwide.
Currently, Yaofangwang Mall has launched a “One-Hour Store Setup” rapid onboarding model, attracting a large number of small and medium-sized pharmacies to join the platform. This has enabled Yaofangwang Mall to offer more comprehensive drug category coverage and greater price transparency, establishing a highly robust nationwide database of drug information and a price disclosure platform. With nearly 100,000 listed drug specifications and over 2 million SKUs, the platform facilitates consumers in searching for medications and comparing prices. According to data from the third-party analytics firm Analysys Qianfan, Yaofangwang Mall ranked second in terms of monthly active users among healthcare distribution industry apps in 2020.
Currently, Yaofangwang Mall has covered more than 900 districts and counties across China, established partnerships with over 3,000 pharmacies, and reached a user base of more than 100 million.
According to the latest data, the total number of pharmacies in China reached 524,000 in 2019, a year-on-year increase of 30,000, with the national pharmacy chain rate reaching 55.34%. As chain pharmacies expand and the total number of pharmacies increases, the survival space for small and medium-sized chains and independent pharmacies has been severely squeezed. Under pressure from all sides, the transformation and development of traditional pharmacies have become urgent.
Zhong Yi analyzed that pharmaceutical e-commerce is a key direction for the transformation of traditional pharmacies. However, in this process, traditional pharmacies still face numerous challenges to be resolved, with low levels of informatization being the root cause.
Currently, most small and medium-sized pharmacies still rely on traditional ERP systems, with some even remaining in the era of paper-based records. This results in non-standardized processes, cumbersome operations, and low management efficiency. Furthermore, with the rise and development of pharmaceutical e-commerce, customer traffic has shifted from offline to online channels. Due to their limited scale, small and medium-sized pharmacies face significant challenges in conducting e-commerce operations and managing prescription circulation.
In 2019, to help small and medium-sized pharmacies achieve digital transformation, Yibang Health successfully developed the “Smart Pharmacy ERP Management System,” a retail management solution for pharmacies based on technologies such as big data and cloud computing. By integrating business management, data management, and marketing assistant functions into a single platform, the system enables refined management of pharmacy operations, data, and marketing activities.
In terms of business management, the ERP system provides GSP compliance management, sales management, and product management based on pharmacy product categories. Regarding data management, the ERP system establishes chain-linked associations among member data, sales data, and product data, enabling full traceability of upstream and downstream documentation and monitoring the entire pharmaceutical distribution process. For marketing support, the ERP system is integrated with Yibang Health’s self-built or co-built internet hospital, offering shared prescription review and electronic prescription circulation services.
Yibang Health helps pharmacies establish an omnichannel marketing system by replacing the existing inventory management software of individual pharmacies with its scalable, free-of-charge solution. This enables management of offline retail pharmaceuticals, back-end administration of online drug sales, and full-process traceability of pharmaceutical distribution. Zhong Yi stated that the implementation of the Smart Pharmacy Management System not only enhances operational efficiency for partner pharmacies but also ensures safety and control at every stage of the pharmaceutical supply chain. Currently, Yibang Health is actively preparing to integrate its backend systems with major e-commerce platforms such as Tmall and JD.com, and will soon enable cross-platform management capabilities for online pharmaceutical sales.
To further reduce pharmacy operating costs, enable end-to-end drug traceability, and ensure patient medication safety, Yibang Health has established the B2B pharmaceutical distribution platform “Yaotu,” the internet hospital system “Yizong,” and the shared internet hospital platform “Kuaihu,” covering the entire lifecycle of pharmaceuticals.
Zhong Yi stated that Yibang Health will gradually expand the application of its smart pharmacy ERP management system to address consumers’ rigid demand for convenient and affordable access to necessary medications, thereby empowering small and medium-sized pharmacies to share in the dividends of pharmaceutical e-commerce. Currently, Yibang Health is considering financing plans.