111 Inc. Reports 2020 Revenue of RMB 8.2 Billion, Nearly 9-Fold Growth Over Three Years, and Files Draft Prospectus for STAR Market Listing

On March 18, 111.com.cn announced its financial results for the fourth quarter and full year of 2020. The financial report showed that in the fourth quarter of 2020, 111.com.cn achieved revenues of RMB 2.64 billion (RMB, same below), a year-on-year increase of 96.1%, marking ten consecutive quarters of nearly 100% robust revenue growth. During the same period, gross profit reached a new high of RMB 104 million, up 143.7% year on year. For the full year 2020, revenues totaled RMB 8.2 billion, representing a 107.6% year-on-year increase, with the three-year revenue scale surging by nearly ninefold.

Since its U.S. listing in September 2018, 111.com has achieved nearly doubled revenue growth for three consecutive years. In terms of full-year revenue, its 2020 revenue surged nearly ninefold compared to RMB 950 million in fiscal year 2017, marking a milestone leap from the billion-yuan scale to the ten-billion-yuan scale on an annualized basis. Notably, in addition to maintaining high-speed growth on the revenue front, 111.com further improved its gross profit. According to its financial report, the company’s gross profit reached RMB 366 million in 2020, representing a year-on-year increase of 121.5%.

Amid a doubling of revenue scale, 111.com’s net loss as a percentage of net revenue decreased significantly from 22.3% in the third quarter of 2018 to 3.7% in the fourth quarter of 2020, reflecting a continuous narrowing of losses. Meanwhile, 111.com further optimized its operational efficiency in 2020, with operating expenses as a percentage of revenue declining from 16.7% in 2019 to 10.2% in 2020. In addition, the cash and cash equivalents balance at the end of the period reached RMB 1.62 billion, a substantial increase from RMB 697 million at the end of the previous year, indicating ample cash reserves.

During the reporting period, 111.com’s core B2B business segment maintained robust growth momentum, achieving simultaneous increases in both revenue and gross profit. In the fourth quarter alone, it recorded operating revenue of RMB 2.47 billion, representing a year-on-year increase of 108.7%. For the full year, revenue rose by 127.8% year on year, while gross profit surged by 387.1%, demonstrating high-quality development on both the supply and demand sides.

On the demand side, as of the end of the reporting period, 111.com.cn had partnered with more than 300,000 pharmacies, accounting for over 60% of the total number of pharmacies currently operating in China. In addition to independent pharmacies, an increasing number of top-100 pharmacy chains have joined the 111.com.cn platform. Furthermore, in the fourth quarter of 2020, order volume on 111 City (1 Yao Cheng) surged by 312% year-on-year, reflecting sustained strengthening of demand-side stickiness.

On the supply side, as internet technologies and digital innovations drive industrial transformation, the wave of industrial internet is accelerating its penetration into the healthcare and wellness sector, with traditional pharmaceutical companies actively embracing 1YaoWang.

As of the end of the reporting period, 111.com.cn directly supplied products to 333 renowned domestic and international pharmaceutical companies, including many globally leading innovative pharmaceutical enterprises. Alongside its expanding scale, 111.com.cn has been deepening its collaborations with pharmaceutical companies, such as exploring psoriasis disease management models with Novartis and partnering with Eli Lilly on a diabetes patient management platform, thereby strengthening its presence in specialized internet hospitals and chronic disease management. Furthermore, in 2020, 111.com.cn established strategic partnerships with Abbott and Chia Tai Tianqing, and further deepened its strategic cooperation with HEC Pharm, helping pharmaceutical companies tap into the vast out-of-hospital market.

Notably, on December 22, 2020, 111.com announced that its Chinese subsidiary, Yaofang Technology (operating as 111.com), had completed pre-IPO financing for a listing on China’s STAR Market, with a pre-money valuation of RMB 10 billion. This round of financing represents a new capital increase following the RMB 420 million (approximately USD 60.49 million) raised by Yaofang Shanghai in August 2020. Investors in the previous round included Youkai Investment, Shanghai State-Owned Enterprise Reform Fund, and Liangji Industrial. Investors in the current round include SAIF Partners, Shenli Enterprise Management, Huasai Fund, Pudong Sci-Tech Innovation, Zhilin Capital, Shanghai Science and Technology Innovation Investment, People’s Pudong Fund, Aixiang Investment, Zhangjiang Venture Capital, and Huazhi Capital. To date, Yaofang Shanghai’s total fundraising has reached RMB 935 million (approximately USD 143 million). According to public information, the new investment will be used to support 111.com’s investments in digital technology and business expansion, including meeting the growing demand from millions of patients for digital healthcare solutions.

Many traditional industries in China still face issues such as imbalanced industrial structures and overcapacity. Against this backdrop, the industrial internet, which drives value chain restructuring to address structural imbalances, has generated substantial commercial value, and the healthcare sector is no exception. Just as Didi has reshaped transportation through digitalization and Meituan has transformed food delivery services, 1 Drug Network (1yao.com) is leveraging digital technologies to reconstruct the pharmaceutical and healthcare industry’s value chain, thereby achieving efficient matching of pharmaceutical supply and demand.

In recent years, 111.com has gradually reshaped its marketing, transactions, warehousing, distribution, and after-sales services through digital technologies. Leveraging supply chain platform capabilities powered by big data and business intelligence, 111.com empowers B-side enterprises digitally to jointly serve C-end users, creating a unique S2B2C model while continuously strengthening its competitive moats in intelligent supply chain technology, warehousing capabilities, and product category diversity.

In terms of intelligent supply chain technology, 111.com has independently developed an intelligent supply chain management system that encompasses intelligent category management, procurement management, intelligent pricing, inventory management, warehouse management, and logistics management. According to its financial reports, by leveraging innovative intelligent supply chain technologies, 111.com maintained low fulfillment costs in 2020, with annual fulfillment costs accounting for only 2.8% of net revenue. Meanwhile, inventory turnover days decreased to 30 days, significantly enhancing supply chain efficiency.

In terms of warehousing, 111.com has added new operational centers in Northeast and Northwest China, establishing a nationwide warehousing and distribution network comprising eight major hubs across South, Central, Southwest, East, North, Southeast, Northwest, and Northeast China. This network enables 24-hour delivery to over 300 major cities nationwide.

In terms of drug categories, 1 Drug Network manages hundreds of thousands of SKUs and primarily serves professional and medical-grade users, establishing a professional advantage in prescription drugs.

Industry insiders stated that 1yao.com has been deeply rooted in the industry for over a decade. Compared with other industrial internet platforms, 1yao.com has completed value reconstruction across multiple segments of the industrial chain, including sales and distribution. Its S2B2C model is characterized by uniqueness and innovation, contributing to a compound annual growth rate (CAGR) of 104.5% over the past three years. Looking ahead, 1yao.com’s S2B2C model will continue to drive its diversification strategy, accumulating new momentum for corporate development. Meanwhile, it is expected to further promote the transformation of the healthcare system in China under the new era of the domestic industrial internet, thereby generating greater commercial value.

Previously, the pharmaceutical industry has long suffered from chronic issues such as severe asymmetry between supply and demand information and high information costs. Traditional independent small and medium-sized pharmacies typically relied on methods like telephone ordering for procurement, while manually entering drug information resulted in extremely low efficiency. These operations were plagued by numerous pain points, including a limited range of purchasable products, high and opaque pricing, and slow delivery processes.

To address the fragmentation pain points in the pharmacy sector, 111.com is vigorously advancing its digital platform strategy. By leveraging SaaS-level technological empowerment to revolutionize the operational logic of traditional pharmacies, and adopting an S2P2C (empowering pharmacies to jointly serve patients) model, it provides a suite of services including centralized procurement, traffic integration, SaaS tools, and data services. This approach extends empowerment from product supply to marketing and digital technology. Under 111.com’s empowerment strategy, pharmacies have broken through physical constraints, expanding their service radius and scope. Meanwhile, procurement costs have been significantly reduced, inventory turnover has accelerated, product categories have become more diverse, and overall operational efficiency has been substantially improved.

For pharmaceutical companies, 111.com’s omni-channel commercial digital platform has also brought “new channels and new growth.” 111.com not only helps pharmaceutical companies reach the “blind spots” in the small pharmacy market but also provides them with digital marketing services, including patient education live streams and CRM management. In the fourth quarter of 2020, 111.com launched digital marketing initiatives such as health lectures and precision operations with Roche, Novartis, Abbott, Pfizer, Eli Lilly, Tongrentang, and Sanofi, delivering in-depth health management education to patients and enhancing their knowledge of medications and awareness of health protection. Meanwhile, it helped pharmaceutical companies expand their coverage in broad markets, deepen customer penetration and adherence, and drive sales growth.

In addition to empowering pharmacies and pharmaceutical companies, 111.com is also exploring the S2D2C (empowering doctors to jointly serve patients) model, thereby enabling physicians in areas such as full-lifecycle patient management, consultation and prescription renewal, cloud-based pharmacies, and real-world studies.

Currently, the scenarios in which users seek medical advice and purchase medications are being completely transformed on 1Drug.com’s digital platform. Users can enjoy a one-stop service integrating “medical consultation, pharmaceutical supply, and payment” through 1Drug.com. Meanwhile, connectivity and mutual empowerment among hospitals, clinics, pharmacies, and patients are being established, gradually forming a complete ecological closed loop.

Dr. Yu Gang, Co-founder and Executive Chairman of 111, Inc., stated that the company maintained strong growth momentum in 2020, a development he described as highly encouraging. “Digital technology is a key engine driving our rapid development. Leveraging this advantage, we will accelerate the implementation of our S2B2C strategy, focus on building intelligent supply chain platform capabilities through decentralization, and empower ecosystem participants—including pharmaceutical manufacturers, pharmacies, and physicians—to jointly serve patients and facilitate the digital transformation and industrial value chain restructuring of the healthcare industry.”