YiKuai Medicine Secures Tens of Millions in New Funding Led by Sequoia China Seed Fund

VCBeat has learned that “Yikuai Yaoyao,” a B2B pharmaceutical supply chain and operational empowerment platform, recently announced the completion of a new round of financing amounting to tens of millions of yuan. The round was led by Sequoia China Seed Fund, with participation from Xinyuan Capital, Plum Blossom Angels, and Dexun Investment.

He Yu, Co-founder and CFO of Hunan Wholesale Pharmaceutical Technology Co., Ltd., stated that the funds raised in this round of financing will be used to strengthen the company’s supply chain management, continue developing its operational management platform, and accelerate market expansion.

Hunan Wholesale Pharmaceutical Technology Co., Ltd. targets small and medium-sized chain pharmacies and independent drugstores in lower-tier markets, aiming to connect upstream pharmaceutical manufacturers with downstream retail pharmacies. Leveraging top-tier supply chain resources, the company builds a pharmaceutical supply chain centered on controlled-sales products. Through its “supply chain + operational empowerment” platform, it helps small and medium-sized pharmacies increase profits and optimize their product portfolios, assists pharmaceutical companies in penetrating grassroots markets, and enables consumers to conveniently access high-quality, cost-effective medications, thereby achieving win-win outcomes for all stakeholders.

The core team of Yikuai Pharmaceutical comprises serial entrepreneurs with extensive experience in the pharmaceutical distribution sector, possessing deep expertise in industry upstream and downstream dynamics as well as operational strategies. The company has established partnerships with numerous top-100 industrial pharmaceutical enterprises nationwide. Its business portfolio covers over 3,000 drug specifications, includes more than 500 products under controlled sales channels, and has cumulatively served over 12,000 end-point purchasers. In 2020, the company accelerated its market expansion, extending its operations from Hunan Province to a national scale and broadly replicating its proven success model.

Despite its relatively recent establishment, Hunan Wholesale Pharmaceutical Technology Co., Ltd. has garnered significant favor from investment institutions, completing multiple rounds of financing in a short period. Previously, the company closed its angel round in June 2019, led by Dexun Investment, with participation from Meihua Angel Venture Capital, Jiuhe Venture Capital, and Buchang Pharmaceutical’s family office. It subsequently secured another round of financing in January 2020, led by Xinyuan Capital, with follow-on investments from Dexun Investment and Jiuhe Venture Capital.

Data shows that in 2018, the total market size of China's pharmaceutical distribution industry reached RMB 1.7 trillion, maintaining a continuous trend of high growth. The retail pharmacy terminal market size was RMB 391.9 billion, accounting for 22.9% of national terminal drug sales.

The pharmaceutical distribution industry boasts a vast market, with numerous opportunities emerging amidst ongoing transformations. The volume-based procurement policy has enhanced drug circulation, reduced drug prices, and improved the industry’s cash conversion cycle. Following the implementation of the “Two-Invoice System,” drug procurement costs have decreased, while efficiency in the distribution chain has increased. He Yu stated, “Driven by favorable policies, the inflection point for entrepreneurship in the pharmaceutical distribution industry has arrived. Tech-driven startups with core competencies are poised to grow into enterprises valued at tens of billions.”

Amid sweeping industry transformation, the needs of small and medium-sized pharmacy chains and independent pharmacies in lower-tier markets warrant particular attention. These entities, located in third-tier cities, urban-rural fringe areas, rural regions, and towns, account for 80% of the total number of pharmacies nationwide. However, they face challenges such as small scale, information asymmetry, and a lack of refined management capabilities, making it urgent to transform their existing business models.

In this context, pharmaceutical supply chain platforms present significant market opportunities. Moving forward, Hunan Wholesale Pharmaceutical Technology Co., Ltd. will strengthen its technological investments to establish a closed-loop data system for upstream and downstream procurement and sales, further optimize product structures, and enhance transaction conversion rates. The company will also develop an integrated business and data middle platform for data storage and analysis, empowering front-end operations with rapid iteration capabilities, reducing labor costs, improving management efficiency across various front-end business lines, and further achieving quality improvement and efficiency gains. This will enable the company to continuously adapt to market changes and empower improvements in the pharmaceutical supply chain.

Cao Xi, Partner at Sequoia Capital China Fund, stated: “Against the backdrop of the separation of prescribing and dispensing, pain points in the intermediate distribution links of pharmaceuticals are evident. Issues such as low market penetration among regional small and medium-sized pharmacy chains and independent pharmacies in lower-tier markets, sluggish sales growth, incomplete drug SKU offerings, chaotic pricing systems, and poor distributor compliance urgently need to be addressed. Wholesale Pharmaceutical shortens the distribution hierarchy from production to circulation, enhances the efficiency of the pharmaceutical industry through internet-based informatization, and provides joint empowerment via technology and service outputs. The company’s team is highly capable, ambitious, down-to-earth, humble, and hardworking. For future B2B services, it is startups like this that need to take a further step upstream in the industrial chain to drive digital transformation and create platform-based opportunities.”

Xin Yuan Capital Partner Hua Xue stated, “The new healthcare reform has driven changes in the structure of pharmaceutical distribution, with significant opportunities embedded within this transformation. By capitalizing on the trends toward informatization and chain operations among grassroots pharmacies, Hunan Wholesale Pharmaceutical Technology Co., Ltd. has the potential to become a leading pharmaceutical distribution platform in lower-tier markets, playing a vital and positive role in enhancing supply chain efficiency and reducing medication costs for consumers in these regions. We remain bullish on the growth trajectory of consumer health in China and the development of primary healthcare services, and we firmly support the business and financing development of Hunan Wholesale Pharmaceutical Technology Co., Ltd.”

Qi Hai, Managing Director at Dexun Investment, stated, “Within a single year, Dexun has participated in three consecutive funding rounds for Wholesale Pharmaceutical, demonstrating our firm confidence in the team’s deep cultivation and transformation of pharmaceutical distribution channels in lower-tier markets. The new retail model for pharmaceuticals in these lower-tier markets exhibits typical characteristics of consumption stratification, with efficiency improvements driven by logic distinct from that of mature markets in the United States and Europe. Starting from the supply chain, Wholesale Pharmaceutical is advancing the chain-store consolidation of pharmacies in China’s lower-tier markets. Over the past year of supporting this startup, we have gained a profound appreciation for the team’s deep understanding of every link in the value chain and their long-term vision for initiating disruptive innovation.”