Alibaba Health Interim Report: Revenue Surges 119.1% Year-on-Year, Driven by Pharmaceutical E-commerce and Consumer Healthcare

VCBeat (WeChat ID: vcbeat) has learned that the interim results announcement released by Alibaba Health on the evening of the 26th showed that for the six months ended September 30, 2019, the company recorded revenue of RMB 4.117 billion and gross profit of RMB 1.032 billion, representing year-on-year increases of 119.1% and 95%, respectively. The adjusted net profit reached RMB 139 million, a significant increase from RMB 11 million in the same period last year.

The aforementioned financial performance demonstrates the continuous enhancement of Alibaba Health’s profitability. The announcement stated that, benefiting from this, the company has continued to increase its investments in innovative business segments such as consumer healthcare, internet healthcare, and smart healthcare, which have already yielded initial returns.

“Strong growth in revenue and gross profit was primarily due to the current reporting period”Pharmaceutical Proprietary Business, Pharmaceutical E-commerce Platform Business, and Consumer Healthcare Business“attributable to rapid growth,” the announcement analyzed.

Specifically, the gross merchandise value (GMV) of the Tmall Healthcare platform operated by AliHealth exceeded RMB 37 billion, with revenue from consumer healthcare services—spanning multiple sectors including medical aesthetics, dentistry, vaccines, and health checkups—increasing by 274.4% year on year.

Over the past 12 months, the annual active consumers on Tmall’s healthcare platform have exceeded 160 million, representing an increase of 30 million in six months. The annual active consumers of its online self-operated stores grew by 10 million over the same period, reaching more than 37 million.

AtNew Retail in PharmaceuticalsAt this level, as of November, Alibaba Health’s “30-minute delivery, 24/7 medication delivery” service has covered 10 cities, including Hangzhou, Beijing, Guangzhou, Shenzhen, Wuhan, and Shanghai. During the recent Tmall Double 11 shopping festival, O2O order volume reached 2.65 times that of the same period last year.

The interim report also disclosed that the proportion of drug manufacturers registered and renewing their contracts on Alibaba Health’s “Ma Shang Fang Xin” platform has exceeded 90% of the total number of active drug manufacturers in China, with vaccine manufacturers achieving 100% coverage.

Notably, the interim report stated that while rapidly expanding its online business, the company is also actively positioning itself in the offline pharmaceutical retail market, continuously exploring development pathways for new pharmaceutical retail models, and preparing to accommodate the outflow of prescription drugs from hospitals.

As an important background to the above statement, the new version of the Drug Administration Law, which will come into effect in DecemberConditional Permission for Online Sales of Prescription Drugs. Coupled with a series of favorable policies in recent years under the “Healthy China” strategy that support the “Internet + Healthcare” sector, the pharmaceutical industry holds promising prospects.

Since the beginning of this year, high-growth consumer healthcare businesses have maintained their strong growth momentum. Taking the medical aesthetics industry as an example, during the recent Tmall Double 11 shopping festival, transaction volume in the medical aesthetics sector surpassed the full-day total of the previous year within just 10 hours and 31 minutes, highlighting its significant potential.

Bolstered by its “cash cow” businesses, Alibaba Health is also continuously expanding its footprint in innovative sectors such as internet healthcare and smart healthcare.

At the level of public medical institutions, after experiencing early internet health consultations and a series of practices aimed at helping medical institutions improve efficiency, Ali Health has subsequently partnered with Alipay, the Zhejiang Provincial Health Commission, and other organizations. By leveraging Alipay as a high-traffic platform for in-depth engagement, Ali Health has laid a more solid foundation for its entry into the “deep-water zone” of the healthcare sector.

The interim report shows that Alibaba Health continues to build its healthcare services channel, which it operates exclusively on the Alipay app, and expands the number of offline medical institutions integrated with Alipay.

As of the end of September 2019, Alipay had signed contracts with more than 11,000 medical institutions, andConnected to medical insurance payment systems at over 300 tertiary hospitals. In September 2019, the number of monthly active users of Alipay's medical and healthcare services in hospital settings exceeded 17 million, representing a year-on-year increase of over 41.7%.

Following the official launch of the “Zhejiang Internet Hospital Platform,” the first nationwide internet hospital platform integrating regulatory and service capabilities, which was developed by Zhejiang Bianque, a subsidiary of Alibaba Health, more than 130 medical institutions, including Grade A tertiary hospitals, have joined the platform, achieving full coverage across all prefecture-level cities in Zhejiang Province.

Building on this foundation, Alibaba Health has undertaken a series of innovative initiatives in healthcare models and technologies, venturing into the “deep waters” of serious medical care. In October, the project co-established by Alibaba Health and the Quzhou Municipal Government of Zhejiang ProvinceChina's First Online Medical Insurance Payment Platform for Chronic Disease Management Goes Live. The platform has successfully established a fully integrated workflow encompassing “online follow-up consultations, electronic prescription circulation, online medical insurance payment, and home delivery of medications,” thereby enabling patients with chronic diseases to receive care without needing to make any in-person visits.

In July, Ali Health launched a transplant follow-up platform co-developed with leading medical experts in the field of transplantation. By shifting traditional offline follow-up care to an online model, the platform aims to address the challenges of post-operative management for organ transplant recipients in China and provide tangible benefits to both transplant patients and healthcare providers.

Meanwhile, Alibaba Health is leveraging resources both within and outside the Alibaba Group to develop medical AI systems with practical application scenarios. Among these, the EEG-based epilepsy screening AI engine, the brain health screening AI engine, and digital dentistry solutions have been progressively deployed in health examination centers and hospital departments.

Meanwhile, the Clinical Decision Support System (CDSS) independently developed by AliHealth had signed contracts with more than 20 medical institutions across China, including Grade A tertiary hospitals, by the end of October, with the CDSS products being progressively put into use.