Alibaba Health Reports FY2018 Revenue of RMB 2.443 Billion and Gross Profit of RMB 653 Million, Plans to Expand Medical AI Initiatives
VCBeat (WeChat ID: vcbeat) has learned that Alibaba Health released its financial results announcement for the fiscal year 2018 (April 1, 2017–March 31, 2018) on the evening of May 16. Alibaba Health achieved a revenue of RMB 2.443 billion and a gross profit of RMB 653 million in this fiscal year, representing significant year-on-year increases of 414.2% and 248.7%, respectively.
“The strong growth in revenue and gross profit was mainly driven by the rapid expansion of our health product sales business and e-commerce platform service revenue during the year,” stated the performance announcement.
The announcement also revealed that Alibaba Health’s profit, excluding share-based compensation expenses, reached RMB 8 million, marking its first return to profitability. “Alibaba Health’s continued improvement in profitability will help facilitate substantial future investments in medical artificial intelligence-related fields, and strengthen its commitment to forward-looking and innovative businesses such as smart healthcare, internet-based healthcare, and personal health management,” the announcement stated.
The annual report also disclosed that, during the year, the e-commerce platform services business—comprising outsourced and value-added services provided by AliHealth—achieved a gross merchandise volume (GMV) exceeding RMB 30 billion. Revenue from health product sales and e-commerce platform services reached RMB 2.149 billion and RMB 171 million, respectively. Meanwhile, revenue from other innovative health-related services also experienced significant growth.
As the flagship platform of Alibaba’s “Double H” strategy in the pharmaceutical and healthcare sector, Ali Health naturally possesses numerous application entry points for connecting with consumers who have health-related needs. This advantage is built upon 19 years of established user perception cultivated through platforms such as Taobao, Tmall, and Alipay. For instance, users of Mobile Taobao exhibit a shopping mindset oriented toward health-related products, Alipay users show a preference for medical and healthcare service offerings, while users of UC Browser and Youku are inclined to access health information through content consumption.
Financial reports indicate that by integrating with Alibaba-affiliated applications such as Taobao, Tmall, Alipay, DingTalk, UC Browser, and Youku, Alibaba Health seamlessly delivers its pharmaceutical and health products, along with healthcare management services, to consumers with diverse needs across various usage scenarios. This strategy has enabled the company to cultivate a stable user base experiencing rapid growth.
Data disclosure shows that by the end of this fiscal year, Ali Health’s online self-operated stores, which have been operational for just over a year, reached 15 million annual active consumers. The number of licensed physicians, licensed pharmacists, and nutritionists contracted with Ali Health to provide medical and health consultation services has totaled nearly 23,000. These professionals deliver health consultation services to users on a rotating shift basis, with daily consultations exceeding 50,000. Additionally, the number of active users who have authorized and activated the personal health management tool “My Health” on Mobile Taobao has reached 28 million. Furthermore, Ali Health’s vaccine service platform now covers thousands of vaccination sites across more than 100 cities, with health education outreach reaching nearly 200 million people.
Since Alibaba’s investment, AliHealth has entered its fourth year of deep cultivation in the internet-based pharmaceutical and healthcare sector. From initially operating solely the China Drug Electronic Supervision Code system to now establishing a comprehensive platform covering all aspects of pharmaceutical and healthcare services, AliHealth has maintained high professional standards in both internal team building and external business expansion.
In selecting external partners, Alibaba Health has joined forces with leading industry enterprises and institutions to establish a “Golden Team” collaboration mechanism. For instance, globally renowned pharmaceutical companies such as GSK, Sanofi, Merck & Co., AstraZeneca, and Pfizer have each engaged in diverse collaborations with Alibaba Health, encompassing drug traceability, vaccine appointment scheduling, chronic disease management, and patient education. In the field of artificial intelligence, top-tier tertiary hospitals in China, including The First Affiliated Hospital of Zhejiang University School of Medicine, The Second Affiliated Hospital of Zhejiang University School of Medicine, Shanghai Xinhua Hospital, and Shanghai Ruijin Hospital, have also partnered with Alibaba Health to advance the implementation of smart healthcare solutions.
Earlier this month, Alibaba Health joined forces with the National Healthcare Big Data Platform, the Scientific and Technical Literature Press, Peking University Cancer Hospital, Health Times, and other professional institutions to launch “Yi Zhi Lu,” an authoritative public-welfare medical think tank. This platform provides users with disease prevention and treatment knowledge that is originally created by expert teams, edited and adapted, and ultimately reviewed by the same expert teams.
In recent years, by leveraging a series of strategic deployments in cloud computing, online payments, financial services, logistics, and rural operations, Alibaba has been gradually establishing an internet commerce infrastructure to serve the entire society. Within Alibaba’s expansive commercial ecosystem, AliHealth plays a pivotal role in delivering “Internet+” pharmaceutical and healthcare solutions to 1 billion Chinese citizens. Building upon Alibaba’s existing commercial infrastructure, AliHealth has begun cultivating its own ecosystem.
Today, medical institutions, third-party software and hardware developers, pharmaceutical manufacturers, offline pharmacies, and others have gradually joined the health ecosystem built by Alibaba Health.
In May 2016, Alibaba Health spearheaded the establishment of the China Pharmaceutical O2O Pioneer Alliance, collaborating with more than 200 chain pharmacy enterprises. Currently, its network covers over 20,000 pharmacy outlets across more than 100 cities nationwide. In the consumer healthcare sector, Alibaba Health has partnered with various medical and health service institutions to launch a vaccine service platform, providing more solutions for eligible populations in China in terms of disease prevention education and appointment services.
Furthermore, Alibaba Health is collaborating with authoritative external institutions, including government bodies, hospitals, and research academies. By leveraging big data and medical artificial intelligence (AI) technologies and services, it connects upward with government and healthcare institutions while serving healthcare professionals and patients downward. With internet hospitals and medical AI as its core products, Alibaba Health is building a complete closed-loop smart healthcare service ecosystem.
Financial reports serve as an endoscope for gaining insight into a company’s operational model. Behind the substantial growth in revenue and gross profit reported by Alibaba Health in its 2018 financial statements lie the high degree of synergy with other business segments of Alibaba Group, its own professional operational capabilities, and the well-established health ecosystem. It is evident that Alibaba Health is deeply integrating its pharmaceutical and healthcare services with internet technologies, thereby steadily solidifying its leading position in the industry.