Rongguan E-Commerce Secures Hundreds of Millions in Series C1 Funding Led by Harvest Capital and Ping An Ventures
According to VCBeat, on December 21, Rongguan E-commerce, a pharmaceutical e-commerce service provider, announced the completion of its C1 round of financing, amounting to hundreds of millions of RMB. The round was co-led by Huagai Medical Fund, under Huagai Capital, and Ping An Ventures, under Ping An Group.
Following this round of financing, Rongguan E-commerce will further strengthen its team building, market and business expansion, as well as the research, development, and upgrading of core products.
Founded in 2012, Rongguan E-commerce has secured two rounds of funding over the past two years from investors including Trustbridge Partners, Ping An Ventures, and Fosun Rhythm Capital, a subsidiary of Fosun Group. The current round of financing was led by Huagai Capital and Ping An Ventures, with additional investments from Trustbridge Partners and Fosun. Notably, Huagai Capital, Ping An Ventures, and Fosun are all members of the China Healthcare Investment 50 Forum (“H50”).Rongguan E-commerce’s latest round of financing has further strengthened the strategic alliance between industry and capital across multiple dimensions.
In recent years, the internet healthcare sector has seen a surge in participants, leading to increasingly fierce competition. Rongguan E-commerce positions itself as a comprehensive service platform for China’s entire pharmaceutical industry chain. Leveraging its extensive experience in developing large-scale internet systems, the team is dedicated to providing “Internet Plus” transformation and upgrading services for pharmaceutical manufacturers, pharmaceutical distributors, retail pharmacies, and clinics.
Currently, Rongguan’s business system encompasses the third-party B2B pharmaceutical supply chain trading platform “My Medicine Network,” the full-chain ecosystem for new pharmaceutical retail “Feijia Cloud,” the intelligent mobile service platform for clinics “My Clinic,” and the terminal-localized O2O health management tool “My Kangkang.” It has established an intelligent ecological service system based on “B2B + SaaS” and a new “S2B2C” model serving the entire pharmaceutical industry chain.
Rongguan has deconstructed and rebuilt every segment of the medical industry chain, reengineering its “value-adding segments” and providing a new pathway for the overall upgrading of the pharmaceutical industry.
Official data shows that Rongguan E-commerce currently serves nearly 100 pharmaceutical manufacturers, over 1,500 pharmaceutical distributors, and 150,000 terminal outlets, including pharmacies, medical institutions, and primary care clinics. In 2016, its online transaction volume reached RMB 22.4 billion. It is currently the only full-industry-chain pharmaceutical supply chain platform covering all 30 provinces across China, with the platform’s transaction scale expected to exceed RMB 50 billion in 2017.
Rongguan E-commerce represents a key strategic investment by Huagai Medical Fund II in the internet healthcare sector. It will create synergies with Huagai Medical Fund’s earlier investments in pharmaceuticals, medical devices, and healthcare services, as well as leverage the resources of over 30 listed healthcare company limited partners (LPs) associated with the fund.
Ren Huichuan, General Manager of Ping An Group, stated: “Ping An’s three rounds of capital injection into Rongguan E-commerce over the past three years demonstrate our confidence in Rongguan’s full pharmaceutical industry chain service model. Driven by the trend of technology empowering the traditional pharmaceutical industry, Rongguan E-commerce will continue to explore value-added service models within its big health strategy, leverage the risk protection role of financial insurance in online transactions, and integrate the entire procurement and sales chain across pharmaceutical manufacturing, distribution, and terminal sectors, thereby empowering the pharmaceutical industry.”
Zeng Zhiqiang, Managing Partner of Huagai Medical Fund, stated: “As the socioeconomic environment and industrial trends evolve, the structure of health consumption is shifting from demand for pharmaceuticals to demand for services. Meanwhile, the healthcare industry is undergoing unprecedented policy reforms. Significant changes are taking place across all segments, including pharmaceutical innovation, manufacturing, distribution, and medical service management. Traditional industry models are quietly transforming, presenting the entire sector with substantial opportunities and challenges.”
Shi Guomin, Managing Director of Huagai Medical Fund, stated, “From the perspectives of pharmaceutical distribution and supply chain finance, China’s pharmaceutical internet market holds immense growth potential. Rongguan E-commerce has built its core competitiveness by reconstructing the ‘four flows’—information, logistics, capital, and commercial flows—for pharmaceutical manufacturers, distributors, terminal pharmacies, and clinics. Rongguan E-commerce facilitates information flow through its ‘My Pharmaceutical Network’ trading platform, enhances transportation capacity and quality by integrating third-party logistics resources, and restructures capital flow through supply chain finance innovations. By integrating online and offline commercial flows, supported by logistics and capital flows, the company has comprehensively strengthened its marketing capabilities and channel control within the commercial flow.”
Yao Xiaofei stated, “With the solid support from this round of financing, Rongguan E-commerce will contribute more significantly to the industry’s ‘Internet Plus’ transformation and business model upgrades, accelerating its leadership in innovation and value creation within the pharmaceutical internet sector. Our goal is to enhance industry efficiency, provide greater assurance to the government, and deliver broader benefits to the public.” Rongguan E-commerce jointly signed the “Letter of Intent for Cooperation on ‘Internet Plus Pharmaceutical Marketing’” with Pfizer, Xi’an Janssen, Takeda China, Guorui Pharmaceutical, Zhejiang Intime, and Tianjin Tongrentang. This agreement provides a strong foundation for promoting cross-sector integration among China’s pharmaceutical manufacturing and commercial sectors, terminal pharmacies, clinics, internet service partners, and vertical community platforms. Looking ahead, Rongguan E-commerce will continue to leverage its internet technology and innovative marketing advantages, partnering with more leading enterprises to seize development opportunities in the big health industry and create a “Chinese solution” for the sector.
“Rongguan E-commerce will continue to leverage its unique business model and rapid growth to drive the ‘Internet Plus’ transformation of the pharmaceutical and broader healthcare industries, enhance supply chain and marketing efficiency in the pharmaceutical sector, and build a new ecosystem featuring innovative marketing and service models for the healthcare industry.”
In recent years, in addition to third-party B2B trading platforms established by traditional pharmaceutical companies, numerous startups have emerged, such as Yaopin Terminal Network, Guoyu Pharmaceutical Online, Kang Aiduo, Jinlida, and Weiming Penguin. Major investors, including Matrix Partners China, GGV Capital, and Fosun Pharma, have also poured capital into players in the pharmaceutical B2B sector.
According to the "2016 Statistical Analysis Report on the Pharmaceutical Distribution Industry" issued by the Ministry of Commerce, the total sales volume of pharmaceutical e-commerce enterprises with direct reporting reached RMB 61.2 billion in 2016. Among this, B2B business sales amounted to RMB 57.6 billion, accounting for 94.2% of the total pharmaceutical e-commerce sales; B2C business sales were RMB 3.6 billion, representing only 5.8% of the total. Industry analysts suggest that with the advancement of the "Two-Invoice System," socialized pharmaceutical procurement may create development opportunities for pharmaceutical B2B sectors.
From another perspective, competition in the pharmaceutical B2B sector will also intensify. How to build barriers around products and services and cultivate core competitiveness are issues worth considering for both incumbent players and new entrants.
To this end, in 2016, Rongguan E-commerce, in collaboration with industry associations and platform partners, jointly launched the Innovative Big Health Industry Alliance. Together with platform clients, it participated extensively in the 2016 APEC Economic Leaders’ Meeting in Lima, Peru, and the 2017 APEC Economic Leaders’ Meeting in Da Nang, Vietnam, showcasing to the 21 APEC economies the innovative development model and future strategic plans of China’s pharmaceutical and big health industries, thereby garnering significant attention and recognition from numerous international organizations.
The launch of the “Chuangmeng Alliance” aims to actively explore the bidirectional integration of traditional pharmaceutical supply chains, medical services, and internet-based services. By continuously exploring the development path of the internet-enabled pharmaceutical industry, creating a closed-loop user service experience, innovating marketing channels for general health products, and consistently building a high-end dialogue and exchange platform, the initiative seeks to chart a practical course for the industrial upgrading of China’s traditional pharmaceutical supply chain and to foster innovative development within the broader health industry.
Today, the "Innovation Alliance" has evolved into a collaborative development alliance for the big health industry, encompassing more than 100 pharmaceutical manufacturing enterprises and over 1,500 pharmaceutical commercial enterprises. Through Rongguan E-commerce’s "My Medicine Network," alliance members have established distribution channels covering more than 150,000 terminal pharmacies and clinics across 30 provinces in China. Furthermore, the "Innovation Alliance" strives to foster cross-sector integration among pharmaceutical manufacturers, distributors, terminal pharmacies, clinics, internet service partners, and vertical community platforms. This initiative aims to meet the health needs of the entire population, improve overall public health, and endeavor to create a "Chinese Solution" for the big health industry, thereby contributing to the "Healthy China" initiative.