Alibaba Health Partners with Yixintang to Establish Internet-based Integrated Medical and Pharmaceutical Service Platform in Yunnan

VCBeat (WeChat ID: vcbeat), August 28 — Alibaba Health announced today that its subsidiary, Hongyun Jiukang, has entered into a framework cooperation agreement with Yunnan Hongxiang Yixintang Pharmaceutical and Jiamei Information. The three parties will establish a joint venture to promote businesses such as an integrated internet healthcare service platform in Yunnan Province.

The announcement revealed that Hongyun Jiukang, a subsidiary of Alibaba Health, Yixintang Pharmaceutical, and Jiamei Information plan to jointly invest RMB 30 million to establish a joint venture. Hongyun Jiukang and Yixintang will each contribute RMB 12 million, holding a 40% equity stake respectively, while Jiamei Information will contribute RMB 6 million, holding a 20% equity stake.

Regarding the purpose of establishing the joint venture, the announcement disclosed: “In active response to policies launched by the Chinese government, such as ‘separation of prescribing from dispensing’ and ‘Internet Plus,’ the contracting parties have decided to promote businesses including an integrated internet-based pharmaceutical service platform in Yunnan Province, China, through the establishment of a joint venture. The Company believes that this collaboration will create greater commercial value for the Company and is in the interests of the Company and its shareholders.”

The tripartite collaboration has undoubtedly drawn significant attention from the industry. Over the past year or two, Alibaba Health has made strategic moves in pharmaceutical e-commerce, smart healthcare, and product traceability, with a growing trend of integration and interoperability across these sectors. In the realm of pharmaceutical e-commerce, Alibaba Health focused last year on establishing an online-offline integrated new retail model. Together with over 100 retail pharmacies nationwide, it founded the China Pharmaceutical O2O Pioneer Alliance, aiming to transform offline pharmacy outlets into community health centers for residents and new entry points for tiered diagnosis and treatment, thereby delivering a richer service experience to consumers.

At the founding ceremony of the Pioneer Alliance last May, Kang Kai, a director at Alibaba Health, stated that after the establishment of the Pioneer Alliance, it would explore and promote the separation of prescribing from dispensing, and establish a sound cooperative relationship with hospitals.

This year, Yunnan Province has frequently issued policies promoting the separation of prescribing and dispensing. The “Implementation Opinions on Further Reforming and Improving Policies for Drug Production, Circulation, and Use (Draft for Comments),” released in May, states that the mechanism of subsidizing healthcare services with drug profits should be further dismantled, and that medical institutions are required to prescribe medications by their generic names and proactively provide prescriptions to patients.

Meanwhile, efforts are being made to explore the interconnectivity and real-time sharing of prescription information from medical institutions, medical insurance settlement data, and drug retail consumption records. In addition, online retail services provided by retail pharmacies are being standardized, with the promotion of new delivery models such as “online order, in-store pickup” and “online order, store delivery.” The issuance of these policies will undoubtedly create greater market opportunities for Yunnan’s retail pharmaceutical enterprises.

Some observers in the pharmaceutical retail sector believe that, leveraging this favorable policy environment, third-party players are likely to pilot an integrated model in Yunnan Province that combines hospital prescription extension services with online retail pharmacy services. Meanwhile, Alibaba Health aims to draw on the implementation of this project to provide a reference for future internet-enabled collaborative service models in healthcare and pharmaceuticals.

Going forward, this collaborative model is highly likely to be opened to retail pharmaceutical enterprises within the O2O Pioneer Alliance. This is also reflected in the announcement released by Alibaba Health, which stated, “This collaboration will help facilitate the broader nationwide rollout of the Company’s integrated online healthcare service platform.”