Buchang Pharmaceuticals Invests RMB 60 Million in KuaiFang SongYao to Deepen Internet-Based Terminal Market Layout
Finally, the two active self-operated O2O pharmaceutical companies in the market are now on a level playing field. Dingdang Kuaiyao is backed by Renhe Pharmaceutical, while Kuaifang Songyao is supported by Buchang Pharmaceuticals.
VCBeat (WeChat: vcbeat) reported on April 18 that Buchang Pharmaceuticals announced this morning its plan to invest RMB 60 million of its own funds in Beijing Kuai Fang Technology, acquiring an 11.538% equity stake.
In September 2014, the Kuai Fang Song Yao (Fast Prescription Delivery) app was launched, and three months later, it secured angel-round investment amounting to several million RMB from Jiuhe Venture Capital. During the same period, competitors such as Yao Gei Li, Hao Yao Shi, and Ding Dang Kuai Yao also entered the market. Traditional pharmacies, internet healthcare providers, and capital investors all turned their attention to this emerging sector, with institutional investments propelling the online-to-offline (O2O) prescription delivery industry into a phase of explosive growth.
By October 2015, Kuaifang had secured an additional RMB 200 million in Series B financing from Tiantu Capital. Operational data at the time showed that Kuaifang had expanded its coverage to multiple cities, including Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou, with both registered users and average daily order volume on the rise.
Ultimately, the collapse of “Yao Geili”’s capital chain dealt a heavy blow to the O2O medicine delivery business model, prompting widespread external skepticism over its low purchase frequency, low average transaction value, high operating costs, and status as a pseudo-demand.
In an interview with VCBeat, Gao Yue, CEO of Kuai Fang, stated that there is still significant room for growth in the O2O medicine delivery market, requiring continuous exploration by industry participants, which demonstrates his confidence in the O2O medicine delivery model.
By January this year, Dingdang Kuaiyao secured RMB 300 million in financing from Tongdao Gongying, undoubtedly injecting significant confidence into the industry. Haoyaoshi Pharmacy is also expanding the reach of its Haoyaoshi APP based on its offline pharmacies, while JD Daojia is extending its pharmaceutical delivery services—both developments serve as positive signals for the industry.
Returning to this investment event, Buchang Pharmaceutical announced that the investment in KuaiFang is primarily aimed at implementing its strategy for extended layout in the terminal market. This subscription was conducted by increasing KuaiFang Technology's registered capital. Specifically, Buchang subscribed to 276,000 yuan of new registered capital in KuaiFang with 60 million RMB, changing KuaiFang Technology's registered capital to 2.3978 million yuan, and Buchang holds 11.538% equity in KuaiFang Technology.
Post-Transaction Shareholding Structure:
The announcement also revealed that as of December 31, 2016, Kuaifang Technology had total assets of RMB 66.643 million and net assets of RMB 58.511 million; its revenue for 2016 was RMB 42.816 million, with a net loss of RMB 47.066 million.
Asset data also reveals that the KuaiFang model is, in essence, an asset-heavy one, with offline pharmacies as its foundation. The core of O2O medicine delivery lies in the internet-enabled transformation of social pharmacies. With backing from Buchang Pharmaceutical, KuaiFang may gain greater leverage in supply chain and capital chain resources.
Notably, Buchang has made significant strides in recent years by investing in consumer-facing online pharmaceutical channels, including a prior investment in the pharmaceutical e-commerce company Qilekang. If there were an award for industrial enterprises that actively embrace the internet, Buchang would undoubtedly be the recipient.