DeKai Pharma Accelerates Chronic Disease Medication Services Following $240 Million Series B Funding Led by Sunshine Insurance

In the pharmaceutical e-commerce sector, Dekai Pharmaceutical (hereinafter referred to as “Dekai”) has emerged as a rising star. It entered the pharmaceutical e-commerce market in 2015 by acquiring Dekai Pharmacy, which held qualifications for online drug sales, and achieved online sales exceeding RMB 400 million within just one year. However, approximately 80% of these sales came from medical devices. This is because Dekai’s parent company, Kangfu Zhijia, specializes in medical devices and operates 100 physical stores across China. According to its plan, Kangfu Zhijia aims to establish “a thousand stores in a thousand cities” nationwide within three years, transforming some of its outlets into integrated “pharmaceutical and medical device stores,” thereby laying out an O2O model for both medical devices and pharmaceuticals.

Recently, Dekai Pharmaceutical secured RMB 170 million in Series B financing, led by Sunshine Insurance. Moving forward, the implementation of Dekai’s strategic plans will be accelerated.

Deepening Services for Chronic Disease Medication

VCBeat has learned that Dekai Pharmaceutical’s online business is currently operating at a loss, with plans to achieve break-even operations in 2017.

DeKai CEO Xia Yu told VCBeat that DeKai will focus on medication management for chronic diseases. There are two reasons for this: first, the average transaction value for chronic disease medications is high; second, patients with chronic diseases have a need for pharmaceutical care services and require face-to-face consultations with pharmacists. Notably, DeKai will concentrate on medications for chronic conditions in oncology and neurology. “After their initial hospital diagnosis, such patients require long-term medication. They typically visit physical pharmacies for their first purchase to gain experience, after which they tend to develop a habit of purchasing from the same source on a long-term basis.” Currently, DeKai operates ten integrated pharmacy and medical device stores.

Xia Yu introduced that Dekai recently acquired a traditional Chinese medicine (TCM) hospital in Beijing, Shi’en TCM Hospital, marking its first foray into the “pharmaceutical e-commerce + online hospital” model. Initially, this hospital primarily serves patients with needs for offline consultations. In the future, Dekai plans to transform it into an online hospital to provide “remote consultation” services for customers of its offline chain pharmacies and online pharmacy platforms. Shi’en TCM Hospital covers an area of approximately 700–800 square meters, holds medical insurance accreditation, and features departments such as dermatology and psychiatry. It regularly invites specialists from public hospitals to conduct outpatient clinics.

According to data from the U.S. online prescription drug market, online drug sales account for 30% of the total pharmaceutical market, with approximately 70% of these sales attributed to medications for chronic diseases.

Xia Yu further analyzed that, in addition to the common “three highs” diseases, medications for neurological disorders and tumors also occupy a significant market share. Traditional O2O models prioritize rapid medication delivery but suffer from low average order values, whereas the average order value for patients with neurological disorders or tumors is around RMB 300.

Xia Yu believes that pharmaceutical e-commerce should provide user-centric solutions. However, it is challenging to rely solely on lightweight online consultations to drive medication purchases, as initial diagnoses must be conducted offline. Currently, Dekai focuses primarily on post-diagnosis medication management. In the future, it plans to collaborate with third-party platforms to integrate services across pre-diagnosis, during-diagnosis, and post-diagnosis stages. Dekai has already partnered with platforms such as Apricot Forest (Xingshulin), Haodafu, and Weitang to provide medication services for chronic disease patients on these platforms.

“Dekai is preparing for the imminent release of favorable policies for pharmaceutical e-commerce,” said Xia Yu. The first is the policy on online sales of prescription drugs; the second is the policy on nationwide health insurance network integration. Once these two major policies are liberalized, they will test the pharmaceutical care service capabilities of pharmaceutical e-commerce platforms. To enhance this capability, in addition to strengthening its own pharmaceutical team, Dekai is also strategically laying out deep collaborations with pharmaceutical manufacturers.

Collaboration with Industrial Enterprises

“Dekai’s strengths lie in its ability to rapidly acquire and serve users. In addition to their robust product portfolios, industrial enterprises also hold greater advantages in pharmaceutical knowledge reserves and experience,” said Xia Yu. He believes that Dekai’s collaboration with pharmaceutical companies can, on one hand, reduce drug costs and offer discounts to patients; on the other hand, it enables Dekai to provide more in-depth services to patients. “Leveraging its online channel advantages, Dekai can disseminate high-quality medication solutions from pharmaceutical companies to patients.”

Xia Yu analyzed that pharmaceutical companies are unable to conduct corresponding patient education services through hospital channels. If they turn directly to offline pharmacies, it is difficult to attract patients for a single disease indication. The advantage of offline channels lies in their ability to quickly aggregate patients with the same condition, thereby providing targeted and efficient services.

In addition, Dekai also provides internet strategy planning for industrial enterprises. According to Xia Yu, Dekai has engaged in in-depth collaborations with no fewer than five industrial enterprises, delivering tailored internet strategy planning services to them.

It is reported that under normal circumstances, once traditional industrial enterprises formulate their annual plans, adjustments in response to issues arising during implementation are extremely slow. In contrast, e-commerce operations may require monthly or even weekly planning, followed by continuous monitoring for potential problems. “The e-commerce decision-making chain for pharmaceutical manufacturers needs to be shortened to enable rapid adjustments and agile responses,” said Xia Yu. Regarding the coordination between online and offline channels, Dekai also provides professional solutions to assist industrial enterprises in addressing these challenges.

Xia Yu also mentioned collaborations with pharmacy chains. The primary concern for chain pharmacies when partnering with third-party e-commerce platforms is the fear of ultimately becoming mere pawns in the online sector. To alleviate these concerns among offline chains, Dekai has established stable relationships with brick-and-mortar pharmacies. Xia Yu told VCBeat that such collaborations require a “deep agreement” between both parties, such as an equity agreement. “In reality, it is difficult for those who promise not to prey on others to actually keep their word. The prerequisite for ensuring they do not harm your interests is to sign a binding covenant or a comprehensive agreement. For instance, they could become your shareholder, or there could be an equity relationship between the two parties.” Xia Yu revealed that Souyaosong (where Xia Yu previously served as CEO) originally designed its relationships with offline pharmacies in this manner. Recently, Dekai Pharmacy has also been attempting to establish joint ventures with certain local pharmacy chains, providing regional protection for these jointly operated pharmacies to ensure they derive benefits and feel more secure.