Yuheng and JD.com Jointly Establish Internet Plus Chronic Disease Prescription Drug Platform with RMB 1 Billion Investment

Recently, Yuheng Pharmaceutical and its wholly-owned subsidiary, Ningbo Yuheng, signed an Investment Agreement with Jiangsu JD Bangneng Investment Management Co., Ltd. (hereinafter referred to as “JD Bangneng”). Yuheng Pharmaceutical intends to jointly establish Yuheng JD Health Investment Management Co., Ltd. with JD Bangneng, contributing capital in the form of cash plus 100% equity interest in Guangzhou New Huacheng following its spin-off. The initial registered capital of the new company is RMB 50 million, and the total final investment is expected to reach RMB 1 billion.

It is understood that the common goal of this collaboration is to leverage complementary strengths and jointly establish a high-quality, comprehensive portfolio of prescription drugs for chronic diseases. By delivering superior quality and service, the parties aim to build a prescription drug brand that earns consumer trust. To this end, starting with branded chronic disease medications, both parties will integrate their advantageous resources and gradually streamline the upstream and downstream value chains, with the objective of providing patient-centered disease management services and creating a chronic disease management platform.

Under this collaboration, JD Bangneng will hold one-third of the seats on the board of directors of Yudong Health. This will introduce internet-based thinking and perspectives at the board level of Yudong Health, which is conducive to broadening Yuheng’s management and operational strategies for future e-commerce channel sales.

As the aging trend of China’s population intensifies, the number of patients with chronic diseases continues to rise. The market potential for chronic disease medications and management services is enormous and growing rapidly. Since most patients with chronic diseases have relatively low requirements for clinical management, channels for obtaining prescription drugs for chronic conditions are becoming increasingly diversified. With the gradual liberalization of online sales of prescription drugs, the internet is likely to become a major channel for retail prescription drug sales, creating significant growth opportunities for the pharmaceutical e-commerce industry. Since entering the e-commerce sector in 2004, JD Bangneng and its affiliates have focused on substantial development in this field and have become well-known e-commerce enterprises in China.

Regarding Yuheng, uncertainties remain concerning the timing and intensity of current policy liberalization. Policies governing the scope of products eligible for online prescription drug sales, electronic prescriptions, and integration with medical insurance will also impact the future market capacity for online retail of prescription drugs. Nevertheless, Yuheng Pharmaceutical firmly believes that the “Internet + chronic disease prescription drugs” model will become the industry’s future trend and represents the company’s preferred new channel and business model. Should policy liberalization proceed slowly or be limited in scope, Yuheng Pharmaceutical will leverage alternative pharmaceutical distribution channels—such as hospitals, retail pharmacies, and mobile healthcare platforms—to achieve its objectives.

Regarding JD.com, in the past two years, JDSuccessively on O2O platformsPharmaceutical E-commerce, medical aesthetics, insurance, electronic prescriptions, and smart hardware. Amid a tightening regulatory environment, the collaboration with Shanghai Pharmaceuticals and Xinhua Grand Pharmacy demonstrates JD.com’s determination to develop its e-commerce platform for prescription drugs. The partnership with Yuheng Pharmaceutical also reflects JD.com’s strategic foresight in early market positioning.

Following its establishment, Yudong Health will be dedicated to the research, development, and manufacturing of high-quality medications for chronic diseases. It will expand diverse commercial channels for its products, delivering cost-effective, high-quality chronic disease management products and services to patients in an efficient and convenient manner. Yudong Health will serve as the company’s management platform for expansion into the chronic disease sector, with future operations encompassing manufacturing, R&D, online sales, and other business activities.