2015 China Pharmaceutical E-commerce Report Released: Kangaidu, Jianyi.com, and No.1 Pharmacy Rank Top Three in B2C

On April 7, the “2015 China Pharmaceutical E-Commerce Data Report” was released at the 2016 Digital Health Industry E-Commerce (West Lake) Forum. VCBeat has compiled and analyzed the key highlights from this report for our readers.

Longyan Releases "2015 China Pharmaceutical E-commerce Data Report"

E-commerce is reshaping the traditional landscape of pharmaceutical retail.

The report indicates that the involvement of e-commerce is reshaping the landscape of the pharmaceutical retail industry, intensifying market competition. Although the pharmaceutical e-commerce sector is currently subject to stringent regulations, policies are gradually being relaxed. This deregulation is expected to usher in a period of explosive growth for pharmaceutical e-commerce.

As of December 31, 2015, the China Food and Drug Administration (CFDA) had issued a total of 526 licenses for online drug trading services. Among these, there were 112 B2B licenses, 26 Class A licenses for third-party platform transactions, and 388 B2C online retail licenses (i.e., Class C licenses), accounting for 21.3%, 4.996%, and 73.8% respectively. Class C licenses constituted the largest proportion. In terms of license-holding enterprises, companies of a certain scale all possessed the corresponding licenses; however, the majority had not yet established substantive online stores and remained in a wait-and-see stance.

Analysis of the B2C business model reveals that China’s pharmaceutical e-commerce B2C transaction volumes in recent years were as follows: RMB 4.2 billion in 2013, RMB 7.6 billion in 2014, and RMB 15.2 billion in 2015. In 2015, the growth rate of China’s pharmaceutical e-commerce B2C transaction volume approached 100%, exceeding the overall growth rate of the online shopping market. Among the top 20 pharmaceutical e-commerce B2C platforms, the average monthly unique visitors on PC terminals reached 20 million in 2015. Beijing, Shanghai, Guangzhou, and Shenzhen ranked highly among the top 10 cities in the pharmacy online shopping index.

Data from Tmall Pharmacy shows that it has obtained the Internet Drug Information Service Qualification Certificate. Among the 388 enterprises holding the Class C Certificate for Online Drug Trading, 230 have opened official flagship stores on Tmall Pharmacy, accounting for 59.28%. In 2015, Tmall Pharmacy maintained its popularity, with transaction volume continuing to grow at a rapid pace, doubling compared to the previous year. Medical devices, over-the-counter (OTC) drugs, health care products, and medical services were the main product categories sold on Tmall Pharmacy. In terms of sales structure, medical devices accounted for 59.81%, followed by OTC drugs at 24.42%. Among the top 10 pharmaceutical companies, the leading enterprises largely corresponded to the top 10 best-selling products. The Top 10 B2C Official Flagship Stores on Tmall Pharmacy in 2015 were led by Kang Aiduo, Jianyi.com, and No. 1 Pharmacy.



O2OIt is pharmaceutical e-commerce B2C.Mainstream Business Models

An analysis of O2O business models reveals that the dominant model is the O2O model adopted by B2C pharmaceutical e-commerce enterprises, which offers advantages in supply chain, pricing power, and brand recognition. The second most common model is the self-built logistics platform O2O model, which boasts higher efficiency in pharmaceutical delivery. However, a drawback of this model is the need for technical integration with offline pharmacies.

“Where our customers are, we are. When customers were offline, we opened physical stores.” Long Yan stated, “Later, as customers moved online, we established an online presence. Subsequently, as customers stayed at home, we delivered medicines and products directly to their doorsteps, engaging with them through internet-based interactions. The future lies in seamless omnichannel sales or retail experiences. Whether via PC websites, mobile platforms, apps, or WeChat, and whether through O2O or B2C models, enterprises must choose and strategically position themselves according to their specific circumstances. Only then can they remain invincible in future competition.”