What China's Top 20 Listed Pharmaceutical Companies Are Doing Amid the Internet Healthcare Boom

In 2014, A-shares staged a spectacular bull run, capping the year with a 50% surge to lead global equity markets. Focusing on the pharmaceutical sector, VCBeat has compiled a list of the top 20 pharmaceutical companies by market capitalization from the previous year. As traditional giants in China’s pharmaceutical industry, what bold and innovative measures have these companies taken in response to the rapidly evolving landscape of internet healthcare? VCBeat editors have organized this information to provide a clear view of their strategic layouts.

Yunnan Baiyao: Leveraging China Mobile to Forge a New O2O Path

It has become commonplace for traditional enterprises to launch online stores. However, Yunnan Baiyao has demonstrated unique insight by partnering with China Mobile, which is also urgently seeking to adapt to the internet wave. This collaboration not only ensures concerted efforts from both parties but also leverages each other’s extensive resources and technological expertise, thereby facilitating a smoother O2O (Online-to-Offline) transition for Yunnan Baiyao.

 



Yunnan Baiyao’s core business encompasses the research and development, production, and operation of pharmaceutical products (primarily traditional Chinese medicines), as well as the wholesale and retail of outsourced pharmaceuticals.

Both parties will explore new models for complementary advantages and joint development between the pharmaceutical and telecommunications industries in the mobile internet era, such as deepening cooperation on call center projects, providing technical support for Yunnan Baiyao’s initial foray into e-commerce, jointly promoting the construction of warehousing and logistics information systems, and exploring collaboration in areas such as wearable devices and intelligent remote health management.This also aligns with Yunnan Baiyao’s implementation of its “New Baiyao, Big Health” strategy, which aims to provide consumers with O2O health services.

In the field of pharmaceutical e-commerce,The Company Established the Yunnan Baiyao E-Commerce Website, and in November 2014, it announced its intention to promote Qingyitang’s female health and hygiene products through an e-commerce model. In addition to its official B2C platform, the Yunnan Baiyao Wellness Website it established operates stores on Tmall and JD.com, as well as on various third-party platforms such as Taobao Mall and Paipai; all of these “online stores” under the Baiyao brand achieve synchronized data sharing.

In addition to e-commerce, Yunnan Baiyao Qingyitang launched the “Finding Goddesses Who Excel at Managing Household Finances” campaign last year. Leveraging the WeChat platform and an interactive marketing model, the company promoted its brand, enhanced its reputation, and increased user stickiness through consumer engagement.

Hengrui Medicine: Focusing on Core Business, Mining Big Data

Early this year, the Obama administration submitted a budget of up to $215 million for the “Precision Medicine” initiative to the U.S. Congress. Precision medicine has clearly emerged as a new value depression in the future healthcare industry. As a leading player, Hengrui Medicine has begun to await the tailwinds that new internet technologies will bring.

Known as "Mr. Anti-Tumor"Hengrui Medicine boasts robust R&D capabilities in the development of innovative drugs and personalized precision therapy.. Precision medicine, also known as personalized medicine, refers to a customized medical model that designs optimal treatment plans tailored to individual patients based on their genomic information, combined with related internal environmental data such as proteomics and metabolomics, with the aim of maximizing therapeutic efficacy and minimizing side effects. The implementation of personalized treatment is premised on gene sequencing technology,The data generated by gene sequencing relies on comparative analysis powered by big data and cloud computing, positioning Hengrui Medicine to capitalize on new growth opportunities.

In December 2014, a gastric cancer-targeted drug developed by the company was launched; it is currently the only oral formulation among targeted therapies for gastric cancer.

Fosun Pharma: Expanding Its Footprint Across Online and Offline Channels

Investment, acquisitions, and in-house app development... Fosun Healthcare is rapidly expanding its online and offline footprint by leveraging its strong capital strength. In the future, it will make a full-scale push into the vast markets of elderly care and health, while also deepening its presence through channel penetration into lower-tier markets.

Fosun Group, known as the PE of the pharmaceutical industry, has been extensively engaged in investment activities across multiple sectors since 2007.

In February 2008, Fumei Pharmacy obtained the Certificate for Internet Drug Transaction Services, becoming the second pharmaceutical retail chain enterprise in Shanghai to qualify for online drug transactions.In October of the same year, Fumei Drug Guide Network was officially launched.In February 2012, Daoyao.com became one of the first online pharmacies to launch on the Tmall Health Pharmacy platform. In 2014, its drug retail website, together with Huashi Grand Pharmacy’s online retail platform (a subsidiary of Shanghai Pharmaceuticals), was selected as one of Shanghai’s first pilot websites for medical insurance reimbursement.

October 12, 2010Fosun Pharma Makes a Major Move, Acquiring 55% Stake in Beijing Jinxiang Pharmacy for RMB 122 Million, Jinxiang Pharmacy has thus become a pharmaceutical retail chain fully controlled by Fosun Pharma. As one of the earliest pharmaceutical B2C enterprises in China, Jinxiang.com leverages the multi-regional coverage of its offline Jinxiang Pharmacy stores, giving it considerable advantages in brand influence.

In 2012, Jinxiang.com launched the “Jinxiang One-Hour” service in Beijing, promising delivery of 100 medications within one hour to provide consumers with timely care.

June 14, 2013,Jinxiang.com’s Mobile Team Launches the “Buy Medicines on Jinxiang.com” Client App, Strategizing for the Mobile Internet. In 2014, Jinxiang.com stood out among self-operated pharmaceutical B2C platforms with a transaction volume exceeding RMB 120 million. Compared to the share of pharmaceutical transactions on comprehensive B2C platforms such as Tmall, Jinxiang.com’s share in the drug category was particularly prominent, accounting for 70% of the total. This demonstrates that self-operated pharmaceutical B2C platforms exhibit a high degree of vertical specialization and professional expertise in pharmaceutical sales.

October 2014,Fosun Kunzhong, under the Fosun Group, co-invested in Guahaowang., as an early investor in Guahaowang, Fosun established a partnership with Guahaowang. On January 30, 2015, Fosun Pharma decided to transfer its controlling stake in Jinxiang.com to Guahaowang, launching a new O2O model for pharmaceutical e-commerce.Jinxiang.com holds an online pharmaceutical sales license, while Guahao.com possesses offline physician resources; the two are poised to expand their collaboration in areas such as wearable devices, private hospitals, and pharmaceuticals.

In 2015, Fosun Pharma established the Internet Business Development Department, focusing on the innovative expansion of internet healthcare services and their integration with existing business operations.

On August 28, 2013, Fosun Pingyao Investment Management Co., Ltd., a wholly-owned subsidiary of Fosun PharmaOfficially Signed with Beijing Blue Health Communication Technology Co., Ltd. (hereinafter referred to as “Blue Health Communication”), and became a shareholder of Blue Health Communication through capital increase.

Lan Weitong offers a product portfolio of telemedicine software and hardware., successfully established the PLA-wide Telemedicine Information Network and telemedicine system projects in Shuozhou City (Shanxi Province), Anhui Province, Hebei Province, and Hainan Province, accumulating ten years of experience in the construction and operation of telemedicine systems. It currently connects nearly 500 hospitals and leverages a pool of over 4,000 medical experts. Blue Health Connect is not only a provider of telemedicine system solutions but also an operator of third-party telemedicine service platforms.

In November 2013, Fosun invested in the Series A round of Scanadu Scout. On April 29, 2015,Fosun International Participates in Series B Financing of Scanadu Scout. The Scanadu Scout, a device highly favored by Fosun, is a mobile vital signs monitor equipped with an independent operating system and incorporating sensors such as a gyroscope, electrodes, light-emitting diodes (LEDs), an accelerometer, and other components.Users need only place it on their forehead for approximately 10 seconds to monitor physiological indicators such as heart rate, skin surface temperature, blood oxygen saturation, respiratory rate, blood pressure, and emotional fluctuations. The data is then transmitted to a companion app on the user’s smartphone and to the cloud for analysis (see figure below).

Regarding future planning, Fosun has proposed “forming a leading business model that takes the lead in embracing the Internet.” Specifically, this meansEstablish a cloud platform for personal health information and other data to provide targeted personal health and elderly care services, and strengthen the expansion of the emerging internet healthcare industry in second- and third-tier cities in mainland China, including prefecture-level cities and affluent counties and county-level cities.



Shanghai Pharma: “New Branches” Grow on JD.com

New Policies Spawn a New Landscape: Shanghai Pharma’s Opportunity Lies in Reducing the Drug Revenue Ratio, Facilitating the Outflow of Drug Procurement Management and Prescription Drugs from Hospitals to E-commerce Platforms.

Shanghai Pharmaceuticals is one of the few national leaders in China’s pharmaceutical commercial sector, boasting significant network advantages and well-established logistics and capital channels with both upstream and downstream partners.

On May 20, 2014, it was announced that its B2B and O2O e-commerce platform, “Yaoyaohao,” had gone live. On March 9, 2015, Shanghai Pharmaceuticals Holding Co., Ltd. invested RMB 70 million to jointly establish Shanghai Pharmaceuticals Grand Health Cloud Commerce Co., Ltd., holding a 70% equity stake. With direct-to-patient (DTP) delivery of high-end medicines as its entry point, the company is aggressively pursuing a comprehensive internet healthcare strategy. It plans to build three major online platforms (an electronic prescription platform, a drug data platform, and a patient data platform) and a three-tier offline network (professional pharmacies, hospital-cooperative and managed pharmacies, and social retail pharmacies) to provide patients with O2O sales of prescription drugs, health management, and other services. Additionally, the company holds licenses for the Shanghai online medical insurance payment pilot program and for pharmaceutical B2C operations.

On May 17, 2015, Shanghai Pharmaceuticals announced that it had entered into a strategic cooperation framework agreement with Beijing Jingdong Century Trading Co., Ltd. (i.e., JD.com). According to the agreement,The two parties will establish a comprehensive strategic partnership across three dimensions—strategy, capital, and business—to jointly build an online sales platform and offline distribution network for prescription drugs. In the non-prescription drug sector (including OTC medicines, health supplements, and medical devices), they will also forge a comprehensive strategic partnership. Meanwhile, both parties will jointly increase their capital investment in Shanghai Pharmaceutical Health Cloud Commerce Co., Ltd., striving to construct an ecosystem for pharmaceutical e-commerce and mobile healthcare.

Following the launch of Shanghai Pharma’s Sina Weibo accounts, “Shanghai Pharma” and “Shanghai Pharma Youth,” in March 2014, the company’s official WeChat subscription account was formally launched on December 31, 2014, providing a platform for the rapid dissemination of corporate information.

Tasly: Breaking Through Bottlenecks, Launching Multi-Pronged Initiatives

Tasly is actively building its own diversified e-commerce platform. If it can successfully integrate three internal segments, it may foster synergistic resonance among the various platforms.

In September 2013, Tianjin launched a medication service program for outpatients with diabetes covered under special disease management. This initiative enables diabetic patients aged 60 and above to enjoy the convenience of online medication ordering and home delivery, while also benefiting from existing medical insurance reimbursement policies. Tasly plays the role of an information network technology provider and a service provider for medication reservation and distribution.

In December 2014, Wu Naifeng, President of Tasly Holding Group, clearly stated that Tasly would enter the pharmaceutical e-commerce sector.

It is projected that by 2016, five major platforms will be successfully established: the Tasly Huaxia Future E-commerce Platform (online education), the Tasly General Health Tea, Alcohol, and Water Products E-commerce Platform, the Over-the-Counter (OTC) Drug E-commerce Platform, the Prescription Drug (Outpatient Special Needs) E-commerce Platform, and the Anguo Chinese Herbal Medicine Trading E-commerce Platform, among others, which will be completed and launched into operation in succession.

Tasly’s self-operated online store, “Tasly Pharmacy” (http://www.tsldyf.com/), also maintains flagship stores on JD.com and Yihaodian. In addition, the Tasly Great Health Network (http://www.dajiankang.com/) encompasses five major sections: the Deepure Mall, Tasly Pharmacy, Guotai Liquor Mall, Kingstyle Jiayou Rihua Mall, and Tasly Health Management Mall.

In May 2015, Tasly leveraged Microsoft’s reliable products and technologies to establish a new system for precision monitoring, management, and health services that is closely aligned with individual needs. The company’s vision isBuilding a digital platform comprising three segments: front-end, middle-end, and back-end. The back-end, centered on an ERP system supplemented by office automation, forms the foundational infrastructure. The middle-end is Tasly’s e-commerce platform, which integrates operations regardless of the access channel. The front-end utilizes Microsoft Band to monitor users’ physical conditions and provide appropriate recommendations.

On September 20, 2014, the Tianjin Telemedicine Association (TTA) was officially established and convened its inaugural general membership meeting. The association was jointly initiated by seven entities—including Tianjin Pharmaceutical Group, Tianjin Medical University, Tianjin University of Traditional Chinese Medicine, China Telecom Tianjin Branch, the First Teaching Hospital of Tianjin University of Traditional Chinese Medicine, Tasly Group, and Tianjin Bohan Biomedical Technology Co., Ltd.—along with renowned experts and scholars from home and abroad, as well as distinguished representatives of private entrepreneurs from Zhejiang, Fujian, and Tianjin. As the exclusive partner of the American Telemedicine Association (ATA) in China, the Tianjin Telemedicine Association (TTA) will co-host the ATA’s annual conference in China, alongside the China International Telemedicine Technology Exhibition.

Baiyunshan: New and Old Powerhouses Join Forces to Build the “Future”

Guangzhou Pharmaceutical Holdings’ portfolio of over 40,000 SKUs serves as the guarantee for realizing Jack Ma’s vision of “separating prescribing from dispensing,” while its cross-border trade qualifications have long been coveted by Alibaba, which aims to tap into the lucrative overseas shopping market. Looking further ahead, how will Baiyunshan leverage Alibaba’s account ecosystem, mobile platforms, payment and financial solutions, as well as its cloud computing capabilities and big data platform, to build its own “Future Hospital”?

January 13, 2015Baiyunshan and AliHealth Sign Strategic Cooperation Letter of Intent, integrate technical resources to jointly explore the O2O pharmaceutical sales model, establish in-depth partnerships in areas such as pharmaceutical e-commerce, and leverage Alibaba’s big health data to co-create the “Future Hospital.”

October 2014,Guangzhou Pharmaceutical Group is currently in discussions with Nobel Laureate in Physics Dr. George Smoot regarding collaboration in the health industry, including medical devices, with plans to develop wearable and implantable medical equipment.. The collaboration between the two parties has also drawn significant attention from the municipal party committee and municipal government.

Joint Venture—Guangzhou Baiyunshan and Hutchison Whampoa Traditional Chinese Medicine Co., Ltd. has also actively embraced the Internet, innovating its marketing model: in 2014,Baiyunshan and Huangpu Established a Virtual E-Commerce DepartmentTo date, Baiyunshan and Huangpu has established multiple self-operated platforms: the Tmall Baiyunshan and Huangpu Home Specialty Store, the JD.com Baiyunshan and Huangpu Nutrition and Health Specialty Store, the Amazon Guangzhou Pharmaceutical Baiyunshan Big Health Flagship Store, and the WeChat Baiyunshan and Huangpu Traditional Chinese Medicine Health and Wellness Store. Recently, Baiyunshan and Huangpu has innovated its micro-commerce model, injecting new vitality into e-commerce marketing.

In September 2014, Baiyunshan launched two functional beverages, Baiyunshan Jinge and Baiyunshan Tiema. To prioritize the promotion of Baiyunshan Jinge, Guangzhou Baiyunshan Pharmaceutical General Factory signed a Strategic Cooperation Agreement with Liaoning Chengda Fangyuan Chain, one of China’s largest pharmacy chains, following earlier agreements with national pharmaceutical retail giants Neptunus Drugstore and Dashenlin. Additionally, the company expanded into e-commerce channels by partnering with the well-known online retailer “Yihaodian” to accelerate the sales and promotion of Jinge.

May 14, 2015GPH Baiyunshan Group, Jointown Pharmaceutical Group, and SBL Sign Agreement in Shanghai to Jointly Invest in and Develop Pharmaceutical Cloud Commerce for the Mobile Internet Era, and collaborate on the implementation of specific initiatives under Guangzhou Pharmaceutical’s “Baiyunshan Tiema,” including cloud channels, cloud terminals, O2O, and micro-entrepreneurship.

September 2014,Developed the iOS version of the “Baiyunshan - Pharmaceutical Information” app (see figure below), through this app, users can access relevant industry news and interact with manufacturers via messages and other means, thereby promoting industry development and facilitating integrated product marketing.



Kangmei Pharmaceutical: Unique Resources, Venturing into “Telemedicine”

Telemedicine is the trend of the future, and Kangmei Pharmaceutical has taken a leading position in the industry by leveraging the advantages of “virtual hospitals.”

Kangmei Pharmaceutical, as the largest producer of traditional Chinese medicine (TCM) decoction pieces in China, is a modern large-scale publicly listed pharmaceutical company built on the foundation of integrated TCM industry chain development, with a primary focus on “Internet +” traditional TCM materials business and “Internet +” big health services. Kangmei Pharmaceutical began laying out its e-commerce strategy to capture market share in 2012, and formally stated in its 2013 financial report that “e-commerce platforms will become the core of our strategy in the future.”

Kangmei successfully obtained its direct selling license in January 2014, enabling an innovative integration of its direct selling business (centered on the “Kangmei Life” brand) with its e-commerce platform, thereby unlocking significant commercial potential. On April 2, 2014, Kangmei Pharmaceutical was awarded the Internet Drug Transaction Service Qualification Certificate by the Guangdong Provincial Food and Drug Administration. On May 7, 2014, the Kangmei Love Health Platform was officially launched. This transition from Kangmei Mall to Kangmei Love marked Kangmei’s strategic shift from a vertical e-commerce model to a platform-based e-commerce model.

“Kangmei Love” Health Cloud Service Platform (http://www.km1818.com/) is a smart health platform integrating the functions of an online pharmacy, health management, and a virtual hospital. The platform innovatively employs a tri-network integration model combining the internet, traditional channels, and terminal retail, consolidating physical health resources from all sectors. Through B2B, B2C, and O2O models, it comprehensively provides high-quality health management products and services to every family and individual in society.

On May 18, 2015, Kangmei Pharmaceutical Co., Ltd., together with its wholly-owned subsidiary Kangmei (Shenzhen) E-Commerce Co., Ltd. (“Kangmei E-Commerce”), Guangdong Kangmeitong Information Service Co., Ltd. (“Kangmeitong”), and Peng Shaoyi, proposed to establish Kangmei Health Cloud Service Co., Ltd. (“Kangmei Health Cloud”). The initiative aims to enhance cloud computing and information service support by introducing professional teams, striving for new breakthroughs and development in areas such as “Internet Plus” smart healthcare, medical information, tumor treatment management, smart elderly care, and online hospitals.

In July 2013, the “Yaocaitong” APP of Kangmei Chinese Medicine Network (www.kmzyw.com.cn/) was officially launched, enabling users to access real-time information on Chinese herbal medicines across China anytime and anywhere. In partnership with professional e-commerce enterprises, Kangmei piloted a “Virtual Pharmacy” in Guangzhou. Several provincial-level traditional Chinese medicine hospitals have been integrated into the Kangmei network platform, allowing the company to directly retrieve electronic prescriptions from these hospitals, centrally dispense and decoct the medications, and deliver them to patients’ homes. Patients can use the “Kangmeitong” APP (i.e., the Kangmei Medical APP) to schedule online consultations and make online payments, with future capabilities for chronic disease management, thereby forming the prototype of a virtual hospital. In addition to the Kangmei Medical APP designed for patients, there is also the Kangmei Doctor APP intended for physicians.

This pilot program will also be expanded to Beijing, Shanghai, Shenzhen, Chengdu, and other cities this year. Furthermore, the company has successively obtained operational licenses for province-wide internet hospitals in Guangdong, Yulin, Guangxi (April 17, 2015), and Qinghai (May 6, 2015). It has also participated in the restructuring of public hospitals in Yulin and Qinghai, securing high-quality medical resources and further deepening its “Virtual Hospital + E-commerce” strategy.

On May 22, 2015, Kangmei Pharmaceutical issued an announcement regarding the signing of a cooperation agreement with the People's Government of Puning City on internet-based medical and health services, taking the lead in launching the “Internet + Telemedicine” initiative.

On March 13, 2015, the Company announced that it had recently received from the Guangdong Provincial Health and Family Planning Commission the “Reply Letter on Kangmei Pharmaceutical’s Establishment of Kangmei Hospital as an Online Hospital to Conduct Telemedicine Services,” approving the establishment of Kangmei Hospital as an online hospital.

Following the approval granted to the Second Provincial People's Hospital in February,Kangmei Hospital also obtained this qualification in March, becoming the first private online hospital in China.Patients can engage in real-time, cross-location doctor-patient communication via web platforms, mobile apps, and other terminals through online chat, telephone calls, and video consultations, thereby remotely addressing inquiries and facilitating remote consultations. Patients with mild or chronic conditions will be spared the hardships of travel and long waiting lines.

A summary of Kangmei Pharmaceutical’s online hospital and e-commerce platforms mainly includes:
☉ Kangmei Hospital Website
☉ Kangmei Mall
☉ Kangmei Traditional Chinese Medicine Website
☉ Kangmei China Traditional Chinese Medicine Material Price Index
☉ Kangmei TCM Network e-Yaogu
☉ Kangmei E-commerce Official Website
☉ Kangmei Official Flagship Store
☉ Kangmei JD Official Flagship Store
☉ Kangmei No. 1 Store Official Flagship Store
☉ Kangmei E-commerce Alibaba Flagship Store
☉ Kangmei Chengxintong

Jointown Pharmaceutical Group: Extensive Piloting, Platform as the Primary Focus

As the first platform-based company to pioneer B2C operations in the pharmaceutical sector, Jointown Pharmaceutical Group has been vigorously disrupting the e-commerce landscape since 2012. Amidst a steady stream of sensational headlines, it has also repeatedly attracted overtures from the aforementioned e-commerce giants. The final outcome was that,“Good Pharmacist”its brand image was rapidly established within two years, gaining a firm foothold in the pharmaceutical distribution sector.

At the 2014 year-end summary meeting, Jiang Zhitao, Vice Chairman of Haoyaoshi under Jointown Pharmaceutical Group (600998), included the development of online hospitals as a key strategic direction for 2015. Meanwhile, Jointown also signed a strategic cooperation agreement with Beijing Zhonghuan Anorectal Hospital this year.Market speculation suggests that Beijing Zhonghuan Anorectal Hospital may become a partner for Haoyaoshi in launching its online hospital.

On May 22, 2015, Jointown Pharmaceutical Group held its annual general meeting of shareholders. Senior executives stated that policies regarding the online sale of prescription drugs were expected to see breakthroughs, and the company was taking multiple measures to strengthen its pharmaceutical e-commerce platform. Liu Baolin, Chairman of the Company, introduced that the company had made significant investments in e-commerce, with investment directions including telemedicine, overseas purchasing, third-party electronic platforms for traditional Chinese medicinal materials, and health record management. Although six or seven teams were engaged in e-commerce operations, there were no notable results yet. He acknowledged that not all initiatives could succeed, noting that achieving success in even one area would be commendable.Liu Zhaonian, Vice Chairman of the Company, introduced that “Haoyaoshi,” the company’s pharmaceutical e-commerce platform, currently mainly sells health supplements, medical devices, and over-the-counter (OTC) drugs online, with OTC drugs accounting for only 10%. These products do not represent the mainstream of pharmaceutical e-commerce, as they can be sold by other e-commerce players as well. Over 80% of the offerings are consistent with those on similar websites, indicating no distinct competitive advantage. Liu Zhaonian stated that for the online sale of prescription drugs, the source of prescriptions and reimbursement for prescription drugs would be the two major pain points hindering development.

Jointown Pharmaceutical Group will further increaseO2O Business Layout: Currently, there are two O2O platforms—"Yaojisong" and "Qumaiyao,"To achieve the goal of “delivering medications to consumers within one hour or even half an hour,” the company has accordingly developed the “Yaojisong” app and the “Qu Mai Yao” app.

Jointown Pharmaceutical Group also built its ownJointown Pharmaceutical E-Commerce Trading Platform, is currently China's most professional online pharmaceutical procurement platform, specializing in drug information queries, pharmaceutical transactions, pharmacy franchising, and medical industry news.Also developed the Jointown Mobile Pharmacy App.。

On January 15, 2015, Haoyaoshi Online Pharmacy, a subsidiary of Jointown Pharmaceutical Group, signed a strategic cooperation agreement with Beijing Zhonghuan Anorectal Hospital in Beijing. The two parties will collaborate on operations, technical support, and the sharing of high-quality resources. This marks the first step for Haoyaoshi in establishing an online hospital, significantly driving the rapid development of the internet healthcare market.

Tongrentang: Focusing on Wellness, Capturing Mindshare

Compared to seeking medical care and purchasing medications, health preservation is a weaker demand. Can online-exclusive offerings and apps enable Tongrentang to successfully relaunch its business on the internet?

Amid the wave of “Internet+”, it continues to innovate.Tongrentang Partners with E-Commerce Platforms to Launch Crowdfunding Campaign for Wellness TeaOn March 18, 2015, Tongrentang announced in Beijing the launch of its first health tea specifically customized for the internet, which would begin crowdfunding pre-sales on JD.com on March 20, followed by sales across all major e-commerce platforms including Tmall, Yihaodian, JD.com, and Amazon.

Furthermore,Tongrentang has developed the WeChat official account “Beijing Tongrentang Health,” the Tongrentang Nanchang Store app, and the “Tongrentang Wellness” app.(A specialized application for medicinal wellness, offering not only seasonal health and wellness knowledge but also information on contraindications and suitable populations for herbal remedies, along with medication reminder alarms.)"Tongrentang Pharmacopoeia" APPetc.

On April 3, 2015, it was reported that Zhang Qingzeng, Deputy General Manager of Tongrentang Group, stated that the number of e-commerce platforms for Tongrentang is also increasing. Currently, Tongrentang has launched on 14 platforms, including Tmall and Yihaodian, with six more e-commerce platforms pending launch. It is expected that the number of e-commerce platforms will expand to 20 in the first half of the year.

The Beijing Tongrentang official website (http://www.tongrentang.com/) lists the following online stores:

Dong-E-E-Jiao: E-Commerce and Direct Sales, an Unconventional Combination

On November 6, 2014, it was reported that the Ministry of Commerce publicly disclosed a statement regarding Dong-E-E-Jiao’s application for direct selling. The company has submitted the relevant materials to the Ministry of Commerce, applied for a direct selling business license, and paid the required security deposit. As a result, Dong-E-E-Jiao is making inroads into the direct selling market, with prospects of realizing an “e-commerce + direct selling” model. Currently,Dong-E-E-Jiao has built its own official e-commerce platform, “Zibu Jiankang Wang.”(http://www.edongeejiao.cn/) and the Tmall platform“Dong-E-E-Jiao Pharmacy Flagship Store”such as e-commerce platforms.

Huadong Medicine: Traditional Chinese Medicine Decoction Services Test Logistics Capabilities

In April 2011, Huadong Medicine established its own B2C pharmaceutical trading website."East China Wulin Pharmacy Mall"；Subsequently, the Tmall Medicine Pavilion was also launched.。

Huadong Medicine has also ventured into e-commerce; since 2013, Huadong Medicine has collaborated with several traditional Chinese medicine hospitals within the province,Provide Traditional Chinese Medicine Decoction ServicesAfter the prescription is filled and payment is completed, patients return home, and the decocted traditional Chinese medicine (TCM) is delivered to their doorstep within 24 hours. Center staff scientifically prepare and decoct the herbs according to the prescription, and the finished products are then delivered to consumers by professional courier services. Initially, Huadong Medicine established its own delivery team of more than a dozen personnel; later, it partnered with postal services to build a “home delivery” logistics system, marking a breakthrough in the intensification of TCM decoction services.

In addition, aHuadong Medicine E-commerce Platform, the platform seamlessly integrates with enterprise internal systems such as ERP, logistics, and finance, and shares data with procurement platforms, suppliers, and medical institutions, thereby optimizing the pharmaceutical supply chain. As of December 2014, Huadong Medicine Business Network had 1,577 registered clients and 2,448 registered suppliers, offering more than 30,000 products spanning categories including Chinese and Western proprietary medicines, ginseng and deer antler medicinal materials, cosmeceuticals, and medical devices.

To date, Huadong Medicine’s current e-commerce system encompasses four major segments: wholesale (B2B), retail (B2C), herbal decoction services, and the health industry.

February 11, 2015,Huadong Medicine’s Health Experience Center and Yueke Medical Aesthetics Clinic OpenThis is a flagship initiative of Huadong Medicine’s broader health and wellness sector, which encompasses a health industry system centered on health experience centers, medical aesthetics, traditional Chinese medicine aroma culture, and day care services. Dedicated to providing health experience services to the general public, it aims to build a practical, comprehensive health platform that seamlessly connects consumers with smart, health-focused industries.

The experience center introduces the most advanced home-based rehabilitation care products and smart devices from both domestic and international markets. These products can collect human health data and upload it to the cloud, enabling real-time health monitoring through backend systems and providing front-end data reports to support consumers’ self-diagnosis.

As part of Huadong Medicine’s “O2O channel” strategy, the “Yuexing Youpin” Health Experience Center has currently opened eight offline experience stores in Hangzhou, Huzhou, Ruian, and other locations, with plans to expand to 25 branches across the province by 2019.

CR Sanjiu: Onlooker
We are currently developing a plan to sell products via e-commerce platforms, have established an e-commerce team, and intend to launch related business operations next year.。

On March 24, 2015, China Resources Sanjiu stated on the interactive platform of Panorama Network on Tuesday that,The Company intends to enter into business collaborations with select e-commerce platforms and currently has no plans to develop its own proprietary platform.. Its core business involves the research and development, manufacturing, and sales of various traditional Chinese medicines and Western pharmaceuticals.

Kelun Pharmaceutical: Onlooker
On May 5, 2015, it was stated on the interactive platform that the affiliated company, Sichuan Kelun Pharmaceutical Trading Co., Ltd., has entered the e-commerce sector to pave the way and accumulate experience for Kelun Pharmaceutical in this field. The development of Kelun Pharmaceutical Trading in the e-commerce sector has limited impact on the Company.The company is monitoring this sector but has no immediate plans to pursue related initiatives.。

Lepu Medical: Accurate Positioning, Building an Ecological Closed Loop

On August 26, 2014, Lepu Medical issued an announcement stating: “The Company intends to use its own funds to jointly invest with Ningbo Meilian Tong Investment Management Center (Limited Partnership), which is to be established together with the core management and technical team of the proposed company, in the form of monetary contributions.”Investment in the Establishment of Beijing Yikang Shiji Technology Co., Ltd.Lepu Medical subscribed to RMB 14 million in registered capital in cash, holding a 70% equity stake; Meiliantong Center subscribed to RMB 6 million in registered capital in cash, holding a 30% equity stake.” Lepu’s New BusinessYikang Century’s positioning is very clear, focusing primarily on wearable medical devices for cardiovascular disease and diabetes.the research and development, sales, and services of, including but not limited to, mobile ECG devices, portable mobile blood glucose meters and test strips, cardiac biomarker mobile accessories and their corresponding test strips, as well as cardiovascular and diabetes health management services and value-added services built upon these products.

August 26, 2014Lepu Medical Announces Investment in Equity of Beijing Jinweijie Technology Development Co., Ltd.Jinweijie is a company primarily engaged in the research, development, production, and service of technological products such as medical emergency call systems, home-based elderly care call systems, and mobile emergency call and positioning systems for public emergencies. Through the acquisition of Jinweijie, Lepu Medical will gradually establish a “Comprehensive Home Healthcare Service Platform” to achieve the following objectives: 1) Build a communication bridge for health management between community physicians and household users; 2) Provide emergency assistance to high-risk elderly patients; 3) Establish personal health records for household users; 4) Offer personalized, value-added healthcare services to special patient groups; 5) Leverage the big data system for household healthcare to provide technical support for the expansion of Lepu’s integrated business operations.

Announcement on the Evening of May 18, 2015: The smartphone-based blood glucose meter independently developed by Beijing Lepu Medical Technology Co., Ltd. (“Lepu Technology”), a wholly-owned subsidiary of the Company, has recently been successfully registered with the Beijing Municipal Food and Drug Administration. This “Poctor880 Blood Glucose Meter” leverages internet technology and cloud computing to connect to smartphones via the audio jack. Used in conjunction with a blood glucose management app, it enables dynamic monitoring of blood glucose levels through smartphone operations. It is primarily intended for the chronic disease management of diabetes, thereby reducing the incidence of complications and alleviating symptoms in diabetic patients.

On March 20, 2015, Lepu Medical released its mobile health strategy in Beijing.Two apps, “Tongxin Butler” and “Heart Failure Management,” will be launched initially., respectively, an online community for patients following stent implantation and an online community for heart failure patients established through intelligent cardiac biomarker detection devices.

Among them, “Tongxin Guanjia” is China’s first rehabilitation management app designed for patients after cardiac stent implantation, featuring multiple modules such as telephone consultation, online consultation, medical lectures, daily postoperative updates, a rehabilitation encyclopedia, and a health marketplace. Currently, there are approximately 500,000 cases of percutaneous coronary intervention (PCI) for coronary heart disease in China, with an annual growth rate of 20%, indicating a substantial potential patient population.

“Heart Failure Management” is the world’s first mobile application dedicated to heart failure management. At its core, Lepu Medical has leveraged internet technology and cloud computing to successfully develop a home-use NT-proBNP testing device that pairs with smartphones. Currently, there are approximately 4.5 million heart failure patients in China, with the number growing rapidly each year, indicating substantial market demand.

It is reported that an expert team composed of many well-known domestic cardiovascular doctors will provide O2O diagnosis and treatment support for these two APPs.

March 18, 2015, Lepu MedicalDisclosed the “Announcement on Investment in Jiangsu Youjiali Health Management Co., Ltd.” and the “Announcement on Investment in Beijing Hushengtang Pharmacy”. Youjiali is the only domestic provider of medical-grade real-time remote ECG monitoring services, possessing 11 million sets of medical-grade ECG monitoring data. It has announced plans to take an equity stake in Jiangsu Youjiali to develop the B2C ECG monitoring market and the market for primary healthcare institutions, thereby securing the core entry point for mobile medical services in remote ECG monitoring. Furthermore, Lepu Medical plans to fully acquire Beijing Hushengtang Pharmacy, which includes Hushengtang’s 11 chain pharmacies and 2 outpatient clinics, as well as the “Internet Drug Transaction Service Qualification Certificate” and “Internet Drug Information Service Qualification Certificate” held by the latter. This move is intended to build an e-commerce platform and constitutes the most critical component of Lepu’s mobile healthcare strategy.

Lepu Medical has continued to pursue an intensive strategy of external expansion, initially establishing a closed-loop ecosystem for comprehensive health management. The company first implemented a co-investment plan management system, forming enterprises together with core personnel of target companies in a “partner” model. Under this framework, it established Beijing Yikang Century, which has developed mobile medical devices such as smartphone-based blood glucose monitors. It acquired Beijing Jinweijie Technology to secure a smart terminal platform for home healthcare services; acquired Beijing Haihetian Technology to obtain the promising heart failure drug levosimendan; took an equity stake in Yalian Baide to gain access to IVD sales channels and third-party testing centers; invested in Lejian Healthcare to obtain qualifications for general practice outpatient services and a third-party medical laboratory; collaborated with Chengdu Shengnuo to secure the promising diabetes drug exenatide; acquired Zhejiang New Donggang to obtain the mature product atorvastatin calcium; and established Shanlan Healthcare Venture Capital Partnership to engage in early-stage project investments. The company’s closed-loop ecosystem, built upon its whole-industry-chain platform, has now taken initial shape.

Guizhou Bailing: A Promising Debut, Backed by Strong Momentum

Guizhou Bailing primarily engages in the production and sales of proprietary Chinese medicines, with a focus on Miao medicine, and has just begun to explore the mobile healthcare sector.

On May 8, 2015, Guizhou Bailing announced that its wholly-owned subsidiary, Guizhou Bailing Traditional Chinese Medicine Diabetes Hospital Co., Ltd., had received the "Notice from the Guizhou Provincial Health and Family Planning Commission on" issued by the Guizhou Provincial Health and Family Planning Commission.Application for Inclusion of Guizhou Bailing Traditional Chinese Medicine Diabetes Hospital as a Pilot Unit for Guizhou Province’s Telemedicine PolicyReply to the Approval》regarding the company'sTelemedicine Strategy: The Company Indicates This Is a Trend, Currently Still in the Planning Stage。

On May 8, 2015, a "Group Strategic Cooperation Agreement" was signed with Yunnan Baiyao Group Traditional Chinese Medicine Resources Co., Ltd. The signing of this agreement by Guizhou Bailing was primarily aimed at promoting its self-developed "Tangning Tongluo" series of products in Yunnan Province.

May 25, 2015The Guizhou Provincial Health and Family Planning Commission, the Company, and Shenzhen Tencent Computer Systems Co., Ltd. signed the "Strategic Cooperation Agreement on 'Internet+ Chronic Disease Medical Services' in Guizhou Province", with a validity period of five years. Guizhou Bailing stated that this collaboration will facilitate the company's deep integration with "Internet Plus" and enable its Traditional Chinese Medicine Diabetes Hospital to provide telemedicine services to a broader patient base. The signing of the agreement will help fully leverage each party's resource advantages, achieving win-win cooperation among the three parties. The Health and Family Planning Commission will play a role in guiding, supervising, and steering the pilot program.The company is primarily responsible for the research and development, manufacturing, clinical testing, and regulatory approval of medications related to chronic diseases, as well as providing telemedicine services to patients., Tencent’s primary role is to assist the Health and Family Planning Commission in establishing Guizhou’s Big Data Center for Chronic Disease Patients and to provide a free software and hardware management system for chronic disease control in Guizhou Province.

On April 3, 2015, the official WeChat platform of Guizhou Bailing was in the debugging phase, pending further improvements.

Overall, apart from Fosun Pharma, which demonstrated foresight by strategically positioning itself in mobile health at an early stage, other pharmaceutical companies only began to explore internet-based initiatives starting in 2013. These efforts became densely concentrated in 2014 and continued to thrive in 2015. However, a few traditional pharmaceutical companies have temporarily refrained from entering the internet space or are still in the planning stages due to factors such as their existing scope of business. Excluding projects that are still under preparation, the implemented initiatives mentioned above are summarized in the table below:

Postscript

As traditional enterprises pivot online, it is not only their products, channels, and target audiences that need to change; more importantly, their mindset must shift. Perhaps big data and cloud computing will redefine the future of the entire pharmaceutical industry. Everyone’s role will evolve from being merely a drug vendor to becoming a provider of healthcare service solutions—shifting from suppliers to service providers. Are pharmaceutical companies ready?

Dear readers, what are your thoughts? We welcome you to share your views and comment actively!

 

Further Reading: Examining the Transformation Models of International Peers:

1.“Global Pharma Giants Reviewed: They Are Aggressively Entering the Internet Healthcare Accelerator”

2.[Review: Pharmaceutical Companies’ Internet Healthcare Strategies Approach a Turning Point]

3.“Detailed Analysis of Internet Healthcare Strategies by Major Pharmaceutical Companies, 2010–2014”