Alibaba injects pharmacy business into HK-listed affiliate

Shanghai

CHINESE e-commerce firm Alibaba Group Holding is injecting its online pharmacy operations into a Hong Kong-listed affiliate in a US$2.5 billion deal to consolidate its healthcare enterprise and ride a boom in online health-related business. Shares in the affiliate, Alibaba Health Information Technology, nearly doubled early on Wednesday after the announcement, resuming trading after being suspended since March 20. Under the deal, Alibaba Health will buy 100 per cent of the online pharmacy operations from a wholly owned subsidiary of Alibaba Group and another investor for HK$19.45 billion (S$3.41 billion). It will issue shares and bonds to fund the purchase, with the shares priced at HK$5.28 each.

Online pharmacies are currently limited to selling over-the-counter medicines and healthcare products such as cough remedies and vitamin tablets, but China is gearing up to open the over 1 trillion yuan (S$219 billion) prescription drug market to online pharmacy operators like Alibaba Health, JD.com and Wal-Mart Stores Inc. Beijing hopes to boost retail drug sales at pharmacy chains and online, and wrestle some sales away from hospitals, which currently control around three-quarters of drug sales.