Alibaba’s health care subsidiary announces 1 billion yuan joint venture with six other companies

Ali Health plans to move into online health insurance

PUBLISHED : Friday, 22 April, 2016, 1:19pm
UPDATED : Saturday, 23 April, 2016, 9:19am

Alibaba Health Information Technology, the Hong Kong-listed health care flagship of e-commerce giant Alibaba Group, is entering mainland China’s growing online health insurance market through a new joint venture.

In a regulatory filing made after the close of trading on Thursday, Ali Health said it had agreed to establish an internet health insurance-related operation with six other companies through a venture with a proposed registered capital of 1 billion yuan (HK$1.19 billion).

Ali Health chief executive Wang Lei pointed out in the filing that the company aims “to build an online community where it will connect participants in the health care market of [mainland] China”.

“The company believes that through the joint venture, it will be able to participate in internet health insurance, which is a new and promising business area that will also help to align the interests of the participants in [China’s] health care market,” Wang said.

The proposed venture’s other stake holders included subsidiary Alibaba Health Technology (Beijing), Hong Kong-based China Taiping Insurance Holdings, Alibaba (China) Technology, mainland underwriter Taiping Life Insurance, electronics company Jiangsu Yuwell Technology Development, Shenzhen Baiyeyuan Investment and Shanghai Yunfeng Investment Management, in which Alibaba executive chairman Jack Ma Yun has a 40 per cent shareholding.

The partners have committed to pay their joint venture’s 1 billion yuan capitalisation in cash within 30 days after being granted approval by the China Insurance Regulatory Commission.

According to Ali Health, the central government expects commercial health insurance claims to take up a greater proportion of total health expenditure on the mainland by 2020.

Global consulting firm Accenture has forecast digital insurance sales on the mainland to reach 400 billion yuan in 2018, accounting for 12 per cent of the country’s entire insurance market, estimated to be worth 3 trillion yuan that year.

Data from the Insurance Association of China showed that online insurance premiums grew 260 per cent year on year to 81.6 billion yuan during the first half of last year.

Wang said the internet insurance business currently makes up “a very small proportion of the whole insurance market” on the mainland.

At present, Ali Health’s main business is product identification, authentication and tracking system (PIATS) for medical and health care institutions on the mainland. This operation is also used for food and beverages, cosmetics and agricultural produce.

Hangzhou-based parent Alibaba, which owns the South China Morning Post, agreed last year to transfer its online pharmacy business on Tmall to Ali Heath in exchange for US$2.5 billion worth of newly issued shares and convertible bonds.

That deal was called off after Ali Health failed to obtain the required regulatory approval at the end of March. The company, which posted a HK$101.53 million net loss last year, has not submitted a renewed application.