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Alibaba

Alibaba Health revenue soars on robust online pharmacy sales

Higher sales, marketing and product development expenses in the year to March 31 led to a net loss of 207.6 million yuan

PUBLISHED : Wednesday, 17 May, 2017, 5:32pm
UPDATED : Wednesday, 17 May, 2017, 11:09pm

Alibaba Health Information Technology reported a massive 739 per cent year-on-year revenue increase in the 12 months ended March 31 on the back of its pharmaceutical e-commerce business.

Despite the huge rise in turnover, the Hong Kong-listed health care flagship of Alibaba Group – known as Ali Health – made a net loss because of costs in areas such as product development.

The company had swiftly diversified its operations last year after the China Food and Drug Administration ended the mandatory use by drug trading enterprises of its product identification, authentication and tracking system on the mainland.

Revenue in Ali Health’s financial year to March rose to 475.1 million yuan (US$68.9 million) from 56.6 million yuan the previous year, driven by sales through its online retail pharmacy for over-the-counter drugs, according to a regulatory filing on Wednesday.

The company started that business in August after completing its buyout of licensed online drug retailer Guangzhou Wu Qian Nian Pharmaceutical Chain.

The ageing Chinese population, and the progress of government-backed medical reforms have combined to create huge opportunities in China’s health care market
Wang Lei, chief executive, Ali Health

Wang Lei, the chief executive at Ali Health, said the company “quickly established the supporting systems for warehousing, logistics and customer services” that the business required.

Higher sales and marketing, administrative and product development expenses in the year to March led to a wider net loss of 207.6 million yuan, compared with 191.6 million yuan a year earlier.

“The ageing Chinese population, increasing public awareness about health issues and the progressmof government-backed medical reforms have combined to create huge opportunities in China’s pharmaceutical and health care market,” Wang said.

The mainland’s pharmaceutical market is among the world’s fastest growing, and is expected to be the world’s second largest by 2020, according to government data.

Wang said a service agreement with Alibaba’s online retail platform Tmall.com also took effect last August, providing “a steady and fast-growing source of revenue” for Ali Health.

The company provides business development, technical support and other value-added services for merchants selling certain pharmaceutical-related goods on Tmall, such as medical devices, contact lenses and family planning products.

New York-listed e-commerce giant Alibaba owns the South China Morning Post.

Wang said Ali Health also developed a new online service called Ma Shang Fang Xin to assist more than 5,000 enterprises from the drug, food and nutritional supplement industries to track the full life cycle of their products, helping fulfil their regulatory compliance obligations.