Chinese online chemist 111 looks beyond lacklustre Nasdaq debut to strong growth at wholesale unit

Three years after selling an online supermarket to retail giant Walmart, founders Gang Yu and Junling Liu rang the bell on Wednesday at the Nasdaq exchange for the market debut of their latest baby, 111 Inc., amid a gathering storm for tech stocks on a variety of earnings and regulatory concerns.

Shanghai-based 111 operates an online retail pharmacy, 1 Drugstore, an online health consultation platform for consumers, 1 Clinic, and a wholesale pharmacy, 1 Drug Mall. The company’s ADRs closed slightly below the US$14 offer price on the first day of trading, after 111 raised a modest US$130 million in its IPO, which priced at the lower end of a US$14-US$16 range.

111’s lacklustre debut follows a bumpy ride for other much-anticipated offerings from Chinese tech companies. Smartphone maker Xiaomi dropped 1.2 per cent on its Hong Kong trading debut in July, while e-commerce upstart Pinduoduo has seen its shares whipsaw since a July Nasdaq debut.

 “With the recent global market turmoil in the past few weeks and in emerging markets, we understand that it is not the perfect time [for a market debut]. We were focused on getting the IPO done and less concerned about pricing at this point,” said Weihao Xu, chief financial officer at 111, in a phone call from New York.

111 has longer term ambitions though, aiming to build the biggest online-to-offline health care platform in China to tap a booming market driven by the country’s ageing population and health care infrastructure that is unable to cope with demand. China's general health and wellness market was estimated to be worth 9.8 trillion yuan (US$1.5 trillion) in 2017, and is forecast to reach 17.4 trillion yuan (US$2.6 trillion) in 2022 at an annual growth rate of 12.1 per cent, according to consultants Frost & Sullivan.