Ali Health sees net loss for six months to September jump 272 per cent to HK$125.56 million

Company in investment mode as it expands internet-based medical services network

PUBLISHED : Tuesday, 24 November, 2015, 8:26pm
UPDATED : Wednesday, 25 November, 2015, 12:26am

Alibaba Health Information Technology (Ali Health), which recorded a wider interim net loss for the six months to the end of September, plans to expand its fledgling internet-based medical services network to meet growing demand for private health care operations in mainland China.

Chief executive Wang Lei said pilot testing of the company’s medical services network had started in the interim period, following government health care reform initiatives that encouraged private investment.

“The group will continue to build an internet-based tiered medical services network, with family doctors as the main entry point and supported by telemedicine services,” Wang said in a filing with the Hong Kong stock exchange late on Monday.

A Deloitte report said public hospitals remain the “dominant care purveyor” on the mainland, where health care spending is forecast to reach US$892 billion in 2018 from US$511.3 billion in 2013.

It said the mainland had a large health care demand gap due to an ageing population, growing urbanisation, proliferating lifestyle diseases, rapidly increasing consumer wealth and advances in universal health care insurance coverage.

Drugs will be delivered from the nearby pharmacies after users place orders online
Tsang Chi, HSBC

Ali Health says its medical services network uses internet technologies and so-called big data analytical capabilities to boost efficiency and improve care while connecting doctors, pharmaceutical companies and third-party service providers with patients.

That new business segment for Ali Health would further develop the extensive online-to-offline initiatives of parent Alibaba, the world’s largest e-commerce services company.

Last month, Hangzhou-based Alibaba announced a plan to integrate its online pharmacy platform with traditional brick-and-mortar pharmacies through Ali Health.

“Drugs will be delivered from the nearby pharmacies after users place orders online,” Tsang Chi, the head of Asia-Pacific internet research at HSBC, said in a report. “Pharmacies will direct shoppers to purchase online if the local stores have insufficient inventory.”

Tsang said those pharmacies could also perform certain clinical functions through the use of remote diagnosis in the stores. In addition, users could seek independent health advice on Ali Health.

While the prospects for those activities appear rosy, Ali Health remains challenged with turning a profit as it continues in investment mode.

Its net loss in the six months to September jumped 272 per cent to HK$125.56 million from HK$33.75 million in the same period last year.

Ali Health attributed that result to increased operating costs, led by HK$58.52 million in sales and marketing expenses , as well as HK$45.15 million in product development spending.

Total revenue increased 14.6 per cent to HK$21.37 million, up from HK$18.65 million.

The main business of Ali Health at present is its product identification, authentication and tracking system (piats) for medical and health care institutions on the mainland. Its piats operation is also used for food and beverages, cosmetics and agricultural produce.

In April, parent Alibaba agreed to transfer the online pharmacy business of its Tmall retail platform to Ali Health.