Chinese e-commerce titan Alibaba Group Holding will inject its online-pharmacy business into the company’s Hong Kong-listed healthcare arm in a HK $ 19.4 billion deal($ 2.5 billion), as the group seeks new opportunities in China’s fast growing healthcare sector.
Alibaba Health Information Technology will issue shares and convertible bonds to acquire an online transaction platform for web pharmacies on Tmall, Alibaba’s business-to-consumer website. Alibaba Group will own almost 56% of Alibaba Health when the bonds are fully converted, it said in a statement today. Currently it has a 38% stake.
Alibaba Health will issue shares at HK$ 5.28. The conversion price will be HK $5.8 per share.
After the deal, Alibaba health will be better positioned to enter the online-prescription drugs market, according to the statement. Pharmacies on Tmall currently sell over-the-counter medicines, contact lenses, medical devices and other products. But the government in Beijing is widely expected to hand out licenses allowing sales of prescription drugs online.
Prescription-drug spending in China is expected to reach $120 per capita in 2018 from about $ 70 in 2013, according to a report from IMS Health Institute for Informatics. The country’s total healthcare spending will grow from $ 357 billion in 2011 to $ 1 trillion in 2020, projected McKinsey& Co.
Alibaba Health is already testing a smartphone app that allows customers to quickly fill prescriptions. Using their smartphone cameras, customers can upload photos of prescriptions and check availability and prices at nearby pharmacies.
Alibaba is also eyeing other healthcare opportunities. The group’s financial payment affiliate Alipay seeks to considerably shorten appointment time by letting users book appointments at selected hospitals through a smartphone app. Patients could also make payments and receive diagnostic results using their smartphones.
