China’s largest e-commerce player Alibaba Group Holding Ltd (NYSE:BABA) is having a difficult time due to a recent government decision. As per the reports, the group had decided to explore China’s medical market by launching online sales of prescription drugs; however, the plan backfired when the government halted a drug monitoring system created by Alibaba’s health-care business unit – Alibaba Health Information Technology Ltd.
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This system is primarily owned by FDA China, which uses it as a means to get updated about regulatory, composition, manufacturing and expiration data. As soon as the news about Government’s interruption made it to the media platforms, FDA said that it would terminate the system and make some changes in drug tracking rules.
Ali Health came into existence in 2014 when Yunfeng Capital Ltd and Alibaba bought 54% stake in Citic 21CN, a leading firm that collected and managed pharmaceutical-products data. As a result of this acquisition, Citic 21CN took the charge of Alibaba’s OTC sale of medicines. It also launched a mobile app that puts patients in touch with community hospital representatives and doctors.
It’s one of the many steps taken by Jack Ma and Alibaba to position the retailer as the largest online seller when it comes to online pharmaceutical market in China. As per the reports, the prescription drug sales touched $100 billion mark in 2015. Going forward, it’s likely to grow at a significant rate, which has prompted Alibaba to take a handful of initiatives to become a majority market share holder in the prescription drug market.
Reporters got in touch with Alibaba’s spokesperson Rico Ngai, but he declined to comment on this issue. He referred to Ali Health’s statement, according to which the company will work closely with regulators to resolve this issue and get things back on track as soon as possible. Further details about this matter will be announced at a later date.
