Alibaba Health acquires 25% stake of Guizhou Ensure Chain

Ali Health invests more in China’s pharmaceutical amidst intensifying competition.

Alibaba Xixi Era. Image credit to leighklotz.

Alibaba Health Information Technology Ltd (Ali Health) has acquired 14.52% of Guizhou Ensure Chain Pharmacy Company Limited for a consideration of CNY421.8 million ($61.3 million).

The transaction will see Ali Health invest US$ 58.7 million in the pharmacy for 25% of stake. Guizhou Ensure Chain owns over 1,000 pharmacies across China.

Hong Kong-listed Ali Health offers technology and services related to product tracking, intelligent medicine, and pharmaceutical e-commerce.

The acquisition will see Alibaba Health work with Guizhou Ensure Chain to explore and expand the online-to-offline (O2O) retail model in China’s healthcare sector. In a media release, Alibaba Health claimed this move will enhance the accessibility and affordability of health care for a projected 1 billion people.

Reuters reported in May of Alibaba’s $1.4b deal of selling its online pharmacy business to Ali Health, a move to consolidate overlapping businesses to better capture a rapid-growing healthcare technology industry in China.

China’s traditional healthcare infrastructure is facing difficulties in supporting the demands of its large ageing society. This has driven investor interest in healthcare technologies that can augment patient experiences.

IQVIA, a health-care information firm, revealed that China’s national pharmaceutical market in 2017 was worth $122.6b – the second largest globally – and is forecast to grow to between $145b to $175b by 2022.

Alibaba’s archrival Tencent is also long in the game. Having started WeChat Intelligent Healthcare (微信智慧医疗) in 2014 to allow users to have a seamless experience in making medical appointments in China’s hospitals, it has also boosted its own healthcare investments and built up its medical services ecosystem.

KrASIA reported Tencent’s move to merge its medtech investees in order to establish an O2O medical network, which saw Tencent Doctorwork and Trusted Doctor merged to become China’s biggest online healthcare platform. Other major players in China’s healthcare technology space are Ping An Good Doctor, and Medlinker.

Editor: Shiwen Yap, Ben Jiang