The growth of online pharmaceutical orders in China: “Alibaba Health” heading into the black
The settlement of accounts by the Chinese Alibaba Group’s online pharmaceutical order company “Alibaba Health” was announced in mid-May. In 2014 – 2015, the investment online pharmaceutical information company “CITIC 21cn” and Tmall’s (Alibaba’s B2C mail order site) pharmaceutical division joined together to establish a separate company. It was then listed on the Hong Kong Stock Exchange.
The news site Toutiao has reported the company’s account reports for the fiscal year ending March 2018. Let’s look at the Chinese Online Pharmaceutical market.
Alibaba Health to hit its first current account surplus
The sales of Alibaba Health in the fiscal year ending March 31 2018, were 2.443 billion yuan, a 414.2% increase compared to the previous year. Its operating profit was 653 million yuan, a 248.8% increase compared to the previous year. Its operating losses went down by 47.7% to 109.9 million yuan but combined with its other incomes, Alibaba has secured profits of 8 million yuan, on a reoccurring basis for the first time.
The company’s outsourcing and added value services (no description of contents) exceeded over 30 billion yuan. The revenue from these operations was 2.146 billion yuan, 171 million yuan with sales accounting for the majority at 2.443 billion yuan. The mail order platform is their main source of income.
There are three directly-managed sites, Alibaba Health Daiyakubo, Alibaba Health Kikanten and Alibaba Health Overseas flagship store, with a collective 15 million users per year. Other health-related services have also seen remarkable growth.
The secret for Alibaba Health’s expansion is its business model of a huge, expansive network.
The site isn’t limited to medical institutions, with services such as online examinations and related facilities. With direct sales websites, the opening of online mail order sites and services like patient support and health consultations, the number of individuals and organizations related to the company is remarkable.
The history of Alibaba Health
Prior to Alibaba’s investments, the main task of the mother company “CITIC 21cn” was the management and supervision of Chinese pharmaceuticals over the internet. For over a decade, it has been deeply involved in the online medical and health fields.
Since entering the group, Alibaba has created a pharmaceutical supply chain infrastructure and moved into online mail orders and related services. It has established technical support, outsourcing, added value services, O2O short-term delivery service and more for Tmall’s medicine-related exhibitors.
The Alibaba Group is skilled in the profit structure of online mail orders. You could, therefore, argue that it was just a matter of time before it accomplished this profit growth.
In this way, their strengthened infrastructure will allow them to extend to online medical care and smart medical care.
Their future plans are not limited to online mail orders
According to a financial report, at the end of March 2018, there were 23,000 medical consultants with contracts to work for Alibaba Health, including physicians, pharmacists and nutritionists. The number of health consultations they actually handled reached 50,000 per day. Accessing the service is as simple as opening Alibaba’s “Android Taobao” application on your smartphone and tapping “Wellness”. It has already been used by 28 million people.
In addition, a vaccine service site was opened at the end of 2017. It comprises vaccination points over 100 cities and 1000 locations and guides users to the best facility. They say 200 million people can use it.
In the future, Alibaba will be tackling even bigger plans.
At the end of April 2018, Alibaba announced a plan to provide online medical consultations with the “Alibaba Medical Office” system for companies looking to revolutionize employee health management. It plans to provide functions such as medical examinations to 5 million companies and organizations.
In early May, they announced plans to establish an authoritative medical encyclopedia, the “Medical Big Data Center” in collaboration with organizations such as the Health Mass Platform, Science and Technology Literature Publisher, Beijing University Hospital Tumor division and more.
As for Chinese medical care, even the general hospitals in big cities are lagging behind the pre-modernity which dominates the industry. Major IT companies such as Alibaba are anticipated to be the drivers that signal reform.
“The roles these companies play from the outset are different from those of Japanese online mail order companies. We must understand the situation and follow the lead of online mail orders and pharmaceutical suppliers in China.” (Yusuke Takano, a Chinese trade consultant.)
Here are some other interesting articles you should check out:
・Top 11 Highest-Paying Jobs in America in 2018
・s Amazon Changing the Distribution System of Pharmaceuticals? IT Companies (Apple, Google and MS) Gear Up to Enter the Medical Industry
・4 Habits Of Billionaires Like Bill Gates And Warren Buffett That We Can All Learn From