China’s e-commerce titan Alibaba Group announced today that it has agreed to transfer the operations of Tmall online pharmacy business to Alibaba Health Information Technology [Alijk.com], the Hong Kong-listed health affiliate of the company, in exchange for the newly issued shares and convertible bonds of the latter. The deal is expected to be finalized by the third quarter of this year, according to the company.
Alibaba Group currently owns a 38.1% stake in Alibaba Health, formerly CITIC 21CN which is a licensed online drug seller with a vast pool of pharmaceutical product data. Alibaba Group and Yunfeng Capital, a venture capital fund co-founded by Alibaba chairman Jack Ma, acquired a combined 54.3% stake in CITIC 21CN in January last year, with the company renamed Alibaba Health that August.
Upon completion of the deal, Alibaba Group’s effective equity ownership of Alibaba Health will increase to about 53%, making the company a consolidated subsidiary of Alibaba Group.
Alibaba’s Tmall marketplace has attracted overall 186 licensed online pharmaceutical retailers, selling OTC drugs, medical instruments, contact lenses and other health care products. Tmall’s online pharmaceutical business generated sales of RMB4.74 billion (around US$763 million) in the year ending March 2015, the company disclosed.
Customers still can purchase pharmaceutical products on Tmall, but Alibaba Health will be the new operator of the business.
According to their statement, Alibaba hopes to better integrate health resources in a bid to construct an connected ecosystem of healthcare services.
Alibaba has made several major moves into the health care market with the launch of a Future Hospital plan, the addition of a hospital appointments feature to Alipay, and the the launch of prescription purchase app.
Image credit: Alibaba Health
Editing by Mike Cormack (@bucketoftongues)