China to Expand E-commerce Business to Online Pharmaceuticals

China to Expand E-commerce Business to Online PharmaceuticalsE-commerce businesses in China are expanding into the pharmaceuticals as the government allows prescription drugs sales away from hospitals and putting them into retail outlets. Online pharmacy businesses grew from virtually nothing to a 7 billion yuan business in 2014, showing a 3 percent market share of all retail medicine sales in China.

The business boon is only a prelude to an explosive growth that will provided that authorities will allow online pharmacies to start selling prescription drugs, thus allowing patients to choose between the online pharmacies of hospitals when purchasing. So far all sales are mainly over the counter medicine with slim margins.a one of the key themes in the ongoing reforms of the medical system is to wean off hospitals on the revenues that comes from drug sales. Once purchasing prescribed medicines online patients can now choose whether to buy medication in hospitals or at retail pharmacies. E-pharmacy business is changing so fast in China due to newer regulations and different competitors as Alibaba and Tmall enter the business.

Alibaba recently scrapped its plan to merge its online pharmacy business with its health subsidiary as their plans to operate the country’s medical tracking system drew the ire of brick and mortar pharmacies. Gaining access to sell prescriptions is the key for online pharmacies working with hospitals and local governments to do trial programs that allow patients to buy medication online using a doctor’s prescription. While these trials extend medical insurance to allow online purchases which is an important incentive for patients in buying online. Although analysts are optimistic as the country’s social security system still consist of fragmented jurisdictions thus creating discrepancies in the policies.

Online pharmacy businesses will grow, but it will depend on how fast regulations on separation between prescribing and dispensing. As of now hospitals are still asking for money coming from drug sales, but once the government says stop the industry will rapidly transform.

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