(Yicai) July 2 -- Meituan, JD.com, Dingdang Kuaiyao and other Chinese e-commerce platforms are all expecting to gain after many Chinese cities, including Beijing and Shanghai, started to allow holders of individual medical insurance to buy non-prescription medicines online this week, much earlier than had been expected, market insiders said.

“We thought the online payment for drugs using medical insurance accounts would be available around 2026, and did not expect it to be launched so quickly,” said Shao Qing, chief executive officer of healthcare consultancy firm Beijing Yaofuneng Technology.

“Once the online medicine payment scheme is fully implemented, it will revolutionize how drugs are retailed,” said Li Junguo, vice president of Sinohealth. Online-to-offline sales currently contribute about 10 percent of all medicine sales, but this could reach 50 percent once the program is made fully available.

Between CNY50 billion (USD6.8 billion) and CNY60 billion worth of drugs are likely to be shifted through the online-to-offline model this year, Shao said. And this figure could more than quadruple to reach CNY240 billion once the scheme is fully rolled out.

“Online sales of drugs have the lowest overheads and the resulting cheap prices not only benefit ordinary people, but also help the medical insurance fund to control costs,” said a market insider who specializes in medical policies.

The Chinese medical insurance authority is taking a tough stance on the high drug prices charged by pharmacies and is reining in spending on medicines. Just recently the National Healthcare Security Administration launched a price comparison function for brick-and-mortar pharmacies using online medicine prices as the benchmark to eliminate price differentials between provinces.

Brick-and-mortar pharmacies all knew that difficult times were ahead once they heard that Shenzhen was piloting the program, Shao said.

The healthy profit margins of brick-and-mortar drugstores have been squeezed in the past five years by the country’s medical bulk buy program, which slashed prices, and by e-commerce, which lured away customers. Several leading drugstore chains such as Yixintang Pharmaceutical Group and ShuYu Civilian Pharmacy Corp. encountered turning points in their business performances last year.

Editor: Kim Taylor