(Yicai Global) July 26 -- Sanofi is still actively investing in Chinese internet-based hospitals despite the government’s recent crackdown on online medical consultations and drug sales as the French pharmaceutical giant believes they are a means to further the firm’s digital healthcare ambitions, the outgoing president of Sanofi China told Yicai Global recently.

Investing in e-hospitals is a key way for Sanofi to promote its global digital strategy and benefit more patients, said Pius Hornstein, who will become global head of Sanofi's digital division from Aug. 1. China’s booming internet-based healthcare sector gives Sanofi more opportunities to improve disease management of chronically ill patients through digital means.

To rein in ‘barbaric growth’ of the e-healthcare industry and protect the normal operation of hospitals and other brick-and-mortar medical institutions, Chinese authorities laid out a set of new rules for internet-based diagnosis and treatment in March stipulating that doctors must see all patients in person and medicine can only be sold to people with a prescription.

But the new regulations have not curbed Sanofi China's appetite for investing in local internet-based hospitals. The Paris-based company was one of four cornerstone investors in online medical firm ClouDr’s Hong Kong initial public offering in July and its biggest new share subscriber at USD15 million.

Digital hospitals help pharmaceutical companies bypass many of the intermediate links that exist in traditional sales channels so as to boost profitability while promoting business development in remote areas, said Hornstein.

It is important, though, to make them more like medical institutions rather than drug stores as many e-hospitals still follow the old practice of using drugs' high profit margin to drive growth, Hornstein said. Tools such as commercial health insurance, for instance, are needed to propel the development of digital hospitals as they cannot acquire stable patient groups without payment guarantees.

Sanofi China is facing challenges from its investments though because most internet-based hospitals are not yet profitable. "We are looking closely at how to improve patient care while at the same time improving our operational efficiency to achieve a higher return on investment," he added.

Editors: Xu Wei, Kim Taylor