(Yicai Global) July 10 -- Even as Shanghai Pharmaceuticals Holding Co. [HK:2607] (Shanghai Pharma) and JD Group announced their strategic cooperation in the medical e-business 'Shanghai Medical Health Cloud,' another large-scale, state-owned pharmaceutical enterprise, China National Pharmaceutical Group Corp. (Sinopharm) is exploring market-oriented reform via provision of medicine e-business services partnered with internet megalith Alibaba Group Holding Ltd. [NYSE:BABA].
The e-business under Sinopharm, yao123.com, recently officially announced completion of its USD18 million (CNY120 million) A-round financing.
Yunfeng Capital and Lang Sheng Investment jointly participated in this funding. Jack Ma and David Yu are the founders of Yunfeng Capital and shareholders of Ali Health [HK:0241].
Sinopharm holds shares of yao123.com through Sinopharm Group Co. [HK:1099]. Sinopharm Group Co also controls the A-share listed companies, China National Accord Medicines Corp. [SHE:000028] and China National Medicines Corp. [SHE:600511].
"In China, a BAT team was to be chosen for the e-business. Through analysis, we finally choose Alibaba because it has mastered 80 percent dataflow of medicine," said Wang Letian, the General Manager of yao123.com to Yicai Global. 'BAT' collectively refers to China's three tech titans of Baidu Inc. [NYSE:BIDU], Alibaba Group Holding Ltd. [NYSE:BABA] and Tencent Holdings Ltd. [HK:0070].
The most important reason for pharmaceutical enterprises to actively ply e-business is that once the government eases online sales of prescription medicines, over 80 percent of their distribution channels will change and the competitive model of pharmaceutical enterprises will re-form, insiders told Yicai Global.
Continuous improvement of 'hospital-medicine separation' in China's medical reform will transform hospital pharmacies from 'profit centers' to 'cost centers.' Thus, instituting online sales of prescription medicine is imperative, insiders have said.
"Sinopharm sells medicines worth USD45 billion (CNY300 billion) every year, encompassing the various levels of hospitals and retail drugstores. We acknowledge the powerful role of Sinopharm in the medicine circulation field," said Huang Xin, Partner and Managing Director of Yunfeng Capital.
Dataflow is the first resource advantage the e-business leviathan will bring to the traditional pharmaceutical enterprise's e-business services. Yunfeng Capital may cooperate with yao123.com through the Tmall Medicine Store of Ali Health in future dataflow introduction, Huang said.
Pharmaceutical enterprises, moreover, value the 'last mile' logistics resources at which the e-business behemoth excels.
"Yao123.com welcomes strategic partners, and thinks highly of resources and investment experience of strategic investors in medicine field. We chose Yunfeng Capital as partner because of its strategic orientation in the comprehensive health field, including Alibaba and its Double-H (health and happiness) strategy," Wang Letian said.