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April 16, 2015

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Alibaba targets rising health care

ALIBABA Health Information Technology Ltd is to integrate its parent Alibaba Group’s online pharmacy business through a HK$19.4 billion (US$2.5 billion) deal to build a platform for sales by online pharmacies.

Alibaba would transfer the business operations of Tmall’s online pharmacy business to Alibaba Health in exchange for new shares and convertible bonds.

Upon the deal completion, Alibaba’s stake in the listed unit will rise from 38 percent to 53 percent.

“Health care will be a strategically important growth area for our ecosystem in the years to come, and we expect this integration will enable Alibaba Group to build a health care ecosystem that can utilize our existing capabilities to provide users with better health care experience,” Alibaba’s Chief Operating Officer Zhang Yong said in a statement yesterday.

Shares of Alibaba Health surged 80.8 percent to HK$12.26 yesterday after it resumed trading in Hong Kong following a suspension since March 23.

Alibaba is extending its influence in finance, film making, digital entertainment and health care as it taps its vast user base and consumer behavioral data accumulated over the years.

Internet companies and other market players are all eying a slice of a health care bill which may hit US$1 trillion by 2020, according to McKinsey & Co.

Started in 2012, Tmall’s online pharmacy business has 186 licensed pharmacy chains selling products totaling around 4.74 billion yuan in the year ended in March. These range from over-the-counter drugs, medical devices, contact lenses and other health care merchandise.

Alibaba Health also plans to enter the online prescription medicine market.




 

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