Source: Baidu

So far, the online pharmaceutical business has not yet been well regulated in China and still faces many challenges and restrictions in its development.

In fact, signs of the growth slowdown have been shown for long. For instance, in Sept. 2015, Jiangxi Renhe Pharmaceuticals Co., Ltd. (Renhe Pharm) announced its plan to offer a private placement, aiming to raise a fund of USD583.97 million (RMB3.90 billion) for its pharmaceutical B2C (business to customer) platform promotion project. However, the company was confronted with many challenges and finally raised a sum far less than expected, despite its repeated adjustment in the private placement plan. Obviously, the investors have been less interested in pharmaceutical E-commerce than before.

The current national policies also placed increasing restrictions on pharmaceutical E-commerce business.

On 28 July, 2016, the State Food and Drug Administration of the People’s Republic of China release the Completion of Pilot Pharmaceutical Retail on Internet Platforms, requiring food and drug administrations of Hebei, Guangdong provinces and Shanghai to terminate the online drug retail on E-commerce platforms like Tmall.com’s pharmaceutical channel, 800Fang.cn and 111.com.cn. This may aim to further improve supervision and regulation on pharmaceutical circulation channels.

In addition, no specific national policies related to online sales of prescription drugs have been issued to date, which has been the largest factor hindering the development of pharmaceutical E-commerce.

According to CCM’s research, the market size of prescription drugs reached around USD179.63 billion (RMB1.20 trillion) in 2015, vs. USD29.95 million (RMB200 billion) of OTC drugs. Yet, the online pharmaceutical platforms are only allowed to offer OTC (over-the-counter) medicines, medical equipment, healthcare products and contraceptives at present.

Besides, the failure to connect with national medical insurance system also restrained the development of pharmaceutical E-commerce.

In 2015, the sales from pharmaceutical E-commerce accounted for a mere 2.9% of the total pharmaceutical sales in the domestic market (vs. 30% of the US pharmaceutical E-commerce in 2013), of which 90% ran in B2B pattern, according to the Ministry of Commerce of the People’s Republic of China.

With increasing access to Internet, more and more consumers are attracted by online shopping given its diversity and convenience. The China Big Data Analysis Report on Pharmaceutical E-commerce Business (2013-2016) showed that Shanghai, Guangdong and Beijing were the top 3 provinces / municipalities by number of online consumers for pharmaceuticals, accounting for a corresponding 15.20%, 14.80% and 11.20% of the total. Meanwhile, most consumers concentrated around Beijing-Tianjin-Hebei Region, Chnagjiang River Delta and Pearl River Delta where are better developed and equipped with complete infrastructure for Internet access and logistics.

Therefore, in the long run, pharmaceutical E-commerce which is still in its initial stage is still of great potential in China, especially the B2C sector, according to analyst CCM. In particular, drugs for chronic diseases and specific medicines are expected to become the leading products in the future market which is now waiting to be further developed by the enterprises.

This article comes from Vitamin China E-News 1609, CCM

About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.

Tag: pharmaceutical

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