After a 15-day share trade suspension, Hong Kong-listed Ali Health Information Technology announced on April 15 that it will acquire online pharmacy assets from its parent company Alibaba Group Holding, the largest e-commerce operator in China.
Ali Health will issue new shares and convertible bonds to Alibaba under the terms of the deal, which is estimated at about HK$19.4 billion (US$2.5 billion).
With the acquisition, Alibaba's stake in Ali Health will increase from 38% to 53%, Shanghai's China Business News reported. Ali Health will also sell convertible bonds to Alibaba, which will further increase the parent company's share to 54.6% if they are exchanged for common shares, the paper said.
As a result, the report said, Ali Health is expected to become the major growth driver of Alibaba's online pharmacy business.
Following the announcement of the acquisition, shares of Ali Health rose about 77% to HK$12 (US$1.54) in early trading on the Hong Kong Stock Exchange April 15, and the stock ended up 80.83% at HK$12.26 (US$1.57) at close of trade.
The paper said the online pharmacy assets Ali Health will acquire are held under Alibaba's TMall's pharmacy marketplace and include 186 online-licensed pharmacies that sell non-prescription medicines, medical equipment, contact lenses and health food supplements.
In the period March 2014 to March 2015, TMall Pharmacy posted revenues of 4.7 billion yuan (US$758 million), which helped to boost the value of the operations in the acquisition deal, the paper said.
In addition, the pharmacy launched an express delivery service in, Beijing, Shanghai and Hangzhou in February, allowing consumers to obtain medicine from their nearest bricks-and-mortar drug store within three hours of placing an online order. The service has boosted the value of the pharmacy's operations, the report said.
The 186 online pharmacies that will be transferred in the acquisition deal have Type C certification under China's internet and drug transaction services qualification system, the report said. This will help Ali Health set up a comprehensive distribution network and enhance its efforts to build a cloud computing technology-based medical services platform, according to the report.
Alibaba chief operating officer Zhang Yong told the paper that his group wants to take advantage of cloud computing technology to improve medical services in China.
According to the report, Alibaba is aiming to set up a system, using cloud computing technology that will allow interaction between patients and doctors. Patients will be able to seek advice and doctors will be able to issue prescriptions that can be filled via the group's medical services platform, the report said.
There is much room for growth in China's online medical services if the country lifts its tight controls on that line of business, the paper said.
In the United States, health costs account for about 15% of the country's gross domestic product, but in China with a population of 1.3 billion, the ratio is between 5% and 6%, the report said.
Apart from Alibaba, other two online business giants–Baidu and Tencent–are eyeing the huge growth potential of China's online pharmacy business, the report said.
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20150419000011&cid=1102
Ali Health will issue new shares and convertible bonds to Alibaba under the terms of the deal, which is estimated at about HK$19.4 billion (US$2.5 billion).
With the acquisition, Alibaba's stake in Ali Health will increase from 38% to 53%, Shanghai's China Business News reported. Ali Health will also sell convertible bonds to Alibaba, which will further increase the parent company's share to 54.6% if they are exchanged for common shares, the paper said.
As a result, the report said, Ali Health is expected to become the major growth driver of Alibaba's online pharmacy business.
Following the announcement of the acquisition, shares of Ali Health rose about 77% to HK$12 (US$1.54) in early trading on the Hong Kong Stock Exchange April 15, and the stock ended up 80.83% at HK$12.26 (US$1.57) at close of trade.
The paper said the online pharmacy assets Ali Health will acquire are held under Alibaba's TMall's pharmacy marketplace and include 186 online-licensed pharmacies that sell non-prescription medicines, medical equipment, contact lenses and health food supplements.
In the period March 2014 to March 2015, TMall Pharmacy posted revenues of 4.7 billion yuan (US$758 million), which helped to boost the value of the operations in the acquisition deal, the paper said.
In addition, the pharmacy launched an express delivery service in, Beijing, Shanghai and Hangzhou in February, allowing consumers to obtain medicine from their nearest bricks-and-mortar drug store within three hours of placing an online order. The service has boosted the value of the pharmacy's operations, the report said.
The 186 online pharmacies that will be transferred in the acquisition deal have Type C certification under China's internet and drug transaction services qualification system, the report said. This will help Ali Health set up a comprehensive distribution network and enhance its efforts to build a cloud computing technology-based medical services platform, according to the report.
Alibaba chief operating officer Zhang Yong told the paper that his group wants to take advantage of cloud computing technology to improve medical services in China.
According to the report, Alibaba is aiming to set up a system, using cloud computing technology that will allow interaction between patients and doctors. Patients will be able to seek advice and doctors will be able to issue prescriptions that can be filled via the group's medical services platform, the report said.
There is much room for growth in China's online medical services if the country lifts its tight controls on that line of business, the paper said.
In the United States, health costs account for about 15% of the country's gross domestic product, but in China with a population of 1.3 billion, the ratio is between 5% and 6%, the report said.
Apart from Alibaba, other two online business giants–Baidu and Tencent–are eyeing the huge growth potential of China's online pharmacy business, the report said.
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20150419000011&cid=1102
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