JD.com to build online pharmacy with drugmaker

A man walks past an adevertisement for JD.com in Nanjing, capital of East China's Jiangsu province on June 12, 2013.[Zhen Huai / Asianewsphoto]

Chinese e-commerce giant JD.com Inc has tied up with domestic drugmaker Shanghai Pharmaceuticals Holding Co Ltd to develop its online healthcare business, according to a joint statement released on Sunday evening.

According to it, a strategic cooperation agreement has been signed by the two parties to seize the potential opportunities in the market and built comprehensive strategic partnership in terms of make business strategy, operate investment and manage the new online pharmacy platform.

"The move reflects a growing rivalry between Chinese e-commerce firms over China's fast-growing online healthcare market, with technology seen as a potential cure for a sector that is bogged down by high prices, snarling hospital queues and frequent allegations of corruption," said Reuters.

Last week, the giant's rival Alibaba Group Holding Ltd said it joined forces with US drugmaker Merck & Co Inc last week to explore developing online health services such as warehousing logistics and health data analysis.

"Contributing by JD's logistics system that covers nearly 2,000 regions and counties in the country, the new platform will explore a new cooperation method to reduce cost and optimize distribution channels within the market," said JD.com in the statement.

"The government has recently announced a series of policies to encourage the development of online pharmacy and we expect this area to be a huge market opportunity," Shanghai Pharma said in a filing to the Hong Kong stock exchange.

China is a magnet for drugmakers, medical device firms and hospital operators looking to tap the world's second-biggest pharmaceutical market, where spending is set to hit as much as $185 billion by 2018, according to estimates from IMS Health.

Shanghai Pharma added a note of caution, reflecting wider concern over regulation of the sector: "China's online drug market is still at an early stage, and there are still some uncertainties around policies governing this sector," it said.