Chinese health firms to see ‘limited impact’ from possible online drug sales rules

These firms have licences and are involved with self-operated pharmacies. 

There will be a potential regulation of online drug sales, in China, but two online health firms operating in direct drug sales may expect no significant impact from this rule, UOB Kay Hian noted.

The China National Medical Products Administration released an opinion draft on banning third-party platforms’ direct participation in online drug sales, which raised concerns on internet healthcare providers’ pharmaceutical business.

UOB Kay Hian said this would be an issue for pharmaceutical e-commerce companies as they might be banned from doing direct drug sales business or choose between their direct drug sales business and pharmaceutical e-commerce platform business.

However, management of online pharmaceutical companies in China, JD Health and Ali Health, hold valid online drug sales licences, and their online drug sales businesses are based on “self-operated or third-party offline pharmacies.”

This means they are compliant with the potential regulation, which will have a limited impact on internet healthcare firms, UOB Kay Hian also said.

On the other hand, UOB Kay Hian said these firms continue to post slow revenue growth, following the stringent COVID-19 policies in China, which caused inefficient logistics for delivering drugs.