Alibaba Group Holding Ltd, the Chinese e-commerce giant, has dropped the plans to merge its pharmacy business with a Hong-Kong-listed affiliate. Alibaba has to drop the plans due to regulatory uncertainties over the deal and broader healthcare industry in China.
China has been launching a raft of new regulations as it tries to overhaul its healthcare market, creating sometimes a complex business environment for the hospital operators, drug firms and medical device companies targeting an overall healthcare bill estimated to hit $1.3 trillion by 2020.
In April last year, Alibaba said it wanted to inject its pharmacy operations into Alibaba Health in a $2.5 billion deal to consolidate its healthcare enterprise and ride a boom in online health-related business.
However, regulators have grown increasingly cautious about the sale of online drugs, while Alibaba Health itself has come under fire for its role operating a government-linked drug tracking platform.
China’s drug watchdog suspended the platform in February after an outcry by domestic pharmacy chains who complained the role gave Alibaba Health an unfair advantage over rivals.
Alibaba will instead look to separately inject a portion of its health food, dietary supplements and nutritional products business into Alibaba Health.