Ali Health hit by Hebei FDA order on online OTC drugs

Drug sales

The Hebei branch of the China FDA has ordered Hong Kong-listed Alibaba Health Information Technology (Ali Health) to halt sales of OTC drugs via vendors on its Tmall platform.

The move by the provincial FDA--which Marbridge Consulting says in a blog suggested may be linked to the status of a pilot license to sell OTC products online--represents the latest twist in efforts by Ali Health to get drug and healthcare sales ramped up in China.

Reuters said the request to halt sales by the Hebei FDA came on Friday (May 27) and was an “urgent” directive focused on third parties that use parent Alibaba Group's ($BABA) Tmall to transact between businesses and customers.

“From today please do not sell or dispatch any more of these kinds of products,” Alibaba said in a notice to its clients, according to Reuters.

"The directive does not apply to other medical products," the notice said, according to Marbridge.

At the national level, China FDA has cautiously allowed pilot programs in online drug and related healthcare sales as part of efforts to curb costs for consumers.

But concerns that products cannot be easily tracked and may be counterfeit have delayed efforts to open the sector wider, including for prescription drugs--frustrating online plans in the sector by Ali Health and others.

According to Marbridge, Ali Health-run Tmall Drugstore told merchants selling OTC products to halt sales, citing the Hebei FDA notice.

However, medical device and health product sales can continue, according to Marbridge.

The pilot license to sell OTC drugs online came via a 2014 acquisition by Alibaba Group, Marbridge said.

Last week, Ali Health told China Daily it had a new plan to work with a network of 65 drugstore chains in China, although operational details were not immediately available.

- here's the story Reuters from Shanghai Daily
- and a blog from Marbridge Consulting