Chinese regulator may put the brakes on all online drug sale pilots

Online sales

China FDA's attempts to allow pilot programs that inch the country closer to online drug sales may come to an abrupt halt as concerns over fakes and tracking systems grow.

A report carried by financial news service Caixin said that the regulator would move to suspend any sales across online shopping platforms. Earlier this week, the Hebei branch of the China FDA ordered Hong Kong-listed Alibaba Health Information Technology (Ali Health) to halt sales of OTC drugs via vendors on its Tmall platform.

Other vendors such as Tencent Holdings may also face pressure--along with pilot programs such as the one approved for Nasdaq-listed Jo-Jo Drugstores that provides a TV loop at an initial 6 stores that allows doctors to consult with patients and write scrips if needed.

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Online prescription drug sales are currently banned in China outside of these pilot efforts.

At the same time, policymakers want to encourage lower cost ways of selling drugs and related medical products as a way to spur competition and cut prices. China FDA however is skittish that opening drug sales widely online could lead to a flood of fakes and poorly made and stored products.

Compounding the problem is the lack of a tracking system for drugs after China FDA suspended the Product Identification, Authentication and Tracking System--known as PIATS--designed by Ali Health after competitors claimed it gave an unfair sales advantage.

China FDA recently put out a notice seeking input from the industry on a new tracking system.

China Radio International (CRI) cited estimates by UBS that online drug sales have the potential to reach RMB 3 trillion ($450 billion) in China.

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