SINGAPORE--Guangzhou Baiyunshan Pharmaceutical plans to raise RMB10 billion ($1.6 billion) to fund its research and development programs and expand product distribution, banking on support from Yunfeng, a private equity firm co-founded by Jack Ma, chairman and founder of the Alibaba Group ($BABA).
Ma, chairman of Alibaba, has agreed to work with Baiyunshan to boost its presence in the profitable Chinese online pharma market through a private placement of RMB500 million. Baiyunshan is the first manufacturer of the generic Viagra (sildenafil citrate) in China--known as "Golden Spear."
The firm said it is is leading the pack in the online pharma market with its own online platform for marketing and sales of products and more than 1 million registered members.
Online stores for other brands under Baiyunshan have been set up through T-mall, an e-commerce platform owned by Alibaba, according to a company spokesman.
According to Baiyunshan, the online drug market was worth RMB4.3 billion in 2013 and that is only the tip of the iceberg in the medicine market.
"It's a long way below the U.S. level of around 30%. So there's plenty of room to grow," Baiyunshan said in an email.
Alibaba is estimated by analysts to control 40% of the Chinese online pharma market already. The e-commerce giant bought an internet drug platform CITIC 21CN last year in collaboration with Yunfeng, which was renamed Alibaba Health Information Technology.
Yunfeng, in an emailed statement, says healthcare is one of the crucial areas of investment for the firm.
Baiyunshan plans to utilize at least RMB1 billion to develop a medical logistics system, to build an e-commerce platform for online pharmaceutical sales and to invest in mergers and acquisitions.
Other investors include China Life Insurance with RMB2.5 billion, Guangzhou Pharmaceutical Holdings and Guangzhou state assets development body.
The Chinese online pharma market still holds a lot of potential for growth and expansion, especially with reports of China FDA allowing online prescription drug sales as soon as this month, opening up huge market opportunities for Chinese drugmakers.
Baiyunshan is expected to be successful in strengthening its presence and operations in the online pharmaceutical market with help from large investments and change in regulations from the Chinese government.
- visit Baiyunshan's website (in Chinese)