Competition to Alibaba as Shanghai Pharma, Ji Jun announce push into China online drug sales

One of the top drug distributors in China, Shanghai Pharmaceuticals, said it would start a separate online unit that would join e-commerce players like Alibaba in a push to expand Internet sales.

Shanghai Pharmaceuticals said in a notice posted in Chinese on the Shanghai Stock Exchange that it would join with Ji Jun, the majority owner of direct-to-patient drug dispensing platform Zhongxie Pharma on the venture. Shanghai Pharmaceuticals is also listed on the Hong Kong Exchange.

The two firms will invest 70 million and 30 million yuan ($4.9 million), Shanghai and Ji Jun respectively, to form the Shanghai Pharma Big Health Online Company.

Shanghai will have the majority 70% stake in the joint venture. Currently, Ji Jun owns 78% of Zhongxie Pharma, while Shanghai Pharma owns the rest.

Shanghai Pharma now focuses on direct-to-patient distribution and tends to sell at the high-end, having won exclusive distribution rights of export drugs.

China's FDA said in mid-January that online drug sales would be allowed as soon as it could draw up regulations.

That was a potential boon to Alibaba, which invested $1.6 billion in Guangzhou Baiyunshan Pharmaceutical to help the firm expand distribution to boost its presence online, through various companies associated with Alibaba's search engine.

Still, there's no sign of the CFDA rules yet.

- here's the HKEx link to Shanghai Pharma