China pharmacies urge abolition of Alibaba Health drug tracking platform

[February 24, 2016]  SHANGHAI (Reuters) - A group of Chinese pharmacy chains has demanded the abolition of a medicine tracking platform run by Alibaba Health Information Technology, piling further pressure on the firm after China's drug regulator suspended the system on Saturday.

In a joint statement on Wednesday, the 19 firms called for the China Food and Drug Administration (CFDA) to close down the system completely and for Ali Health, an affiliate of e-commerce giant Alibaba Group Holding Ltd, to play no further regulatory role.

"Ali Health getting involved in regulation of pharmaceutical information, both has a bearing on the safety of national data and creates unfair competition," the pharmacy chains said in a statement. Among the 19 are firms like Sinopharm Group Co Ltd's Guoda Drugstore, China Jo Jo Drugstores Inc and Laibaixing Pharmacy Chain.
 

The conflict underlines fissures within China's fragmented drugs market, as well as entrenched opposition to big changes from established firms as Beijing tries to reform the sector. China is a magnet for drugmakers, hospital operators and medical device firms targeting a wider healthcare bill estimated to hit $1.3 trillion by 2020.

A spokesman for Alibaba, which handles press relations for Ali Health, declined to comment on Wednesday. Ali Health said in a regulatory filing last Sunday it had not received notification from the CFDA and would continue to operate the platform.

Ali Health saw its shares drop 14 percent on Monday after the CFDA said it had suspended the platform. It operates online medicine sales, but makes most of its revenues from operating the drug tracking platform, known as the Product Identification, Authentication and Tracking System (PIATS).

The system, owned by the CFDA but operated by Ali Health, had caused tension within China's healthcare market, with pharmacy chains saying the Alibaba-linked firm would have an unfair advantage over rivals.

(Reporting by Adam Jourdan; Additional reporting by John Ruwitch; Editing by Kenneth Maxwell)

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