China suspends Ali
Health-run online drug monitoring platform
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[February 22, 2016]
BEIJING (Reuters) - China's food and
drugs regulatory body said it had suspended its electronic drug
monitoring system, a platform operated by Alibaba Health Information
Technology Ltd, while it drafts amendments to regulations monitoring
pharmaceutical sales. The China Food and Drug Administration (CFDA) said
it will seek comments until March 23 on changes to the way
pharmaceutical products are monitored, including online sales, according
to statements posted on its website on Saturday.
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Ali Health said in a filing on Sunday it had not received notice
from the CFDA over the operation of the platform. The suspension
comes after Ali Health's involvement in the platform - which allows
consumers to check the authenticity of medical products online - was
brought into the spotlight last month.
Hunan-based pharmacy chain Yontinhe Group said last month it was
suing the CFDA over the monitoring system, alleging the arrangement
gave an unfair advantage to Ali Health, which has its own online
drug sales business.
Shares in Ali Health, an affiliate of e-commerce giant Alibaba Group
Holding, fell sharply in the aftermath of the announcement, fueled
by concerns that the company could lose the right to run the
platform, formally known as the Product Identification,
Authentication and Tracking System (PIATS).
Ali Health said it had not received notice from the CFDA to request
that it discontinue providing technical support and maintenance
services to the platform, according to a filing to the Hong Kong
stock exchange late on Sunday.
"The company will therefore continue its operation of the Drug PIATS
and provision of services to the drug industry, and will work
closely with the CFDA to continue such operations under the CFDA’s
direction," the company said in the filing.
A spokesman for Alibaba Group declined to immediately comment when
contacted by Reuters earlier on Sunday.
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China is the world's second largest pharmaceutical market after the
United States, and is a magnet for drug makers, hospital operators
and medical device firms targeting a wider healthcare bill estimated
to hit $1.3 trillion by 2020.
Shares in Ali Health surged in April last year when Alibaba said it
was injecting its online pharmacy operations into a Hong Kong-listed
affiliate in a $2.5 billion deal.
Beijing hopes to boost retail drug sales at pharmacy chains and
online, and wrest some sales away from hospitals, which currently
control around three-quarters of drug sales.
(By Nicholas Heath, Meng Meng and John Ruwitch)
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