The tech industry in China is moving its focus onto online healthcare. JD Health’s IPO last week is Asia’s biggest health-care listing on record. Excluding its Nasdaq-traded parent’s $4.5 billion secondary listing in Hong Kong in June, the health-care company’s share sale is also the largest in the city this year.
The largest e-commerce companies in China, Alibaba and JD.com, similar to Amazon, have been working on dominating the gigantic healthcare industry. They offer a broad spectrum of products, including everything from digital solutions for hospitals (such as online appointment booking), trading of consumer health services such as plastic surgery, 24hour medicine distribution, online diagnosis for patients and marketing services for drugmakers.
Alibaba Health was first launched by the e-commerce firm as an investment portfolio, however, it eventually grew into a subsidiary, after various occurences of consolidation over the years. Additionally, JD.com launched JD Health in 2019 and instantly attracted a large flow of investments.
By venturing into healthcare, these colossal enterprises aim to create a one-stop-shop for everything a consumer might need. Below you will find various numbers showcasing the comparison between the two digital health behemoths:
When it comes to sources of revenue, both companies heavily depend upon the sale of medicines, prescription as well as over-the counter, and various other healthcare products, such as vitamin supplements. JD Health and Alibaba Health both have a direct-to-consumer drug business, largely involved in the supply chains, however, they also act as a market for third-party suppliers, from which monetization is achieved by charging commission fees. Both, also possess a smaller but expanding services segment targeting consumers, hospitals and pharmaceutical companies.
Alibaba Health – 7 billion yuan or $1.07 billion (six months ended September)
JD Health – 8.8 billion yuan or $1.35 billion (six months ended June)
This year Alibaba Health shared its first profitable earnings, receiving 278.6 million yuan in the six months ended September, a massive comeback from the loss of 7.6 million yuan it suffered during the same period the year before.
On the other hand, JD Health suffered a loss of 5.4 billion yuan in the six months ended June, in comparison to the profit of 236.3 million yuan it pocketed during the same period in 2019. This loss is attributed to the fair value changes after issuing additional convertible preferred shares.
Even though Alibaba Health created less revenue, it boasts a larger base of users, due to its vastly spread out ecosystem. Alibaba’s B2C marketplace, Tmall, in the year ended June, enjoyed a total of 250 millions users that made purchases through the online pharmacy. Moreover, there were 65 million active users in Alibaba Health’s direct-to-consumer drugstore.
JD Health’s platform boasts 72.5 million people that made at least one purchase in the last year.
The COVID-19 outbreak brought about a large increase in demand in online health consultation services, a service both companies provide. JD Health has a pool of over 65,000 doctors, both in-house and third-party. In comparison, Alibaba Health, by September, was comprised of a network of over 39,000 doctors.