According to China’s media, the 21st Century Business Herald, Beijing might ban third-party platforms from offering medicines online. The move sent stocks of online drug sellers to plummet in Hong Kong on Wednesday, June 22.  

China’s drug watchdog, the National Medical Products Administration (NMPA), released a draft of the Regulations on the Implementation of Medicine Administration Law. The draft includes a new provision prohibiting third-party platforms from direct medicines sale.

On the Hong Stock Exchange, Alibaba Health shares plunged 14%, JD Health plummeted 15%, and Ping An Health dropped 7%. 

The outlet reported that China authorities would clarify the “third-party platform” definition in a proposal introduced in May. The proposal seeks to change the laws on drug supervision, including a ban on such firms directly selling medicinal products.

According to Yicai Global, if the new rule is introduced, online drug platforms will not compete directly with brick-and-mortar pharmacies. But it will not be easy to implement this new regulation.

Drug sales represent a big proportion of revenue of online healthcare platforms. Alibaba Health reported 3.1 billion dollars in the first quarter; 64% were from self-run online pharmacy stores, while JD Pharmacy’s online platform accounted for 85% of JD Health’s earnings.

However, an analyst from Citigroup told Bloomberg that the proposal has little impact on internet healthcare executives, such as AliHealth. The analyst added that these executives said their businesses should follow the policy, and their e-commerce platforms do not directly sell medicines online.

In addition, some pharmaceutical e-commerce insiders told First Finance and Economics that some relevant departments from China authorities have also recently held seminars to discuss the issue. But there is still some uncertainty about whether the provision of the ban on third-party platforms can be implemented in the end.

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