Alibaba under siege as Chinese regulators & pharmacies fight its e-drug tracking system
- The China Food and Drug Administration (CFDA) has suspended the online drug tracking platform operated by Alibaba Health Information Technology, Ltd. while it revises regulations related to pharmaceutical sales.
- The CFDA is seeking comments until March 23 regarding ways to change how pharmaceutical products are monitored. This covers online sales, in addition to consumer monitoring of drugs to check for authenticity.
- Because of the CFDA's actions, there have been concerns that Alibaba Holding Group could lose the right to run the platform, which was previously called the Product Identification Authentication and Tracking System (PIATS).
- Furthermore, a group of 19 Chinese pharmacy chains released a joint statement on Wednesday urging the CFDA to permanently shutter the system.
There's a lot at stake for China in terms of how its growing healthcare market is regulated. This market, which is expected to hit $1.3 trillion by 2020, has numerous dislocations that need to be addressed. Hospitals currently control about 75% of drug sales and the central Chinese government would like to boost retail drug sales at pharmacies, as well as online.
Patients have relied on the online platform to monitor drugs for authenticity. But, in addition to running the platform, Ali Health also sells drugs online—a fact that Yotinhe Group, which has an online drug sales business, says creates unfair competition.
For its part, Ali Health says it did not receive notice from the CDFA regarding discontinuation of technical support and maintenance services for the platform over the weekend. Therefore Alibaba has said that it will continue operation of the Drug PIATS and providing services to the drug industry "under the CFDA's direction." The CFDA owns the platform, but Ali Health operates it.
The 19 pharmacy chains were blunt in their criticism. "Ali Health getting involved in regulation of pharmaceutical information, both has a bearing on the safety of national data and creates unfair competition," they said in a statement. That includes companies like China Jo Jo Drugstores Inc and Laibaixing Pharmacy Chain.