In recent years, China's online shopping titans have entered the prescription drug market. When JD.com, Alibaba's arch-rival, realized that the healthcare market extends well beyond retail, the company spun off its healthcare unit to a subsidiary for a potential IPO last May. That startup, JD Health, hit a staggering $ 7 billion valuation in its Series A round of $ 1 billion in November.
Another massive check is on the way in less than a year when JD Health announced it has entered into a definitive agreement with private equity firm Hillhouse Capital to raise over $ 830 million for the Series B Funding of the infant company plans.
The deal with Hillhouse, an early JD.com backer and aggressive pursuer of healthcare opportunity, is expected to take place in the third quarter of this year. JD.com remains the majority shareholder in the transaction.
JD Health is now a multifunctional health platform that offers everything from the 30-minute delivery in the pharmacy to the telemedicine service that was heavily used during the COVID-19 pandemic, consumer-related health services such as genetic testing to solutions for digitizing Hospital systems. The company “achieved profitability” last year, claimed its managing director Xin Lijun.
The health unit is another effort by JD.com, the closest Amazon equivalent in China for supply chain control, to get out of online retail. JD.com also oversees an independent fintech subsidiary and a separate logistics company, both of which are planning an IPO.
Alibaba has made a similar move into the healthcare sector with its subsidiary Alibaba Health, a Hong Kong-listed company with a current market capitalization of around $ 34 billion.
The company's earnings report sheds some light on the breadth of its reach: its online drugstore's annual active consumers topped 190 million in May, with the most recent growth fueled by the pandemic.
It's unclear how many users JD Health has amassed for its online pharmacy, which according to its CEO is the company's "main business," but it has released statistics on other segments. Since the COVID-19 outbreak, over 1.7 million patients have used the diagnostic service, which now receives over 100,000 inquiries every day. JD Health's latest promise announced this week is to build an online family doctor service for up to 50 million Chinese families.