​Alibaba's Tmall online pharmacy moves into Alibaba Health

Alibaba Group has announced that its Tmall online pharmacy business will be integrated into Hong Kong Stock Exchange-listed Alibaba Health Information Technology, after the two companies reached a definitive agreement.

Under the agreement, Alibaba Health will also become a consolidated subsidiary of Alibaba Group. Alibaba Group currently owns a 38 percent stake in Alibaba Health, but the move will see this increase to approximately 53 percent.

Alibaba Health will become responsible for running the business operations of the Tmall online pharmacy business, Alibaba Group said.

According to Daniel Zhang, Alibaba Group chief operating officer, the integration of the online pharmacy business into Alibaba Health will place the company in a position to be able to execute a greater healthcare e-commerce strategy, such as entering the online prescription drugs market.

"Healthcare will be a strategically important growth area for our ecosystem in the years to come, and we have a strong competitive advantage in this area," he said.

"Healthcare is especially important to Chinese consumers, and we expect that this integration will enable Alibaba Group to build a healthcare ecosystem that can utilise e-commerce, big data, and other technologies to improve the healthcare supply chain, and ultimately provide users with a better healthcare experience."

Alibaba boasted that 186 online-licensed pharmacies offering over-the-counter medicines, medical devices, contact lenses, and other general healthcare products are now featured on Tmall.

While the transaction is still subject to approval, Alibaba Group expects the transaction to be finalised in the third quarter of 2015.

During the third quarter of 2014, the e-commerce operator reached a net profit of AU$792 million, fuelled by higher advertisement fees.