The age of online medicine

Internet facilities have made online shopping the ultimate trend in almost all industries, and the pharmaceutical industry is no exception. Pharmaceutical companies are now starting to shift their business online, and the industry is still adapting to this transition.

According to a Science and Technology Daily's report in June, the market scale of the pharmaceutical industry in the US reached $247 billion in 2013, with online retailers contributing to 30 percent ($74 billion) of this figure. These figures show the potential of the online market, but in China in 2013, online pharmaceutical sales only produced $68 million out of the overall 41 billion pharmaceutical sales.

Although the Chinese online pharmaceutical business is still in its infancy, there are some domestic pharmaceutical companies that have taken measures to stay ahead of the market. Of them includes Kangmei Pharmaceutical Company, a private firm that manufactures and sells pharmaceuticals and medical devices primarily in China. As one of the largest producers of medicine in China, its total revenue reached 13.3 billion yuan ($2 billion) in 2013, which includes both the online and offline markets.

Kangmei's initiative in the online pharmaceutical market started in 2011, when they sold their products online to other businesses, and later progressed to sell them directly to customers in 2012. In the company's 2013 fiscal report, building e-commerce was taken as their core market strategy in their future growth.

In April 2014, they established their own online pharmaceutical selling platform, which will support the company's other platforms for selling their products such as taobao.com.

Despite Kangmei's advancements in the online pharmaceutical business in recent years, it still only accounts for a minor percentage of the company's overall sales when compared to its offline business. Currently the monthly revenue of Kangmei online business is 10 to 14 million yuan, which only amounts to one percent of sales.

During an interview with Liao Kaiji, the general manager of e-commerce sector of Kangmei in late August, he told Metropolitan the reason why they chose to enter e-commerce was because of the growing popularity for online shopping among domestic consumers.

Liao said that there are some barriers still affecting the growth and expansion of online pharmaceutical stores. According to media reports, in order to conduct online selling, pharmaceutical companies have to gain two certificates from the China Food and Drug Administration: the Internet Drug Information Service Certificate, and the Internet Drug Trading Services Qualification.

"The issue of whether pharmaceuticals bought online can be covered by medical insurance will also impact on a consumer's decision," said Liao.

Although some argued that the expansion of the pharmaceutical industry from offline to online makes it harder to supervise the products' sources and quality, Liao has a different opinion.

"The online stores are easier for the government to supervise, since the online platform is more open and transparent," said Liao.

Despite these existing issues, more and more pharmaceutical companies are making the change by going online in the face of huge market potential.

Zhang Yongjian, director with the Research Center for Development and Regulation of Food and Drug Industry at the Chinese Academy of Social Sciences, has extensive experience and a good insight into the online pharmaceutical business.

"Hospitals and pharmacies are the two major ways for Chinese people to buy medicines. As the online shopping trend pushes the industry towards change, more pharmaceutical companies are going online," said Zhang. "The advantages for online stores are that they are convenient and their medicines are available at more affordable prices."