Alibaba tells vendors to halt drug sales online, cites government rule change

Mon May 30, 2016 11:28pm EDT
 
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By John Ruwitch and Adam Jourdan

SHANGHAI (Reuters) - Chinese e-commerce firm Alibaba Group Holding Ltd has told vendors on its Tmall website to stop selling medicine, saying a local regulator has issued an "urgent" directive halting drug sales via third-party platforms.

Alibaba, in a notice dated May 27 seen by Reuters, cited a circular from the Hebei province branch of the China Food and Drug Administration (CFDA) on "urgent control measures relating to drug products". It did not elaborate on reasons.

The regulator's surprise directive comes as the government promotes retail sales of over-the-counter (OTC) medicine, with a pledge to harness technology to solve issues as varied as high drug prices and snarling hospital queues. At present, drug sales are dominated by public hospitals.

The directive only applies to drug sales on marketplace websites, Alibaba said. Such sites, however, generally provide the bulk of traffic to pharmacies and drugmakers selling online.

"From today please do not sell or dispatch any more of these kinds of products," Alibaba said. The directive does not apply to other medical products, it said.

A company spokeswoman told Reuters that Alibaba's medical products site Yao.Tmall.com was "cooperating and complying with the government's new policy to stop online drug sales on third-party platforms".

"While the policy change might impact the whole medicine e-commerce business including Yao.Tmall.com, industry players are exploring new ways to use internet technology to help improve the traditional drug retail system," the spokeswoman said.

The Hebei CFDA declined to comment.   Continued...

 
An employee is seen behind a glass wall with the logo of Alibaba at the company's headquarters on the outskirts of Hangzhou, Zhejiang province, April 23, 2014.  REUTERS/Chance Chan/File Photo