Updated 2:12 PM EST, Wed, Jan 29, 2020

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China to Allow Online Prescription Drug Sales


(Photo : Reuters) As soon as this month, China will begin allowing prescription drugs to be sold online, opening up a $161 billion market to online retailers.

As soon as this month, China will begin allowing prescription drugs to be sold online, opening up a $161 billion market to companies like  Alibaba, Wal-Mart and Costco, reports Reuters.

The China Food and Drug Administration (CFDA) is currently deciding which prescription medicines to approve for sale, a senior healthcare policy adviser told Reuters.

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"The policy will be released in January or February and the CFDA is actively working on it," said the adviser, who declined to be identified.

In China, hospitals currently account for approximately 70 percent of drugs sold to consumers. Online pharmaceutical retailers are restricted to selling over-the-counter medicines and healthcare products such as cold remedies and vitamins.

Pharmacies with an online presence, such as China Nepstar Chain Drugstore Ltd, as well as general online retailers like Wal-Mart and Alibaba will likely benefit from the new policy. Alibaba and already have licenses to sell over-the-counter drugs online, as does  Wal-Mart.

However, when the prescription drugs are first being sold online, it is expected that most of the sales will between businesses, before moving to retailers. According to Deutsche Bank, the size of the business-to-business drug market could be as high as 800 billion yuan ($128.6 billion).

Analysts say that drugs sold online in China could be as much as 10 percent cheaper than those sold through brick and mortar pharmacies.

"The government has a common theme - to improve quality of care for the masses and at the same time contain costs," Andrew Chen, head of PwC's China Consulting Healthcare practice told Reuters. "So, the e-pharmacy side is definitely going to be a trend."

Frank Zhao, chief financial officer at pharmacy chain China Jo-Jo Drugstores Inc., said it would take time for consumers and companies to get used to the new online prescription sales model. He added that the new policy will allow his company to significantly increase its online sales. Zhao added that in the U.S. approximately one-third of drugs are sold online, compared to China were there are practically no drugs sold online.

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