Alibaba Online Drug Coding System To Be Halted By China
Chinese government stated to halt the operations of Alibaba's electronic drug coding technology responsible for earning significant chunks of revenue.
Alibaba Health Information Technology Limited’s shares have plunged after the Chinese government stated the implementation of a drug coding technology, which has been operated and developed by the online trading giant, will be halted by it.
In the trading session held in Hong Kong, the shares of Alibaba Health fell by 12% to HK$4.26 at 9:25 am. China Food & Drug Administration (CFDA) suspended the electronic coding technology responsible for fake medicines, as existing regulations draft amended to allow the usage of other techniques to track medications back to their origins, the regulator stated on Saturday.
Revenue earned by operating the drug product identification, authentication, and tracking system (PIATS) contributed to almost the total revenue of the organization in the year ending on March 31, 2015, Alibaba Health stated.
The company hasn’t been notified by the Chinese drug regulatory body to stop offering maintenance services and technological support to support the tracking technology, it stated, adding that the system’s operations will not be discontinued by it and will closely collaborate with regulatory bodies to ensure that such operations are continued according to their guidance.
The earnings potential of the coding system is a factor that has influenced the shares of Ali Health, registered in HK. The shares declined by 20% on January 28, after domestic media reported that the drug regulatory body of China aimed to withdraw the operating rights of the company for the coding technology, and increased by 16% 24 hours later following the statement of Alibaba Health that it had failed to get any notice from the regulator to halt operations.
The development of other main businesses like pharmaceutical online trading business and development of a healthcare services network had continued, it stated. The unit of Alibaba Health Citic 21CN is providing maintenance and technical facilities to the network, including the authentication, tracking, and identification of drugs, it posted on Weibo on February 5.
The enterprise stated although the ownership of the system has been in the hands of the government, the facilities provided by it play a helpful role in identifying resold drugs and counterfeits and deter unlawful companies.
Fortune has reported that CFDA posted on its website that it will be seeking comments up till 23rd March on changes needed to be implemented to monitor pharmaceutical products including electronic sales.
Ali Health filed on Sunday that the CFDA has notified it over the platform’s CFDA. The suspension came after Ali Health got involved in the Chinese platform. Hunan based pharmaceutical company ‘Yontinhe Group’ stated CFDA was sued by it over monitoring the system, accusing that Ali Health had been given an unfair advantage by the arrangement. Here it is necessary to tell that Ali Health is a seller of drugs.
