by Hui Zhang

• JD Health has built the largest pharmaceutical retailer in China, accounting for more than 15% of China’s pharmaceutical retail market.
• JD Health’s pharmaceutical business has been extended to cover B2C (Business-to-Consumer), B2B (Business-to-Business) and O2O (Online-to-Offline), aiming to build the most extensive and complete retail ecosystem in the industry.

To help patients in need to buy the right drugs at a fair price, JD Health, as a veteran of pharmaceutical e-commerce in China, initiated a charity project in which the company provided drug subsidies of RMB 1,000 per person to those registered with the local government. At the same time, JD Health is taking advantage of JD’s nationwide logistics network, which covers 99% of the population in China, to ensure drug supply to people living in China’s remote areas.

“I rely on my labor to be able to support my family, however, more than 20 years of back pain brings me a lot of suffering. Usually, I can bear the pain to do farm work, if it’s windy or rainy, it will be pretty difficult for me to even get out of bed. Not to mention not being able to do farm work, I might need my young children to take care of me,” said Wanhe Pan, a farmer from Zhumi Village of Fushun county in southwest China’s Sichuan province.

The only source of income for Pan’s family is farming, and his chronic back pain brings much difficulty to the less well-off family. Pan’s story is just one of many cases in the remote mountainous areas in China where access to medical care is limited. Apart from the burden of medical expenses, remote locations and limited transportation options also become obstacles in the treatment of disease. Faced with sudden illness, many people like Pan can only choose to procrastinate, which would lead them to miss the best window for treatment, leave them unable to work, and exacerbate their poverty.

There is an even more alarming figure behind the lack of medicine in rural areas in China. According to official data, China produces as many as 15,000 tons of expired drugs every year, a considerable part of which is circulated to small rural clinics through illegal second-hand drug markets. People from not only rural or remote mountainous areas, but also low-tier citers or towns are faced with limited drugs selection, expired drugs, inability to access to drugs for chronic diseases, high prices, and more.

JD Health started its pharmaceutical e-commerce business by selling health products online for the first time in 2013, marking an official step into the pharmaceutical retail business. Its pharmaceutical e-commerce business has been extended to cover B2C (Business-to-Consumer), B2B (Business-to-Business) and O2O (Online-to-Offline), or omnichannel, aiming to build the most extensive and complete retail ecosystem in the industry. JD Health has become the largest pharmaceutical retailer in China, accounting for more than 15% of China’s pharmaceutical retail market, with more than half of the drugs sent to fourth tier cities and below, according to JD’s data.

B2C: Largest Retail Platform

JD Pharmacy, as a core part of JD Health’s B2C business, was established in May 2016. It has become China’s largest pharmaceutical retail platform, online or offline in just three years, and its growth rate is four times higher than the industrial average rate in China. JD Pharmacy is also the first of its kind providing both medication consultation and drug purchase services in the industry. JD Pharmacy has a team of doctors and pharmacists to provide patients with medical consultation and services of medication usage. Relying on JD’s big data to help consumers in health management, JD Pharmacy’s health management team follows up with patients who have purchased medication from the platform, and offer furthers medication usage suggestions.

A rich supply of drugs, and an efficient and convenient drug purchase experience have made JD Pharmacy widely welcomed by Chinese consumers.

“It’s not only convenient for me to buy medicine from JD Pharmacy, but also for my parents living in different places. The elderly can’t always go out to buy medicine due to poor physical condition. I can place an order on JD Pharmacy today, and my parents can receive the medicine the next day, which is a huge help to us,” said Chen Xue, who works in Beijing.

In addition to medication retailing, JD Pharmacy also launched a medication purchase service for families to solve problems encountered by consumers in daily drug purchase. The ‘Family Medicine Kit’ service is committed to providing families with one-stop medication and health management services ranging from drug recommendation, medical consultation, and health knowledge sharing to pharmaceutical after-sales services. It provides consumers with not only commonly used medicines at home, such as medicine for cold, fever and cough, but also medication usage instructions, and free medication consultation from professional pharmacists according to their needs. Considering household medicine expires easily, JD Health also worked with JD’s insurance business team and JD Logistics to offer free one-time replacement services for expired drugs.

JD Pharmacy has already established partnerships with many well-known pharmaceutical companies both home and abroad, such as GlaxoSmithKline, Johnson & Johnson, Novartis, BMS, Bayer, Tongrentang, Yunan Baiyao Group, and Dong-E-E-Jiao.

B2B:One-Stop Drug Trading

In addition to the B2C business, JD Health started its B2B business by setting up a medicine procurement platform called ‘JD Medicine Procurement’ in 2017 to improve the circulation efficiency of traditional channels, and increase the transparency of information.

The main target of JD Medicine Procurement is to provide a ‘one-stop’ drugs trading platform for pharmaceutical industry enterprises, commercial enterprises, retail enterprises, medical institutions and pharmacies. Most of the customers in the lower reaches of drug wholesale are mainly drugstores, small and medium-sized chain drugstores, clinics and other medical institutions that are under great pressure to survive in the unprecedentedly competitive environment of China’s pharmaceutical market. Nearly half of them come from counties or towns in fourth tier cities and below. They have been faced with many challenges, such as incomplete drug procurement varieties, inability to compare prices, and long procurement cycles, for a long time.

“A few months ago, we still used the traditional method of procurement by phone and onsite purchase. It’s both inefficient and time-consuming as we lack of product information. I’m grateful that JD Medicine Procurement makes one-stop drug procurement a reality,” said Qiang Wang who owns a drug store in a fourth-tier city in China. He is also the No. 120,000 customer of JD Medicine Procurement.

Suppliers, who are mainly pharmaceutical enterprises in the upper reaches of drug wholesale, are facing quantity and inventory challenges from lower-tier cities.

“Pharmaceutical enterprises can mainly reach the first, second, and third -tier cities. It is very difficult for them to penetrate into cities below the fourth-tier cities, ” said Xiaomeng Mu, head of JD Medicine Procurement business.

The platform has been among China’s large-scale third-party pharmaceutical wholesale platforms since its establishment, covering 21 provinces and more than 400 cities, with more than 120,000 retail terminals and more than 600,000 items.

O2O: Covers 25 Provinces

Through cooperation with offline pharmacies, JD Health developed an omnichannel medicine delivery service to help pharmacies benefit more financially, while providing rapid drug delivery services to patients. The service now covers nearly 150 cities in 25 provinces across China. Consumers can place orders in nearby pharmacies through the service base on their locations, and the drugs are guaranteed to be delivered in 30 minutes.

Since the outbreak of coronavirus, more and more consumers use the omnichannel medicine delivery service to buy drugs through mobile phone in order to avoid cross-infection by going outside. The service has seen a significant increase in users and orders, with new users accounting for 80% of orders in the last month.

Compared with other pharmaceutical O2O platforms, JD Health has a team of professional doctors and pharmacists to provide comprehensive medical consultations and drug usage instructions to consumers, which attracts more offline pharmacy partners.

In January this year alone, Nepstar Drugstore’s order numbers from JD Health’s ominichannel medicine delivery service increased by more than 300% compared with the same period last year. One of Nepstar Drugstore’s operation managers said consumers are more likely to shop on JD thanks to the quality guarantee and fast delivery speed. In addition, JD Health also offers free 24/7 online consultation for all diseases during the outbreak of coronavirus, providing professional and convenient medical services to help avoid cross-infection. The free consultation services have also brought a lot of consumers to their offline pharmacies.

Apart from delivering medicine from pharmacies nearby consumers’ home, JD Health is also experimenting a new medicine delivery services which can link consumers with pharmacies in the whole city in Chongqing, Chengdu and Shenzhen. JD Health plans to promote the new service model to more than 20 cities across the country in the near future.

Lijun Xin, CEO of JD Health

The pharmaceutical business is only part of JD Health’s ambition and strategy in health industry. Lijun Xin, CEO of JD Health, previously announced that JD Health’s business focused on online retail and wholesale of medical products, internet hospital, medical services, and intelligent healthcare solutions. However, Xin readjusted the business focus to pharmaceutical supply chain, internet hospitals and chronic disease health management in the second half of 2019. JD Health is targeting the whole health industry, and is endeavoring to help JD’s over 300 million consumers in full life cycle health management.

“JD Health was only a pharmaceutical e-commerce company in the past. But now we want to grow into a real health company by offering consumers full life cycle health management services,” Xin said.

(zhanghui36@jd.com)