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Alibaba healthcare transaction to expand business in sector

Alibaba Health intends to buy a part of Alibaba Group's healthcare retail business valued at HK$10.6 billion to integrate with existing business operation.

Alibaba Health intends to buy part of Alibaba Group’s healthcare business, valued at HK$10.6 billion (US$1.35 billion), in order to integrate with existing business operations, according to a stock exchange filing today. 

Alibaba will sell part of its business at the Tmall Pharmacy to Alibaba Health, which includes the retail operation business of medical devices and healthcare products, adult products and medical and healthcare services and products from brands such as Omron and Johnson & Johnson.

These categories represent 20.6 billion yuan of gross merchandise value (GMV) in the fiscal year ended March 31, 2018 and include over 3,300 merchants on the platform.

Alibaba Group will receive HK$10.6 billion worth of newly issued shares and will increase its equity stake in Alibaba Health from 48.1 percent to about 56.2 percent after the closing of the deal, which is still subject to shareholder and customary approval.  

“Alibaba Health continues to develop into our healthcare flagship platform, enabling us to create the best healthcare ecosystem in China,” said Alibaba chief executive officer Daniel Zhang. 

According to Frost & Sullivan, total healthcare expenditure in China is expected to grow from 4.6 trillion yuan in 2016 to 11.4 trillion yuan in 2026. 

“This transaction will allow us to expand our business by adding more complementary categories and enabling us to have deeper engagement with more participants,” said Leo Shen, chief executive officer of Alibaba Health. 

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