Chinese online healthcare stocks plunged more than 10% after a state-run newspaper called for greater supervision of prescription drugs sold on the internet, sparking fears that the government is preparing to introduce new regulations.
Ping An Healthcare and Technology, which operates the online health consultation app Ping An Good Doctor, saw its shares tumble 14.4% on Friday. The sharp drop wiped out $8.5 billion of the Shanghai-based firm’s market cap.
Shares of Alibaba Health Information Technology also fell nearly as much, dropping 13.3%, while JD Health International slid 14.4%. The drop brought the market cap of Alibaba Group and JD.com’s health units down $2.6 billion and almost $4 billion, respectively.
Earlier the same day, the Communist Party’s main newspaper, People’s Daily, suggested that prescriptions filled by online healthcare platforms should be reviewed by professional clinical pharmacists. The commentary said some of the internet hospitals do not have a review system for their online prescriptions, while also lacking professional pharmacists, which has led to problems like “overprescriptions” and “distributing medicines before prescriptions are actually issued,” the paper said.
“Prescription drugs are exceptional, and we must strictly ensure medication safety,” People’s Daily wrote. “Whether the prescriptions come from a reliable source and whether their quality is guaranteed are a matter of medication safety concern.”
Ping An Healthcare, Alibaba Health and JD Health did not immediately respond to requests for comment.
China’s online healthcare sector had been experiencing a surge in sales as the pandemic boosted demand for remote consultations and medicine sales. Ping An Healthcare said it had attracted 72.6 million monthly active users in 2020, up 8.5% year-on-year. Alibaba Health said it recorded more than 280 million annual active users on its pharmaceutical platform and over 520 million users on its healthcare channel as of March. While JD Health said its annual active users increased to 89.8 million last year from 33.7 million in 2019 .
The three companies all offer online healthcare services ranging from consultations, hospital referrals and appointments, as well as e-commerce platforms that sell medication and wellness products.
In recent years, China had lifted an earlier ban on the sale of prescription drugs online while seeking to promote the country’s digital healthcare sector as part of its drive to boost consumption and employment.