China to Allow Online Pharmaceutical Sales

The China Food and Drug Administration (CFDA) is finalizing preparations to allow online sales of a pre-approved list of prescription drugs, starting in early 2015. Until now, online pharmacies have been restricted to selling over-the-counter (OTC) drugs and basic healthcare remedies such as cough syrup.

It is expected that Chinese and Western pharmacies with an online presence in China, such as Alibaba and Walmart, will benefit from this new policy. Many drug products carried by these online pharmacies should see expanding sales. Initially, it is probable that online prescription medicine sales will be mostly business-to-business. However, over the next several years, direct-to-consumer online prescription drug sales are likely to grow quickly.

Currently, almost no drugs are sold online in China, whereas around 35% of drugs in the U.S. are sold online. This policy change will allow many Western drug companies to more easily penetrate China’s pharmaceutical market, which is valued at more than $100 billion.