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JD.COM, INC.

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Five Years of JD Pharmacy: A Business Roadmap

05/17/2021 | 12:00pm EDT

by Hui Zhang

This year marks the fifth anniversary of JD Pharmacy, the first-party pharmaceutical business model of JD Health, which has embraced fruitful results since its establishment in January 2016. So far, JD Pharmacy has managed more than 20 million SKUs of pharmaceutical and healthcare products on its platform. In 2020, JD Pharmacy generated revenue of RMB 16.8 billion, representing an increase of 77.8% year-on-year. These business results are a testament to the logic behind JD Health's pharmaceutical business.

A wide range of pharmaceutical and healthcare products, covering specialty drugs and convenient omni-channel services to send medicine to those in urgent need in as fast as 30 minutes; together with medical consultation services provided by a team of professional physicians, are only part of what JD Health's online pharmaceutical business offers Chinese consumers.

Enlin Jin, vice president of JD Health and general manager of the company's medicine business, sharing JD Pharmacy's business highlights over the past 5 years

The key strengths of JD Health's retail pharmacy business include allowing users to purchase pharmaceutical and healthcare products anytime and anywhere, and providing them with an integrated one-stop shopping experience. With a mission to become the go-to health management platform for China, JD Health is committed to offering its users easily accessible and high-quality pharmaceutical and healthcare products at affordable prices.

'As a pioneer in transforming the supply chain of pharmaceutical and healthcare products in China, JD Health has achieved immense scale with a wide product selection while maintaining stringent quality control and competitive pricing, thus gaining users' trust,' said Lijun Xin, CEO of JD Health.

Business Expansion

JD Health started its pharmaceutical e-commerce business by setting up a platform for third-party pharmaceutical retail businesses, and opened JD Pharmacy the same year to run its first-party business. JD Health's retail pharmacy offers high-quality pharmaceutical and healthcare products including OTC drugs, prescription drugs, and medical devices, as well as health and wellness products.

As for direct sales business, JD Pharmacy has established a supply chain network with leading pharmaceutical companies and healthcare product suppliers and maintained robust growth.

JD Health has cooperated with a number of leading global pharmaceutical companies, including Eisai China, AstraZeneca, Pfizer, Novartis, Bristol-Myers Squibb (BMS), Sanofi and Abbott Laboratories, to upgrade medication and health management services in order to fulfill users' needs. So far, it has established cooperation with 92% of the top 50 global pharmaceutical companies, and 97 of the top 100 Chinese pharmaceutical companies. In partnership with the companies, JD Health launched the first 'new and specialty drugs platform' for acute and serious diseases in China, providing patients with cutting-edge treatment solutions.

Leveraging JD Logistics' cold chain capabilities and extended logistics network, JD Health is able to provide superior delivery services to customers covering a broad range of pharmaceutical and healthcare products. As of Dec. 31, 2020, JD Health utilized JD.com's 14 drug warehouses and over 300 other warehouses nationwide.

'Since March this year, we have accelerated the development of our 'self-operated cold chain' business. In less than two months, JD Health's 'self-operated cold chain' has now covered 58 cities in 9 provinces nationwide,' said Enlin Jin, vice president of JD Health and general manager of the company's medicine business.

Enlin Jin

In September, 2020, Novartis was one of the first batch of pharmaceutical companies to give JD Health's cold chain network a shot, by launching its MS (Multiple Sclerosis) drug Siponimod on JD Pharmacy, which was also the first platform in China to sell the drug. JD relied on its dedicated pharmaceutical warehouses, nationwide supply chain network and information systems including an intelligent temperature monitoring platform to ensure the most suitable environment for the drug's delivery, with easy tracking of the delivery process.

List of brand partners

JD Health established the Rate Disease Care Center in February this year with the goal to become an efficient platform with integrated treatment, medication, insurance and charity support for patients of rare diseases. JD Health provides the most comprehensive choices of oral medications for rare diseases available in China and ensures delivery of authentic drugs via its proprietary logistics network, in many cases the cold chain network, to patients' doorsteps in a secure and timely manner.

With regard to the third-party pharmaceutical business, JD Health allows both chain and independent pharmacies and suppliers to sell pharmaceutical and healthcare products through the platform, which supplements the business of JD Pharmacy. As of Dec. 31, 2020, there were more than 12,000 third-party merchants on our online marketplace platform.

In addition to pharmaceutical business, JD Health has also entered into cooperation with major Chinese cities on healthcare insurance payments.

Since January 2019, JD has partnered with Suqian No.1 People's Hospital in eastern China's Jiangsu province to move most of its services online, allowing patients to seek the advice of the hospital's doctors from the comfort of their home. Meanwhile, the online hospital can also facilitate insurance payments for medication. Tianjin municipality also adapted a preferential policy toward JD to support online healthcare insurance reimbursement. Thanks to governmental support, Tianjin Nankai Hospital and JD Health jointly launched the 'Nankai-JD Internet Hospital' during the pandemic to offer real-time medical help to patients quarantined at home. The internet hospital also supports local patients to use their healthcare insurance to buy medicine online.

Healthcare Services

While continuously expanding the variety of drugs, JD Heath has also been committed to setting up one-stop medication services so as to fulfill users' rising medicine demands over the past 5 years.

JD Health offers online healthcare services connecting hospitals, doctors and other healthcare professionals such as pharmacists, nutritionists and psychological counselors with JD Health's own users to provide them with comprehensive services.

Many of the patients purchasing medication only need advice on drug usage, and would prefer not to cue up in the hospital for consultations. However, due to a shortage of medical resources, there are not enough pharmacists in China according to official data, which showed that there were only over 300,000 licensed pharmacists in about 454,000 pharmacies across the country.

With JD Health, customers can bypass the hassle, thanks to the company's cooperation with a group of pharmacists that can provide users with medication consultation, usage guidance, safety and rational usage-all from the comfort of customers' homes.

Offering medication related services is only part of JD Health's innovation to complement its pharmaceutical business. Having a team of doctors, most of who come from AAA hospitals, is another way JD Health aims to bring peace of mind to users when they purchase drugs online. In order to provide users with holistic healthcare services covering testing, diagnosis, treatment, medication and recovery, it has integrated its online hospital with offline ones. It empowers offline public hospitals by providing patients with online follow-up visits, prescription renewal and other services through its online healthcare service platform. So far, JD Health has collaborated with over 10,000 hospitals and built a medical team consisting of over 110,000 in-house and external doctors and medical experts. In 2020, the company had an average of over 100,000 daily online consultations, which is more than 5 times of that in 2019.

JD Health's doctors

COVID-19 has changed the living and working habits of many people, including their interaction with pharmacies. As people increasingly seek medical advice and products online, the surge of telemedicine on JD Health also means significant growth for drug delivery services.

Through cooperation with more than 200,000 offline pharmacies, JD Health developed an omni-channel medicine delivery service to help pharmacies benefit more financially while providing rapid drug delivery services to patients. The service now covers over 200 cities, and medicine can be delivered in as fast as 30 minutes to JD Health's online users, in an expansion of JD's Omni-channel Fulfillment supply chain innovation program.

Launched in 2019, the program integrates multiple types of offline channels, including supermarkets, convenience stores and brands' offline stores, enabling them to deliver orders that originate from JD directly. Hundreds of chain supermarket and store brands, including Walmart, Yonghui Superstores, Better Life and BHG have joined the program. Even during the pandemic, JD Health continued to delivering medical drugs to patients in need and connected at least 13 million patients, who were lack of medication, with chronic diseases in Hubei province with pharmaceutical companies and pharmacies and provides timely information on where they can get the drugs they need, online or offline.

Digital Marketing Acceleration

Through its technology and big data strength, JD Health is working with pharmaceutical companies to explore innovative marketing solutions to enhance sales. JD Health mainly focuses on three aspects to facilitate brand partners' e-commerce marketing. Firstly, it improves drug accessibility and patient compliance by constantly improving services. Meanwhile, JD Health offers specialized professional operation and integrated product-effect marketing solutions, throughout the whole process of user purchase, drug use and repurchase. And last, JD Health also leverages its platform advantages and traffic resources to help brands in new drugs marketing online.

For example, JD Health partnered with a number of upstream pharmaceutical companies to debut their medicine through JD Pharmacy including Eisai's LENVIMA treatment for patients with hepatocellular carcinoma, Novartis' Mayzent to treat relapsing multiple sclerosis, Pfizer's Vyndamax and Vyndaqel for treatment of transthyretin amyloid. In addition, it closely cooperated with AstraZeneca to facilitate popularizing and streamlining access to original drugs, bringing oncology patients more convenience.

Business Vision

'Over the past five years, JD Health has continuously accelerated the expansion of the full range of medical products, and strengthened the capacity of professional services,' said Jin. 'Additionally, its business scope has expanded from simple pharmaceutical retail to pharmaceutical services, Internet medical services and other in-depth fields.'

JD Health is also accelerating the construction of its self-run pharmacies across China right now so as to further improve the efficiency of its omni-channel services. Meanwhile, JD Health is also ready to open its technology and supply chain, among other strengths, to industrial partners so as to boost the digital transformation of the whole industry.

'As the core platform of the pharmaceutical supply chain segment of JD Health, JD Pharmacy has leveraged its strong pharmaceutical supply chain and one-stop professional service capability in medicine and health over the past 5 years,' said Xin. 'It always remains open-minded, explores new retail channels and service scenarios together with pharmaceutical partners, and continuously offers digital marketing solutions to promote the digital transformation of the pharmaceutical industry.'

(zhanghui36@jd.com)

Disclaimer

JD.com Inc. published this content on 17 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 May 2021 15:59:02 UTC.


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