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Yaobili set to change China's pharmaceutical industry with new model

Company connects pharmacies with consumers so drugs can be dispensed round the clock

Chinese people buy drugs from vending machines and pay for them electronically. (Photo courtesy of Yaobili)

BEIJING -- Yaobili is reshaping China's pharmaceutical industry by offering to connect consumers and pharmacies directly on its platform which can only be accessed via WeChat so that drugs can be ordered and delivered more efficiently.

The company has raised tens of millions of yuan, or millions of U.S. dollars, in a series A round from GGV Capital and He Xiaopeng, founder of Xpeng Motors, a manufacturer of electric vehicles.

China's retail pharmaceutical market has grown dramatically in recent years thanks to internet technology and the appearance of new business models. Offline retail sales in 2018 amounted to 600 billion yuan ($85.4 billion).

However, the industry is still fragmented with lots of small retailers. The top 100 retail pharmacy chains have a combined market share of only about 20%. As such, most major pharmaceutical retailers are actively acquiring smaller peers.

In the online pharmaceutical retail industry, business-to-consumer models, exemplified by the company 111, Inc., and online-to-offline models, such as Dingdang Kuaiyao, are changing the business landscape. Online sales still only account for about 2.6% of total drug retail sales, compared with 26.4% for online sales of daily-use consumer goods.

Against this backdrop, Yaobili, established in 2018, offers software as a service to pharmacies to enable efficiencies through the use of information technology.

The company provides mainly three types of services. The first is a program called Yaobili that is offered within the social networking service app WeChat which is owned by Tencent Holdings. Pharmacies can register on the mini program free of charge, and consumers who have purchased drugs online can receive deliveries of them at their homes.

Second, the company also provides member management and sales management tools and a so-called pharmaceutical vending machine that enables round-the-clock sales. Third, the company provides a sales promotion system based on data it has harnessed, sending pharmaceutical manufacturers' ads to consumers.

Yaobili also recently started providing another mini program that offers video usage instructions. Consumers can scan QR codes on product packets or in pharmacies to view instructions on how to apply or consume drugs. Yaobili has recorded videos of nearly 1,000 over-the-counter drugs.

CEO Yu Jun said Yaobili has a time advantage over its online retailer peers as it has direct connections to pharmacies which can dispatch drugs quickly and directly to consumers.

Yu also pointed to the fact that his company does not need any warehousing facilities, which means it can provide its services at a lower cost than other O2O companies that have to store and deliver the drugs themselves.

Furthermore, he said that pharmacies can register on the company's platform free of charge and are automatically selected by users who live nearby. This means that it has a captive audience.

Yaobili wants to expand its sales network in Beijing and major cities in the east and south of the country and to form partnerships with major pharmacy chains.

36Kr, a Chinese tech news portal founded in Beijing in 2010, has more than 150 million readers worldwide. Nikkei announced a partnership with 36Kr on May 22, 2019.

For the Japanese version of this story, click here.

For the Chinese version, click here.

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