China Jo-Jo signs online deal

China Jo-Jo Drugstores says a deal with the owner of a Chinese e-Pharmacy Card will significantly improve its online revenues this year.

China Jo-Jo, a Chinese retail and wholesale distributor of pharmaceutical and health care products through its own online and retail pharmacies, has through subsidiary Jiuzhou Pharmacy, established a joint venture with Shanghai Jianbao Technology, China’s leading Pharmacy Benefit Management  provider. SJT  owns and operates Yikatong (the e-Pharmacy Card), a popular pharmacy and health insurance benefit card with over 180,000 current users.

The joint venture agreement requires Shanghai Jianbao to direct the majority of its online E-Pharmacy-Card transactions to China Jo-Jo’s official online pharmacy site, which is expected to significantly improve the company’s online pharmacy revenue and profit margin in 2015.

According to the joint venture agreement, Shanghai Jianbao and Jiuzhou Pharmacy will hold 65 per cent and 35 per cent of the JV respectively. Shanghai Jianbao will be in charge of directing the online sales of Yikatong to China Jo-Jo’s e-commerce site, and has committed a minimum monthly sales volume of RMB 10 million (US$1.6 million) by the end of 2015. With over 180,000 card users, the total online transactions reached about RMB 300 million (US$48 million) among five network pharmacies including Jiuzhou Pharmacy in 2014.

It is expected that Shanghai Jianbao will shift the majority of those online sales volume to China Jo-Jo after the announced partnership. In return, China Jo-Jo, being one of only a few online pharmacy license holders in China, will handle the actual online sales, procurement and delivery of pharmaceutical and health care products to e-Pharmacy Card users.

Both sides agree that the JV will consider applying for a new online pharmacy license after monthly revenue achieves at least RMB 10 million and certain other eligibilities are met.

Lei Liu, China Jo-Jo chairman said the direct transfer of e-Pharmacy Card businesses to his company’s own online pharmacy will greatly enhance customer loyalty as well as its profit margin.

“It’s also a sustainable and recurring business model that is hard for our competitors to imitate. To ensure our goal of online pharmacy sales surpass sales of our retail stores within the next three years, we have to grow China Jo-Jo from a regional drugstore chain into a national online drugstore and fundamentally change our sales and distribution model.

“We aim to become one of the first drugstore chains by leveraging PBM model to effectively control the rising health care cost in China.”

China Jo-Jo Drugstores, has 60 retail pharmacies in Hangzhou and distributes drug and other healthcare products to other drugstores and vendors.


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