There is big money in drugs. Or at least buyers of Chinese etailer Alibaba’s latest venture, Alibaba Health Information Technology, had better hope so. On Tuesday, AHIT announced that it would buy a business indirectly owned by its indirect parent. The follow-Jack-Ma’s-money effect — seen just last week when Ali Pictures took some assets from Alibaba — then took hold. AHIT stock jumped 80 per cent, adding $5.8bn to its value.
AHIT was created last year from a company formerly named Citic 21N. In April, Alibaba subsidiary Perfect Value paid $171m for a 54 per cent stake that is now somehow worth $7bn. AHIT’s main business is a system that tracks consumer products and provides information on their provenance. It is, for example, the only system in China that monitors and tracks drugs (if they have been registered).
The target company for the latest deal, AliJK.com, looks like a nice fit. It operates Alibaba’s online pharmacies business, hosting 186 merchants licensed to sell over-the-counter drugs. It is just over three years old and is one of only three companies in China with a licence to host pharmacies online. AliJK has handled drugs worth $765m in the past year, taking a fraction of a per cent of that for itself.