Hony backs Chinese pharmacy management platform

Financial terms weren't disclosed but Hony said in a statement that the round was worth multiple billion renminbi. The deal – which comes from Hony Capital Fund VIII – allows the fund to become the second-largest shareholder in Quanyi with a 20% stake, according to a disclosure from China's Ministry of Commerce.

Suzhou-based Quanyi was launched last year, with a view to building a national pharmacy chain through M&A, with combined sales of RMB7 billion ($1 billion), within two years. The platform previously received an investment from domestic private equity firm Shenzhen Co-Stone Capital.

Last year, it acquired more than five pharmacy chains located in Zhejiang, Hebei and Jiangsu provinces. Those included Hengtai Medicine and Wenzhou Yizheng Pharmacy, which had 157 stores and four stores, respectively.  

In line with the latest funding round, Quanyi announced it had acquired an additional five pharmacy chains in Sichuan province. The platform is expected to generate more than RMB6 billion in revenue by the end of this year.

The retail pharmacy industry in China is highly fragmented, with channels ranging from chain stores to individual pharmacies to medicine counters in supermarkets. It is now transitioning to a new model as a result of disruption by technology, said Xinghua Wu, Quanyi's chairman.

"Under industry 2.0, the integration of pharmacy chains is accelerating. To better serve Chinese consumers with new products and services, one needs to provide an integrated solution through the combination of online platforms and offline resources. We believe we'll be the leader in the new industry, supported by Hony Capital's strong value-add capability," added Wu.

Quanyi plans to use the latest funding to acquire more pharmacy chains and adopt a centralized drug merchandising model in order to increase profit margins.

Hony Capital established a hospital operation group – Hospital Corporation of China – following the acquisition of Shanghai-based Yangsi Hospital in 2014. Through the platform, which listed in Hong Kong early this year, the GP wants to consolidate medical resources in the regions where it already has hospitals with a view to creating a national medical services network.

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• Topics
• Greater China
• Consumer
• Healthcare
• Expansion
• China
• Hony Capital
• Growth capital