China online pharmacy Dingdang seeks Hong Kong IPO

TPG Capital took the lead in that round, contributing $100 million. OrbiMed, Redview Capital, Summer Capital, Valliance Asset Management, Yingke Private Equity, and Orchid Asia also took part.

Dingdang’s largest external shareholder is CMB International, with 7.28%. Most recently, it participated in a $150 million Series B extension last year alongside SBCVC and Dragon Gate Investment Partners. The first tranche of the Series B, worth RMB600 million ($93 million), was led by SBCVC in 2019. The company received angel funding from Chunfeng Venture Capital and a RMB300 million Series A from Tongdao Capital in 2016.

Launched in 2015, Dingdang describes itself as a pioneer in digital healthcare services in China. It is the third-largest player in China’s digital retail pharmacy space with a 1.2% market share. The prospectus doesn’t identify the market leader – on 11.4% - but it is likely JD Health, the online-to-offline healthcare business of e-commerce giant JD.com. It raised $3.48 billion through a Hong Kong IPO last year.

Dingdang’s drug express service, accessible through a mobile app and a WeChat mini program, leverages a network of 302 smart pharmacies across 14 cities in China. Delivery is guaranteed within 28 minutes of an order being placed. In addition to online direct sales, the company sells products to e-commerce players and other online platforms and distributes to consumers via the offline pharmacies.

Dingdang also offers online medical consultation, utilizing 16 full-time and 58 part-time doctors, and 800 third-party doctors, as well as chronic disease and healthcare management solutions such as dosage guidance, consultation reminders, and prescription renewal.

Last year, Dingdang fulfilled 40.5 million medication orders through its online direct sales and offline channels, up from 26.4 million in 2019. Health consultations doubled in number to 4.4 million. More than two-thirds of people using the consultation service end up buying products through the drug express service.

Revenue came to RMB2.23 billion in 2020, up from RMB1.28 billion the previous year. Online direct sales accounted for 76.1% - continuing a steady increase – with 15.1% from B2B distribution, and 7.8% from offline retail. The remaining 1.1% came from advertising and other business. Over the same period, Dingdang’s net loss widened from RMB273.9 million to RMB919.7 million, largely because of increases in fulfillment and sales and marketing expenses.

China’s digital health and wellness market was worth RMB218.1 billion in 2019, and Frost & Sullivan projects it will reach RMB4.2 trillion in 2030. The digital retail pharmacy segment is the biggest contributor, generating RMB111.7 billion in gross merchandise value (GMV) in 2019. By 2030, it will be RMB1.3 trillion.

Other recent investment activity in the space includes a $270 million round for Yaoshibang. The company is an exclusively B2B player, distributing medicines from upstream drug manufacturers to pharmacies, clinics, and health centers.

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• Topics
• Greater China
• Healthcare
• Technology
• IPO
• China
• TPG Capital
• Softbank China Venture Capital
• OrbiMed
• Redview Capital
• Yingke Private Equity
• Orchid Asia Group Management