CHINESE e-commerce giant Alibaba Group has scrapped plans to inject its pharmacy business into a Hong Kong-listed affiliate, citing regulatory uncertainties over the deal as well as over China’s broader health-care industry.

    The affiliate, Alibaba Health Information Technology Ltd, said in a filing April 1 that a time limit for the deal to go ahead had been reached a day earlier. The firm said it had not applied to extend it, effectively terminating the plan.

    China has been launching a raft of new regulations as it tries to overhaul its health-care market, creating a sometimes complex business environment for hospital operators, drug firms and medical device companies targeting an overall health-care bill estimated to hit US$1.3 trillion by 2020.

    In April last year, Alibaba said it wanted to inject its pharmacy operations into Alibaba Health in a US$2.5 billion deal to consolidate its health-care enterprise and ride a boom in online health-related business.

    However, regulators have grown increasingly cautious about the sale of online drugs while Alibaba Health itself has come under fire for its role in operating a government-linked drug tracking platform.

    China’s drug watchdog suspended the platform in February after an outcry by domestic pharmacy chains who complained the role gave Alibaba Health an unfair advantage over rivals.

    Alibaba Health said uncertainties over the deal, as well as regulatory changes in the wider health-care market, were behind the decision to not pursue the plan.

    “There are currently substantial regulatory uncertainties in relation to the medical and health-care industry,” it said in a filing to the Hong Kong stock exchange.

    Alibaba will instead look to separately inject a portion of its health food, dietary supplements and nutritional products business into Alibaba Health, the latter said. That business is currently operated by Alibaba’s online platform Tmall.(SD-Agencies)