Alibaba's health woes show its Midas touch has limits. A unit of the Chinese e-commerce giant has suffered a run-in with mainland regulators. Though shares of the Hong Kong-listed Alibaba Health Information Technology soared when Alibaba took control last year, reality has proved less exciting. It's a reminder that even boss Jack Ma can't cure investors' loss of faith.
China's food and drug regulator has suspended an electronic drug monitoring system as it overhauls pharmaceutical regulations. That's a big blow for Ali Health: the $5 billion company has been developing and operating the nationwide platform for identifying and tracking pharmaceuticals for regulators for almost a decade.
Even though Alibaba injected its online pharmacy business into Ali Health in return for a majority stake last year, the drug tracking system is still expected to generate most of the company's revenue for the year ending March. News of the suspension promptly knocked as much as 16 per cent off Ali Health's shares.
A closer examination shows the prognosis has been gloomy for a while. When Ma's $169 billion e-commerce empire took full control of the loss-making company last year it was touted as Alibaba's "healthcare flagship". Excited investors pushed its value to almost $13 billion.
Since then, however, the company's shares have declined by two thirds. Last month a pharmacy chain added to the uncertainty when it sued mainland regulators, claiming that Ali Health's role in the drug tracking system gave it an unfair advantage.
The company's troubles may be specific. But some of Alibaba's other listed subsidiaries have struggled to live up to their early stock market promise. Shares of Alibaba Pictures jumped by more than 185 per cent when the e-commerce group took a controlling stake in 2014. But despite China's box office boom, the TV and film production company has shed over $6 billion of market value since its peak in April last year.
Alibaba still has the power to excite investors: Shares in Groupon recently jumped as much as 41 percent after the Chinese company announced it had taken a stake in the once-feted purveyor of online deals. Ali Health is a reminder that Alibaba's golden touch wears off.
China's food and drug regulator has suspended an electronic drug monitoring system as it overhauls pharmaceutical regulations. That's a big blow for Ali Health: the $5 billion company has been developing and operating the nationwide platform for identifying and tracking pharmaceuticals for regulators for almost a decade.
Even though Alibaba injected its online pharmacy business into Ali Health in return for a majority stake last year, the drug tracking system is still expected to generate most of the company's revenue for the year ending March. News of the suspension promptly knocked as much as 16 per cent off Ali Health's shares.
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Since then, however, the company's shares have declined by two thirds. Last month a pharmacy chain added to the uncertainty when it sued mainland regulators, claiming that Ali Health's role in the drug tracking system gave it an unfair advantage.
The company's troubles may be specific. But some of Alibaba's other listed subsidiaries have struggled to live up to their early stock market promise. Shares of Alibaba Pictures jumped by more than 185 per cent when the e-commerce group took a controlling stake in 2014. But despite China's box office boom, the TV and film production company has shed over $6 billion of market value since its peak in April last year.
Alibaba still has the power to excite investors: Shares in Groupon recently jumped as much as 41 percent after the Chinese company announced it had taken a stake in the once-feted purveyor of online deals. Ali Health is a reminder that Alibaba's golden touch wears off.