Xi'an Yikang Pharmacy ("Yikang") announced today that it has completed a strategic financing with funds advised by CVC Capital Partners ("CVC"). Through the partnership, CVC will help Yikang diversify its medicine categories, improve efficiency of distribution and sales, enhance digitalisation and continue to grow and scale the business.
The retail pharmacy sector in China is currently undergoing a period of market consolidation and business model innovation. Its future design will be shaped by four key factors, namely professional competence, diversified services, online channels and digitalisation.
In recent years, there has been a move to make prescription drugs more readily available outside of public hospitals under the government's "Healthy China 2030"policy. Although public hospitals remain the primary channel for the sale of drugs, the number of retail channels continues to rise, leading to a greater proportion of drug sales outside of public hospitals. Retailers have to be prepared to respond quickly to market changes.
As a retail pharmacy chain leader in Northwest China, Yikang has made investments in online channels and digitalisation. It has successfully attracted over 10 million loyal members thanks to its proprietary mobile application and WeChat mini-programs, and is a national leader among O2O (Online to Offline) and DTP (Direct to Patient) pharmacies. The app provides a full range of services including health science education, order and delivery of prescription medication, and over the counter healthcare and personal care, with O2O service coverage reaching 70%. Yikang will use the capital from this financing to further ramp up investment in digitalisation and build a popular smart retail pharmacy brand.
Mr. Yu He, Chairman of Yikang, says: "We would like to express our sincere gratitude to CVC for its trust in Yikang as a strategic shareholder. Yikang's offline shops are the closest health partners for many of our consumers. With CVC's support, we will continue to leverage digitalisation and smart new retail toolkits to provide more targeted and convenient services to our customers and be their preferred health partner in Shaanxi and beyond."
Mr. Kevin Xu, Senior Managing Director of CVC, says: "With the deepening of China's healthcare reforms, rapidly ageing population and the increasing importance people attach to health and quality of life, CVC is optimistic about the prospects of China's retail pharmacy market. Especially the boost in business efficiency brought about by digitalisation and economies of scale arising from sector consolidation. We are glad to be able to help Yikang continue to better serve Chinese consumers with our extensive experience in the retail and healthcare industry."