China to allow online sales of prescription drugs this month

Online winners

Pharmacies with an online presence, such as US-listed Jo-Jo Drugstores and China Nepstar Chain Drugstore Ltd, as well as general online retailers also stand to benefit. Marketplaces Alibaba and JD.com already have licences to sell over-the-counter drugs online, as does US retailer Wal-Mart.

Initially, online prescription drug sales are likely to be business-to-business (B2B) before spreading to retailers. The potential size of the B2B drug market ranges from 300 billion yuan to as much as 800 billion yuan, according to Deutsche Bank.

At risk could be offline middlemen such as Sinopharm Group Co Ltd, Shanghai Pharmaceuticals and China Medical Systems Holdings Ltd.

It will take considerable time for companies and consumers to get used to the new model, said Jo-Jo Drugstores' Zhao, adding the policy would allow his firm to expand significantly online. In the US, around a third of drugs are sold online compared with almost zero currently in China, Zhao said.

Drugs sold online may be up to 10 percent cheaper than those sold through traditional channels, analysts say.

"The government has a common theme - to improve quality of care for the masses and at the same time contain costs," said Andrew Chen, head of PwC's China Consulting Healthcare practice. "So, the e-pharmacy side is definitely going to be a trend."