The government-backed healthcare services in China are now receiving third-party competition from private players led by Alibaba Group Holding Ltd (NYSE:BABA) and others.

Chinese healthcare industry data reveals, this market is expected to grow to one trillion dollars by 2020. Alibaba Group and other private players view the market for prescription drugs in China as hugely attractive because hospitals in china sell the drugs prescribed. Therefore, there is scope for corruption and often drug prices are often inflated.

Alijk: The Drug-bidding app

Alibaba Group Holding Ltd (NYSE:BABA) is attempting to enter this lucrative market with a mobile app, named Alijk. Using technology which has created the market domination of the company in ecommerce, BABA will offer an online bidding solution.

As part of the new offer, patients need to upload the prescription and receive bids for the price that they can be supplied by retail pharmacies in the neighborhood. The vendor chosen by the patient will then receive payment via Alibaba Group Holding Ltd mobile-based payment product, AliPay. The retailer is then expected to deliver the order to the door of the patient.

Alibaba Group has already run this application on a pilot-basis in the province of Hebei. The application has already helped several people to purchase prescription drugs at 20% discounted prices. This has also allowed customers to save as much as 50% on their annual spending on drugs.

Industry experts believe that the app will disrupt the current balance in the industry. The supply-chain is likely to be disrupted with Alibaba Group Holding Ltd (NYSE:BABA) likely to gain major share of the $149 billion market for prescription drugs. Already there is discomfort in Alijk success. Many hospitals were seen distorting the prescriptions, so as to render them ‘unloadable’ to the mobile app.

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