Shares of Alibaba Health Information Technology Ltd., better known as Ali Health, experienced a sharp plunge on Monday after the China Food and Drug Administration (CFDA) announced that it would be suspending the use of the company's electronic drug monitoring system, according to The Global Times.
The CFDA's announcement, which was released on Saturday, stated that the Product Identification, Authentication and Tracking System (PIATS), a system developed and utilized by Ali Health to track medicine sales, would not be used in the Chinese market anymore.
The PIATS system had been the backbone of Ali Health's revenue as of late, with the company previously announcing to the Hong Kong stock exchange that "almost all" of the firm's revenue was generated from the operation of the PIATS system, reports Bloomberg Business.
Though very prolific, the PIATS system has been under intense criticism lately, with rival Hunan-based pharmacy chain Yontinhe Group stating in January that it would be suing the CFDA over its use of the PIATS system, alleging that it gives Ali Health an unfair advantage in the drug sales business.
Ali Health also operates an online drug sales business, which is of course, largely influenced and bolstered by the utilization of the drug-monitoring system, reports Reuters.
Despite the setback, Ali Health stated that it would continue to provide support and maintenance services to the platform until it receives a formal notice from the CFDA.
