Alibaba’s health technology unit plunged after China said it will discontinue a drug-coding system developed by the company.
Shares of Health Information Technology Ltd. were down 12 percent to HK$4.26 (55 US cents) in Hong Kong Monday morning.
The China Food and Drug Administration suspended the electronic coding system that identifies counterfeit medicines and allowed other methods of tracking drugs, Bloomberg reports, citing an official announcement.
“The company doesn’t currently have sufficient information to accurately estimate the impact on its financial results and operating performance,” Alibaba Health, which is controlled by billionaire Jack Ma’s Alibaba Group Holding Ltd., said in a statement to the Hong Kong stock exchange on Sunday.
“There could be a material adverse impact on the company’s revenue, business and results of operations” if the China FDA announces other new regulatory policies, it said.
The drug product identification, authentication and tracking system accounted for almost all of the company’s revenue for the year to March 31, 2015, Alibaba Health said in the stock exchange statement.
The company has not received any official notice from the authorities.
It said it will continue to operate the system and and will work closely with regulators to provide such services under their direction.
The coding system’s earnings potential has been an influential factor for Ali Health shares, which are listed in Hong Kong.
The stock plunged 20 percent on Jan. 28 after local media reported China’s drug regulator planned to withdraw the company’s operating rights for the coding system, and rebounded 16 percent a day later after Alibaba Health said it had not received any notification from the authority to cease operations.
Alibaba Health will continue to develop its other main businesses, such as the construction of a medical services network and pharmaceutical e-commerce business, it said in the statement.
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