Alibaba Health Information Technology (AliHealth), the health services subsidiary of Chinese e-commerce conglomerate Alibaba Group has launched a healthcare and drug alliance with 65 major Chinese drugstore chains in a bid to help reshape drug distribution and healthcare deliveries.

"China Healthcare and Drug Pioneer Alliance is a network that aims to integrate value-added services like health consultation, chronic diseases management, and health insurance programs into the current platform of merely online drug retailing," said Long Yan, deputy director of China Medical Pharmaceutical Material Association at the launch ceremony on Wednesday. He was nominated as the head of the alliance.

According to Long, China's retail sales of drugs hit 500 billion yuan last year while only one percent of the total was transacted via online drug stores.

In China, all hospitals have big pharmacies where patients get medicine prescribed by physicians. For a long time, hospitals marked up drug prices to help sustain the operations.

Experts warned that has led to unnecessary drug prescriptions and costs for both patients and the country.

To correct the situation, the top health authority launched a healthcare reform, and cut off hospitals' financial dependence on drug sales has been high on the reform agenda.

"That provides unprecedented opportunity for online drug sales, which might help the government reshape the current drug distribution system," Long said. The alliance would help China's drugstore chains boost online drug sales.

"In addition, with big data collected via online sales of drugs, the alliance would gradually transform from a drug distributor to a comprehensive healthcare management service supplier."