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China's JD.com in online pharmacy tie-up with Shanghai Pharma

Richard Liu, CEO and founder of China's e-commerce company JD.com, gestures before ringing the opening bell at the NASDAQ Market Site building at Times Square in New York May 22, 2014. REUTERS/Shannon Stapleton

SHANGHAI (Reuters) - Chinese e-commerce giant JD.com Inc has tied up with leading Chinese drugmaker Shanghai Pharmaceuticals Holding Co Ltd to develop its online healthcare business, the drugmaker said in a filing on Monday.

The move reflects a growing rivalry between Chinese e-commerce firms over China's fast-growing online healthcare market, with technology seen as a potential cure for a sector that is bogged down by high prices, snarling hospital queues and frequent allegations of corruption.

Larger rival Alibaba Group Holding Ltd said it joined forces with U.S. drugmaker Merck & Co Inc last week to explore developing online health services such as warehousing logistics and health data analysis.

The sale of prescription drugs online in China is currently prohibited, but Beijing is expected to open up the market soon and is finalising the list of medicines that will be approved for online sale, industry sources said.

"The government has recently announced a series of policies to encourage the development of online pharmacy and we expect this area to be a huge market opportunity," Shanghai Pharma said in a filing to the Hong Kong stock exchange.

A JD.com spokesman declined to give immediate comment.

China is a magnet for drugmakers, medical device firms and hospital operators looking to tap the world's second-biggest pharmaceutical market, where spending is set to hit as much as $185 billion (118 billion pound) by 2018, according to estimates from IMS Health.

Shanghai Pharma added a note of caution, reflecting wider concern over regulation of the sector: "China's online drug market is still at an early stage, and there are still some uncertainties around policies governing this sector," it said.

(Reporting by Adam Jourdan; Editing by Stephen Coates)