Chinese conglomerate Alibaba Group is planning to sell certain healthcare assets under its Tmall Pharmacy business to its Hong Kong-based division Alibaba Health Information Technology for HK$10.6bn ($1.35bn).

Product categories such as medical devices and healthcare products, adult products and medical and healthcare services will now move over to the Alibaba Health platform from Tmall Pharmacy.

Together, these categories are said to have represented 3,300 merchants and CNY20.6bn ($3.2bn) gross merchandise value in the fiscal year ending 31 March 2018.

The move is expected to increase Alibaba Group’s equity ownership in Alibaba Health from 48.1% to 56.2%, while its voting interest will rise from 61.5% to 67.5%.

Alibaba Group CEO Daniel Zhang said: “Healthcare is a strategically important area for Alibaba Group with strong growth potential.

“Alibaba Health’s knowledge and network, in combination with Alibaba Group’s consumer insights and technology, will enable us to create the best healthcare ecosystem in China.”

“Healthcare is a strategically important area for Alibaba Group with strong growth potential.”

Alibaba Group noted that the deal will allow Tmall Pharmacy merchants to boost their connection with various healthcare ecosystem participants, including consumers. This in turn will improve customer retention and new opportunities for sales.

It also is expected to enhance customer experience with Alibaba Health’s analytical capabilities, engagement, and wide healthcare product offerings.

Alibaba Health CEO Leo Shen said: “The transaction strengthens Alibaba Health’s market leadership and recognises our contribution to the healthcare industry in China.

“It will allow us to expand our business by adding more complementary categories and enabling us to have deeper engagement with more participants.”

The transaction is subject to customary closing conditions and approvals.