Photo: CFP

China's food and drug regulatory body said it had suspended its electronic drug monitoring system, a platform operated by Alibaba Health Information Technology Ltd, while it drafts amendments to regulations monitoring pharmaceutical sales.

The China Food and Drug Administration (CFDA) said it will seek comments until March 23 on changes to the way pharmaceutical products are monitored, including online sales, according to statements posted on its website on Saturday.

The suspension comes after Ali Health's involvement in the platform, which allows consumers to check the authenticity of medical products online, was brought into the spotlight in January.

Hunan Province-based pharmacy chain ­Yontinhe Group said in January that it was suing the CFDA over the monitoring system, alleging the arrangement gave an unfair advantage compared with Ali Health, which has its own online drug sales business.

"Operating the electronic drug monitoring network means Ali Health can access and use detailed sales data of drug industry competitors like ourselves," Yontinhe said in the statement on its website, according to a report by Reuters in January.

Shares in Ali Health, an affiliate of e-commerce giant Alibaba Group Holding, fell sharply in the aftermath of the announcement, undermined by concerns that the company could lose the right to run the platform, formally known as the Product Identification, Authentication and Tracking System.

The company has previously stated that the platform was operated by the firm but was actually owned by the CFDA.

A spokesman for Alibaba Group declined to immediately comment when contacted by Reuters on Sunday.

China is the world's second-largest pharmaceutical market behind the US, and it is a magnet for drugmakers, hospital operators and medical device firms targeting a wider healthcare industry ­estimated to hit $1.3 trillion by 2020.

Shares in Ali Health surged in April in 2015 when Alibaba said it was injecting its online ­pharmacy operations into a Hong Kong-listed affiliate in a $2.5 billion deal.

China hopes to boost retail drug sales at pharmacy chains and online and wrestle some sales away from hospitals, which currently control around three-quarters of drug sales.

China wants to overhaul its healthcare market which suffers from an undersupply of doctors, snarling queues and a wide gap between urban and rural healthcare.