(Yicai) Nov. 29 -- Shares in Alibaba Health Information Technology surged as much as 6.2 percent today after the Chinese online healthcare provider said it is paying HKD13.5 billion (USD1.7 billion) for the exclusive marketing rights in the healthcare category on its parent firm Alibaba Group Holding’s e-commerce platform to improve its services to online vendors and boost revenue.

Alibaba Health’s share price [HKG:0241] was trading up 0.6 percent at HKD4.69 (USD0.60) as of 2 p.m. Earlier in the day it hit HKD4.95.

Alibaba Health will pay Ali Mama, Hangzhou-based Alibaba’s marketing arm, HKD2 billion (USD25.6 million) in cash and issue 2.56 billion of shares at a price of HKD4.50 each for the rights to some of its services on Tmall, the Hong Kong-based firm said yesterday.

The deal will allow Alibaba Health, which was spun off from Alibaba in 2015, to offer value-added services to its merchants on Tmall. It will also help Alibaba Health build on its existing businesses to provide more diversified services to healthcare vendors and boost the company’s profit and revenue, it said.

Alibaba Health’s net profit almost tripled in the six months ended Sept. 30 from the same period last year to CNY445.9 million (USD62.6 million), while revenue jumped 12.7 percent to CNY13 billion (USD1.8 billion), according to the financial report released yesterday.

The number of vendors on Alibaba Health’s Tmall stores climbed 14.2 percent as of Sept. 30 from a year ago to 32,000, and the number of members of its self-operated shops jumped 21 percent to 77 million, the firm added.

Alibaba Health said yesterday that Chief Operating Officer Shen Difan has been promoted to chief executive officer. He is replacing Chairman Zhu Shunyan who has resigned from the role. It is the second time that 45-year-old Shen acts as CEO, having previously held the position from March 2018 to March 2020.

Editor: Kim Taylor