(Yicai Global) May 29 -- Alibaba Group Holding will sell the flagship pharmacy service on its premium e-commerce platform Tmall to medical unit Alibaba Health in a HKD10.6 billion (USD1.4 billion) deal aimed at consolidating the firm's position in the healthcare sector.

Alibaba Health Information Technology will acquire all equity in the parent company's affiliate Ali JK Medical Products through the issuance of shares, the Hangzhou-based firm said in a statement.

"Alibaba Group has been very supportive to the development of Alibaba Health as the group's flagship platform in the healthcare sector," said Alibaba Health Chief Executive Leo Shen. "The transaction strengthens Alibaba Health's market leadership and will allow us to expand our business by adding more complementary categories."

China's private healthcare sector has become a key battleground for China's technology conglomerates. Alibaba Health faces stiff competition against other major players including Tencent Holdings' WeDoctor and Ping An Healthcare in its efforts to expand market share. Domestic expenditure in the sector is expected to hit USD1 trillion by 2020 from USD357 billion in 2011, states a report from McKinsey.

Ali JK Medical Products runs Tmall Pharmacy, an online store selling medical instruments and health products as well as offering medical services. The platform, with a userbase of 86 million customers and 3,300 merchants, posted revenue of CNY20.6 billion for the twelve months up to the end of March this year.

Alibaba will continue to support Alibaba Health in its development of a flagship health and medical platform, and look for cooperation opportunities to help the unit achieve its goal.

Editor: William Clegg