Merck KGaA and Alibaba Health Information Technology Ltd. entered a collaboration that will initially focus on drug monitoring and internet health services in China.

The deal will combine Alibaba Health's drug tracking platform with Merck's expertise in diabetes, thyroid diseases and heart diseases to ensure safe and secure drug use, Merck said in a news release.

Financial terms of the collaboration were not disclosed.

German drugmaker Merck and Chinese internet healthcare company Alibaba Health also plan to explore pharmaceutical e-commerce and artificial intelligence-enabled healthcare applications.

A 2016 Deloitte report estimated that the pharmaceutical e-commerce market could hit sales of up to 400 billion yuan by 2020, up from 10 billion yuan in 2015.

China plans to make affordable, accessible healthcare available to all citizens through its Healthy China initiative — a program through which the country aims to reach health equity by 2030. In April, the country's state council released guidelines encouraging a deeper integration of the internet and healthcare.

The country has also made efforts to decouple drug sales from the hospital business and move that market to an online platform, but the Asian powerhouse continues to face significant hurdles.

In February 2016, the China Food and Drug Administration suspended the electronic drug monitoring platform that Alibaba Health hoped it could run. In May 2016, Alibaba Health's parent, Alibaba Group, also stopped its online drug sales.

As of June 19, US$1 was equivalent to 6.48 Chinese yuan.