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Amazon expands push into healthcare with online pharmacy
Angelica LaVito and Matt Day
Nov 18, 2020 – 9.42am
New York/Seattle | Amazon unveiled its biggest push into selling prescription drugs with the launch of a digital pharmacy and discounts for paying US Prime members that sent shock waves through shares of pharmacy chains and distributors.
The e-commerce giant on Tuesday (Wednesday AEDT) unveiled Amazon Pharmacy, a section of its retail website and mobile application that lets people order medication.
Shoppers can pay using their health insurance. Prime members who do not use their insurance are eligible for discounts on generic and brand-name drugs on Amazon's site or at about 50,000 participating pharmacies.
Amazon's new offering comes more than two years after its $US753 million ($1.03 billion) acquisition of PillPack, an online pharmacy known for organising prescriptions into packets. This expansion puts the Seattle-based e-commerce company into more direct competition with pharmacy giants CVS Health and Walgreens Boots Alliance, the two largest chains in the US.
CVS shares fell as much as 8.5 per cent in early trading in New York, while Walgreens Boots dropped as much as 10.3 per cent.
The move also helps Amazon compete with Walmart and other big-box stores that already sell prescription drugs.
Analysts have long expected Amazon to dive deeper into healthcare in a bet the company can bring its digital real estate and logistical prowess to bear on a roughly $US4 trillion industry in the US with a reputation for inefficiency. The company rattled drug retailers with its PillPack acquisition, but Amazon has been slow to integrate the online pharmacy start-up into its offerings.
The announcement on Tuesday marks the first time that shoppers can order prescription drugs directly on Amazon. Previously, they were redirected to PillPack's website.
An integrated pharmacy removes one of the few gaps in Amazon's offerings compared with major big-box and grocery rivals, some of whom have long filled shoppers' prescriptions in the same stores where they sold flat-screen televisions or cans of soup.
The discounts are a clear play for people who pay for their medications with cash, whether they are uninsured or are looking to save money. Strong demand for transparency and better deals have helped fuel the rise of discount card programs like GoodRx Holdings.
Amazon will display both the price when using insurance and the price without. Infusing transparency into a system that has been frustratingly opaque for consumers could alter the supply chain.
"We designed Amazon Pharmacy to put customers first – bringing Amazon's customer obsession to an industry that can be inconvenient and confusing," said TJ Parker, vice-president of Amazon Pharmacy and co-founder of PillPack.
Amazon's push comes as consumers are shunning stores and ordering more items online, a trend the coronavirus pandemic has accelerated.
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Call me old fashioned but I reckon the level of competition an Amazon entry into our market place would be a very good thing – especially for the cost conscious where the price transparency in retail pharmacy is hardly great.
I am sure the Pharmacy Guild will be dragging out every lobbying skill to block the idea but I reckon change is inevitable. We have already seen Ramsay make some progress and I can’t believe Amazon can be denied entry forever!
What do you think?
David.
Think it is a great thing. For all the talk of innovation and disruption the entry of the likes of Amazon must surely be a welcomed addition.
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