Amazon has finally made its way into the health care industry by launching Amazon Pharmacy. This will allow people in 45 US States to order commonly prescribed medications from the online colossus, and have them delivered to their doorsteps in no time.

Two years ago, Amazon acquired PillPack for $753 million. It has since then been working to acquire state licenses across the US to ship prescriptions. This new venture is a step up from the mail-order pharmacy, however, PillPack will remain distinct for those who require pre-sorted doses of multiple drugs.

This new online pharmacy represents a move in the pharmaceutical industry to make medication more affordable and more accessible. The pandemic may help the online retailer bring drug orders online, posing a real threat to brick and mortar pharmacies. Prime members benefit from two-day delivery and discounts of up to 80%. Discounts on non-insurance purchases are offered both online and at more than 50,000 physical locations, including those of rivals.

It makes sense that the tech conglomerate has finally tapped into the drugs industry. It has a consumer market worth of over $300bn, and additionally has a recurring nature of small packages that are likely to integrate smoothly into Amazon’s existing logistics orders, identified by Morgan Stanley.

The results of this are already apparent. Since Amazon’s announcement, both CVS’ and Walgreen Boots Alliance’s stock fell by 9%, Rite Aid 16%, and GoodRx 20%.

Jeffries analyst Brent Thrill adds that this is not the first time Amazon caused massive disruption - “they identify ginormous markets where the processes are absolutely awful as a consumer and they make it easy.” Given the complicated nature of distributing and selling drugs, with some necessitating refrigeration and others being controlled substances, this places an extra regulatory burden on Amazon to comply with.

Customers can set up a profile on Amazon that doctors can directly send prescriptions to, or can be transferred from their existing retailer. Basic health information will be required. However, this raises concerns about the provision of health data to a tech corporation. Amazon has stated that health data will stay separate from the retail site, and that advertisers will not have access to this information without permission. Despite this, former Amazon executive James Thompson envisages that ads for gym equipment or specific health products may pop up based on a particular customer’s health data.

Amazon has ramped up the pressure. Pharmaceutical companies must act quickly and strategically to compete against the online retailer whose dominance is not to be underestimated.

By: Nicole Woo

Amazon Swoops Into The Pharmaceutical Sector