Amazon has long been the most dominant force in online retail, but a new push to diversify could soon spread that dominance to the healthcare sector as well. Given its enormous resources, broad technical proficiencies and renowned ability to recognize emerging markets, Amazon poses a major threat to many of the traditional players in healthcare.
The $400 billion company based in Seattle has been developing its highly secret “1492” healthcare division for some time, but it is finally ready to enter the market in a profound way by introducing a suite of disruptive services related to pharmaceuticals. In a bid to increase competition and undercut the traditional drug retailers, Amazon will use its advanced logistical capabilities to speed up drug delivery especially to patient homes. The online portal for prescription medications would also offer much broader price transparency than is currently available, positioning itself to become a one-stop retailer for much of the country.
Amazon is investigating the possibility of becoming a major distributor of drugs to retail pharmacies. Its immensely popular Amazon Business platform that serves as a logistical network for 45,000 third party vendors could easily be scaled up to accommodate this new venture. By applying its competitive strength and industry-leading logistical capacity, Amazon could quickly muscle out many current medical suppliers.
Amazon is also looking into the possibility of using its highly popular voice-activated assistant Echo to deliver telemedicine services. Not only could Echo be used in residences by patients who want to consult with a medical professional, but it could also be seamlessly merged with the pharmacy to immediately order prescribed drugs. Echo would also provide a robust resource in a variety of clinical settings.
This expansion of digital health services would be buttressed by a rapidly expanding collection of patient health data. Amazon has proven that it could leverage consumer data to create personalized purchasing options. This new trove of information would give them a competitive advantage and make the company a formidable competitor in the healthcare market.
This new strategy would likely revolutionize at least certain segments of the healthcare industry. Pharmaceutical companies would likely have to respond to the intrusion of this behemoth price competitor, leading to a depression of pricing. This would erode profit margins and push less efficient organizations out of the market. The remaining competitors will have to streamline operations, adopt more efficient business practices and adapt to a less profitable business environment; ultimately, a disruption by Amazon would reshape the industry from shareholder-centric to consumer-driven.
A study by Goldman Sachs estimates that if Amazon expands into the pharmaceutical market, it would reap enormous rewards. The greatest profits would be found in online and retail sales; in the first year alone, the company could gross $72 billion. If it served as a product distributor to existing pharmacy outlets, it would produce $17 billion in gross profits in the first year. If the company only partnered with existing pharma companies, it would gross $1-$3 billion.
Dr. Rober Moghim, M.D. - CEO/Founder Onyx M.D.
Disclaimer: The views expressed in this article are the personal views of Robert Moghim, M.D. and do not necessarily represent and are not intended to represent the views of the company or its employees.