Amazon targets expansion in US healthcare sector

The investment bank Jefferies has rooted out a series of letters and other communications between Amazon and the Pharmacy Boards at the American State level, where the company outlines its expansion plans for the healthcare retailing sector.

The conversation was triggered by Amazon’s recent purchase of licenses to sell pharmaceuticals in several states in the US. In the correspondence related to these applications, the company states that it would not be selling prescription drugs. Rather, it wants to focus on “medical equipment and supplies”.

This is perceived as offering the sort of retail healthcare products found in the likes of Walgreens, the US healthcare retailer, rather than entering the slightly overcast world of online pharmaceuticals. The latter would not be as outlandish as it seems. Buying medicines over the internet appears to be big business, although it is hard to tell. Often cross-border sales of pharmaceutical products are a grey area, as is tracking who sells what to whom. Yet much of the purchase of drugs is ‘discreet’ within healthcare systems, allowing providers such as Cardinal Health in the US to gain a valuable source of revenue. It might be the sort of market that a Silicon Valley company might try and ‘disrupt’, although the formidable regulatory structures around the market could be a barrier.

Nonetheless, even that parts of the healthcare sector may be under threat from Amazon’s retail and logistics capabilities is significant. It illustrates the power and reach of new logistics technology, both of high productivity warehousing systems, but also of data-generation web-based systems such as Alexa. Of course, such a threat is not just to the retailers themselves but also to the logistics service providers who support them.

Source: Transport Intelligence, November 16, 2017

Author: Thomas Cullen


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