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This Is How Amazon Could Invade the Pharmacy Business
- deleted 9y ago[deleted]
- analog31 9y agoIt should be easy for Amazon to start delivering my meds: Convince my employer. Right now, I walk two blocks to Target for new prescriptions, and I'm required to buy any refills from Express Scripts. My clinic also has a pharmacy on site that I could use. I'm betting that refills (i.e., stuff that's taken chronically) is the bulk of the prescription drug business, but it would be interesting to know if that's true or not. I don't see much fat to trim.
- Turing_Machine 9y ago"I don't see much fat to trim." Well, the obvious one is that Express Scripts probably isn't already sending you a package of other stuff every week or so to which a bottle of pills could be added at little or no increased cost, nor do they likely have the clout with shippers that Amazon does. Yeah, not everyone gets an Amazon package every week, but enough people do that it's going to add up.
- dannyw 9y agoHow many people get weekly refills? I️ thought monthly would be a lot more efficient and common?
- phnofive 9y agoExpress Scripts pushes 90 day supply as long as insurance allows it, I assume for this reason.
- Turing_Machine 9y agoThat's not the point. It doesn't have to be weekly, or even monthly. Whatever the frequency is, Amazon is somewhat likely to already have a package headed to the customer within that interval (much more likely that a dedicated prescription store, certainly). The advantage is actually greater with less-frequent refills, as the probability of having another package they can piggyback on within an acceptable window becomes higher the less frequent the refills are.
- adventured 9y agoI suspect Amazon isn't overly concerned with trimming the fat in this case (Walmart took out a lot of what was left of that when they entered the business). At break-even in pharmacy, while not trimming so much as a dollar of fat, Amazon benefits big. Here's how: - Increased shipping volume. This adds to their market leverage and it can bolster their own logistics business over time. Anything Amazon can do at scale, while at least breaking even, is a very big benefit to their flywheel. - Another entry into the home, into a person's life. And in this case, a far more important one than most purchases. If Amazon can sell a 67 year old a prescription and get into her home, they're no doubt betting they can also sell her an artificial intelligence tool in the coming years (maybe it takes three years of advertising the Echo on the side of the prescription delivery box to convince the customer). - It becomes a very sticky repeat business. People will stay with those so long as you don't treat them horrendously. That buys Amazon time to figure out new ways to make money in the segment. It may also be a long-term play on the fact that the US is guaranteed to increasingly shift to government healthcare, as the ACA or equivalent walks its way up the income ladder by necessity; Amazon may see an angle in that. - Walmart is finally becoming a serious online competitor. They're growing at 2x the rate of Amazon, with about 1/3 the online retail sales. Walmart's online business appears to be kicking into another gear. They've got a $20 billion per year pharmacy sales business. Then there are obviously the other far larger pharmacy-centric giants (the big three have ~72% of the pharmacy business). Anything Amazon can do to press them all in that segment, is a win competitively. To grow at this point, Amazon has to take from everyone else, as US consumer spending is expanding relatively slowly.
- phasecode 9y agoI would love to see Walmarts online growth split apart from the acquisition of Jet. Chance's are they are riding the coattail of that acquisition and once that drys up the only thing left is to spend a ton of money on customer acquisition to fuel "growth". Having both used Amazon and Jet, I find that Amazons customer support and checkout experience is significantly better then Jets.
- snowpanda 9y agoTotally agree with what you said. I'd like to add that another part of the break-even game is that often all it takes is for your competitor to take one step in the wrong direction, for you to become profitable. When Blockbuster (for example) took on streaming to compete with Netflix, not only were they far too late, but they also charged a fee for movies. People didn't bother because Netflix had unlimited streaming. They also had a poor catalog if I recall correctly. Too many mistakes.
- cperciva 9y agoRemember that Amazon loves low-margin businesses. You might not see much fat to trim, but I'm sure Amazon can save a few cents here and there.
- thisisit 9y agoThere are lot of stories going around on this, all of which are based on the client note by Leerink’s Ana Gupte which was released on Friday, setting cat among the pharma industry pigeons: http://www.barrons.com/articles/amazon-pharmacy-could-make-walgreens-cvs-sick-1507309531 http://www.barrons.com/articles/amazon-pharmacy-could-make-w... This article re-packages all the points from the client note like shipping, generics, B&M stores etc without even attributing to the original report.
- risingsky 9y agoAmazon is spreading its wings and it won't stop at anything. The idea of using Alexa seems far-fetched, but who knows?!
- xor1 9y agoLooking forward to having my adderall delivered by drone.
- deleted 9y ago[deleted]
- chasd00 9y agoheh i take vyvanse and have to burn a morning once a month to get my refill. It's so infuriating i wrote a telemed system based on webrtc and am selling it to my doctor so i can see my NP and get my rx snail mailed to me without leaving the office.
- rwbcxrz 9y agoI already have to worry about counterfeit electronics when ordering from Amazon. I’m not sure I’d trust them with prescriptions.
- deleted 9y ago[deleted]
- k_sh 9y agoThe barrier of entry to pharmaceutical sales is a bit higher than electronics.
- bamboozled 9y agoIt shouldn't be, dodgy appliances can get you seriously injured or even killed. [1] [1] http://www.scmp.com/news/china/article/1283818/woman-electrocuted-while-answering-iphone-may-have-been-using-fake http://www.scmp.com/news/china/article/1283818/woman-electro...
- katastic 9y agoYou can't be serious. Drugs differing by a couple thousands of a gram (mg) can severely harm or kill someone. There are some drugs measured in micrograms. And that speaks nothing of potential contaminates and cross-contamination. There's also no serious black market for theft and addictive abuse of electronics. (Not one that compares in the order-of-magnitude to the amount of drugs abused every day.) You can say electronics should be more regulated. You can't argue (without much more talking points) that electronics are as deadly or dangerous as drugs... things you put inside your body. And if you bring up medical electronics... we're right back to the same strict regulation that drugs have. So we don't even necessarily need more regulation of them.
- manmal 9y agoAlso, with expensive drugs I would worry that counterfeits could be introduced within Amazon‘s warehouses by workers, or within the postal system. Open a package, extract the original, and put the counterfeit in. For drugs that are worth hundreds of dollars per package, why not? I expect pharmacies to double check everything they buy, and I somehow doubt Amazon will be able to ensure safety when the package is handled by 10 different people. If they develop some kind of (digital?) package seal, I might change my mind. Or every pill container has an RFID chip and is verifiable with the supplier‘s public certificate.
- dqdo 9y agoI think that the Whole Foods acquisition now gives Amazon a physical footprint to compete with CVS, Rite-Aid, etc. Imagine ordering online and picking it up at a Whole Foods. After this step, they will find ways to fully by-pass the physical store and ship you medicine directly via Prime. There is a lot of money in the pharmacy business and a lot of opportunities for Amazon to enter this market and disrupt it. I don't think that any of the incumbents have the technological capabilities to compete with Amazon's supply chain. The question is not if they will enter. The question is how and how fast.
- MonicaSalma 9y agoInteresting what's going on next year in Amazon
- amelius 9y agoOk, so this is what a winner-takes-all game looks like, and it is getting pretty boring. Can we now play a different game, please? We can start by turning Amazon into a utility.
- corporateguy5 9y agoBut then it would turn into a slow government entity, all the talent will leave, and our economy would lose a great innovator.
- amelius 9y ago> But then it would turn into a slow government entity Public utilities are not necessarily government entities; they can be privately owned. > all the talent will leave, and our economy would lose a great innovator That talent could work at universities again, so everybody would benefit more evenly from innovation.
- icebraining 9y agoPublic utilities are not necessarily government entities; they can be privately owned. Like Bell, who had to be sued to allow people to use modems and fax machines?
- amelius 9y agoAt least the law was on our side. Try suing Amazon for a similar cause.
- icebraining 9y agoI don't need to - I can not use them.
- Ice_cream_suit 9y agoI know the ex-CEO of a generic pharmaceutical firm. Drugs that are wholesaled at $100 are discounted by the firm to around $25$. There is much profit for Amazon to harvest.
- aomix 9y agoI worked at a distributor throughout college and the week a drug went generic was party time. The company would ship more of a recently genericized drug in that week than they had until that point. Dropping to ~25% the original price is the average but sometimes it would be 10% or less.
- Havoc 9y agoNegotiating that legal framework is going to be challenging
- charpede 9y agoIs Amazon going to attempt to tackle the healthcare insurance market? CVS and Walgreens may have started in that direction, but they rely on EHRs to get them the industry knowledge they lack. I'm not sure if Amazon would do the same. That opens patients up to some crazy HIPPA scenarios when Amazon decides to collect your prescribing visit info to send to the insurance company.
- theklub 9y agoI think the brick and mortar pharmacy business is already being cut out by placing like Optum and express scripts.
- PaulHoule 9y agoThey ought to buy Pillpack.