Will the giant
online worldwide retailer be the future pharmacy business leader?
Over the last months, the e-retail giant Amazon online
shop has been thinking of diversifying its product range already well enlarged
with book stores, drones and its own delivery services. Amazon is still not
satisfied. Indeed it's next target will this time be the pharmaceutical field.
The news hasn’t been confirmed by Amazon but the Wall
Street Journal relayed the information of St Louis Post-Dispatch according to
which Amazon has obtained a license for medicine distribution.
The Amazon ‘healthcare’ project team
Amazon has recently hired Mark
Lyons who used to work for a health insurance company, Premera Blue Cross.
At the same time, the Amazon’s grocery and Pantry chief, Eric French,
started to hire new employees. So far, the online retail giant has consulted
with dozens of people which has led them to think that they could run a
pharmacy that will be entirely based on the web.
Targeted test
countries
The United Kingdom
In the United Kingdom, drugstores sell around 12 billion pounds of medicine
per year.
It could represent a potential market since Amazon could catch
opportunities by collaborating with the Department of online prescriptions, the
National Health Service.
The plan is quite risky and challenging since the United Kingdom market
stands for one of the most regulated in the world with strict rules applied to
companies delivering medicine.
In order to break into this market, Amazon also has to be registered into
the Medicines and Healthcare Products Regulatory Agency.
Amazon already announced that they were looking for applicants for the job
of general manager with a pharmacist training.
The United States
In the United States more than 4 billion of prescriptions are delivered
each year, that’s to say a $300 billion turnover per year.
Amazon already obtained administrative authorisations in 12 American states
such as Nevada, Arizona, North Dakota, Alabama and New Jersey. And it is still
waiting for the approval for Maine.
Supplies such as blood pressure monitor and bandage are already available
on the web. And Amazon has also been given the go-ahead to sell any kind of
medicine without prescription on the internet such as pain treatment like Advil
and antiallergenic treatment like Zyrtec.
The US drugstore market is a potential one but still remains dominated by
traditional drugstore chains like Walgreen’s and CVS.
Japan
Amazon has made a partnership with two local drugstore chains in order to
test the online sales and fast delivery (the same day of the order) of
medicine.
However, the process is not that quick. Before purchase, the Japanese
customers need to be consulted by a pharmacist.
They then have to describe their symptoms online as well as their medical history
by completing a form. At the end, the articles will be home delivered only
after the approval of a pharmacist.
The first steps
in a thousand-mile march
Laws on medical prescription transfers and on electronic prescriptions make
this market
Before entering this market, Amazon has to deal with a complex ecosystem
linked to the health system. And it would be necessary to reach agreements with
the private mutual health insurance companies that pay the healthcare costs in
absence of social security schemes like in the United States.
Amazon will have then to adapt its offerings according to each country’s regulation
system on healthcare.
Threats are numerous and could discourage Amazon from entering this new
market.
One of the solutions would be for Amazon to make a partnership with a big
wholesale pharmaceutical company. This could be the reason why Amazon took over
Whole Foods so that it could set up pharmacies in its stores.
To be continued…
According to CNBC, Amazon will keep on analysing the result and will make a
decision on the launch of its drugstore in the long run or not at the end of
November 2017.
If the project is a success, Amazon will turn into a significant problem
for brick and mortar competitors which are already on the way out.
Likewise, it might jeopardise the regular presence of pharmacies even more
if the Giant online retailer managed to establish lower costs.
The problem is that making medicine cheaper is without doubt interesting
for everyone but it could also be dangerous. Most of the time cutting costs
means lower quality. Maybe Amazon should be looking at another sector to
monopolize.
Ophélie.L
Hi Ophélie!
ReplyDeleteI had no idea Amazon was thinking of delivering medicine through its website. Personally, I don't think Amazon should stick to this concept of an online drugstore. It could pose a threat to local pharmacies, drugstores, perhaps even doctors too and as you said, the quality could be dubious.
Furthermore, I think that people are more comfortable buying their medicine in local stores from professionals who are able to provide information and advice rather than online.
I think it's best that the company stick to selling standard products such as books and furniture.
What is your point of view ? What do you think Amazon should do?
Manon.V
I agree with you, I was also quite surprised when I discovered this Amazon healthcare project.
DeleteAs you said, I think people are more reassured when having a real face-to-face consultation with professional doctors.
For example, I can’t imagine some elderly members of my family change their medical habits.
Most of the time people feel close to their doctors because they have seen them growing up and it also makes them feel more confident regarding the medicine that they we’ll be prescribed.
Even if I remain sceptical, I think it will be interesting to see if it works well or not.
Ophélie.L
Hey Ophélie!
ReplyDeleteYour article is very interesting!
I was not aware that Amazon wanted to enter a new market. I personally think it is risky, I’m scared that some medicines will be fake, maybe it's just me, maybe it is because I’m used to buying directly to the pharmacist. What do you think about this announce?
Another question, do you think Amazon is ready for this market? I mean it is medicines, not books or phones, so people are expecting a really fast delivery, because they are sick, but if there is a delay of delivery, people won’t be happy. I don't think that would work but I may be wrong.
Myriam S.
Hello Myriam,
DeleteThank you for your comment. I guess few people are aware of that project but I think that if Amazon hasn’t made any official declaration it was on purpose because it would have faced many critics. That’s why the project to be tested before being officially launched.
I totally understand your threat, especially nowadays with scandals regarding the medicine contents.
To answer your question, I don’t think Amazon is ready for this market, and once again that’s why it is being tested and that is also why they are needing a professional team since Amazon isn’t specialized at all in this field.
Concerning the delivery rapidity, you’re pointing at something interesting. I didn’t think about that but it is true that it can be a problem in case of emergency... But if it is a real emergency, won’t people avoid to place order through the Internet ?
Ophélie.L
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