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[Life Science] Is Amazon about to disrupt the pharmaceutical ecosystem?

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Recently, a pharmaceutical company ‘Pharma Inc’ (real company name anonymized) was using Netvibes Insights Driven Decision Making to analyze industry trends and develop strategies for the potential industry new entrant – Amazon

Let’s take a look at our findings !

While Amazon has neither confirmed nor denied the claim of entering the pharmaceutical industry, the said industry is on guard at the possibility of a disruptive force entering the $560 billion industry.

Question 1:

  • What are the factors that motivate Amazon towards this industry?

Insights:

Amazon seems to have the Midas touch, venturing into everything a to z. Many of their products and services providing support to the other.

The 1492

  • A healthcare technology lab that is dedicated to opportunities in healthcare. Electronic medical records and telemedicine are being explored.

Customer base and products

  • The ability to store customer preference and combine it with recommended listings
  • Allows for a personalization of offering medical products from digital health devices and diagnostic kits to functional food.

Big Data/AI Excellence

Cloud Technologies

Decisions such as the hiring of Mark Lyons (in charge of implementing an internal pharmacy), increased efficiency of ‘Prime Now’, ‘Super Flex’ and ‘Amazon Flex’ contribute to Amazon’s rising interest.

Outcome

  • Frequent PushMail reporting to help in product development and innovation strategies, AutoSave intelligence to be able to refer to previous reports.

 

Question 2

  • What are the industry deterrents or barriers?

Insights

The average profile of Amazon’s users are young which does not typically match the targets of prescription and maintenance drugs. The ease with which consumer, in this case possible patients, are willing to try an alternative new approach lefts much to be said.

 

Industry giants, CVS and Walgreens, have a long-standing rapport with key industry influencers. Collaborating with company when it is new to the sector and is yet to establish ties, even if said company is Amazon, is daunting to many of the experienced companies.

Question 3:

  • What is the perception of key industry players concerning Amazon entering the pharmaceutical industry?

Insights

CVS and Walgreen – major pharma giants, are not particularly apprehensive of Amazon joining them. They claim the industry is moving towards ‘value based model’ and population health, meaning pharmacies are developing relationships with doctors, hospitals and other providers in the community. During this bravado, the release of a report by analysts at Leerink regarding Amazon entering the industry, shares of CVS and Walgreen dropped by approximately 5%.

For Amazon to be successful, the online retailer would have to gain ties to health insurance companies, doctors and hospitals that already have ties to their local communities.

While Express Scripts’, pharmacy benefits management giant, shares declined by 2.6%, CEO Timothy Wentworth expressed his interest in the idea of collaborating with Amazon should they enter the pharmacy space.

Apart from experimenting with Seller Flex, pharmaceutical deliveries may cause Amazon to handle more of its own deliveries, in attempt to minimize third party risk. This would affect their logistics and shipping partners FedEx and UPS.

Both companies released statements saying that Amazon is not a major contributor to their revenues and are still likely to depend on them for delivering to sparsely populated areas.

Their shares did see a decline before a marginal increase before the end of the day (5th Oct 2017).

Outcome

Social media and stock market monitoring – Social analytics, track topics and smart tagging

 

Question 4

  • What is the potential impact innovation giants like Amazon can have on the healthcare industry?

Insights

The replacement of pharmacies by Amazon will not take place overnight. Instead, they would begin to serve as an intermediary between consumers, health insurers and the healthcare system. This would give them access to patient data as well as present the opportunity to cross sell related products and make them a major player in the digital health industry.

It is without a doubt that AI and IoT are driving us towards personalized digital healthcare. Research into 3D printing for possibly fast deteriorating products, printable medications to improve dosage quality, personal health monitoring implemented in devices like Alexa and Echo is what the future hold for us. The healthcare industry is in need of the personalization and precision that digital transformation offers and perhaps Amazon is just the company take on the challenge.

 

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