Amazon’s online pharmacy
Having confirmed Alexa’s disease diagnosis by an Amazon physician, patients can order its medication conveniently and for a competitive price on Amazon’s well-established online shop platform. Since 2018, it is possible to get pills sent home by the Pillpack service. In June 2018, Amazon declared its intention to become a major player in the healthcare market by acquiring this aforementioned startup for 1 billion dollars. The online pharmacy startup is specialized in delivering personally packaged medications to patients by mail. With this approach, Amazon not only gained access to about 40.000 patients, but also received the license to sell prescription drugs in 49 US states.
The impact of this deal on established pharmacies was immense: Rite Aid, Walgreens and CVS Health lost about 11 billion dollars market value after the announcement. In addition, European pharmacies fear Amazon’s goal to become a leading online pharmacy. DocMorris’s mother “Zur Rose” reacted with acquisitions by itself, e.g. by acquiring Germany’s third biggest mail-order pharmacy Medpex. It will be interesting to see how established players will defend their market. Amazon has several competitive advantages, including its exceptional logistics capability (shipping), bulk purchasing power, and a transparent pricing model. With Amazon’s growing role as a key drug distribution channel, pharmaceutical manufacturers not only share sensitive sales numbers with Amazon, but are also charged for high rankings on search result pages of its website (Google’s business model).
However, Amazon is not settling for its role as a sole market place. In early 2018, Amazon launched its own private labeled OTC line called Basic Care – manufactured by a third party called provider Perrigo. With Amazon’s access to customers, its scale and power over the future key distribution channel for drugs, Amazon will become a strong competitor not only for pharmacies but also for drug manufacturers.