Amazonation of Pharmacy
Amol Chahal / March 04, 2018
4 min read
Last year in December, I had the opportunity to visit Amazon Headquarters in Seattle, WA. What they have created over the last decade is absolutely stunning and mind-blowing. While they were still testing out their Amazon Go store for their employees (and I had the opportunity to explore it as well), one of the biggest yet simple revelations I had was “the future is approaching faster than you may think”. They are truly revolutionizing the current state of the retail industry, which also includes community pharmacies.
There have been numerous emerging articles over the past 6 months speculating how Amazon could invade/revolutionize the pharmacy retail industry. A simple truth that sometimes may be overlooked is that Amazon sells convenience and time. While one might argue that the healthcare industry is relatively more complex and requires Amazon to overcome the loops of legality (which is true), history has shown repeatedly that ‘Amazon disrupting industries’ has been successful even when the odds were against them. This is a company that once set an agenda to digitize every book in print.
A few ways Amazon has been speculated to transform the pharmacy industry include enormous shipping power, buying cheap generics, turning “Whole Foods into Whole Drugs”, buying into the pharmacy business, or launching their own startup. Amazon has already recently launched the “Basic Care” OTC Line of products on Amazon.com as of August 2017, with product inventory categorized into allergy/cold/cough, antihistamines, analgesics, children’s, digestive, feminine hygiene, hair growth, pain, and stop smoking. Not only do they offer these products (aka, convenience), their platforms are accompanied by infographics showcasing the drugs. For instance, the allergy/cold page has infographics showing the differences between allergy and cold symptoms. Given the current magnitude of their technology, they could easily add a symptom checker on their platform to provide recommendations as they are selling these products. That being said, there will always be a need for ‘brick-and-mortar’ stores for people looking for immediate relief (unless they provide one-hour delivery to their patients as they do one-hour wine delivery).
Amazon is already selling medical supplies and equipment to clinics and hospitals. Amazon's cloud service is currently competing and pitching to healthcare customers to store healthcare-related data. The company has also recently partnered up with JP Morgan and Berkshire Hathaway to launch a healthcare company for their employees. Amazon has partnered up with Merck to inspire Alexa (their voice identification system similar to Apple’s Siri) to help diabetic patients manage their condition.
A pharmacy branch manager in England wrote: “Everyone should be scared of Amazon encroaching into the pharmacy business. With a powerhouse of logistical expertise and experience, there is a real competitive threat to the sector.” Another politician wrote an open letter to the Prime Minister in the UK recommending: “… I would like the community pharmacy market to follow trends we have witnessed in other retail markets. This might include a shift away from the traditional brick-and-mortar business model towards scaled-up, innovative supply solutions employing digital technology, where Government expenditure is minimized.” And Government expenditure minimization would obviously be a huge driving factor.
While technology might be ‘cool’ and reveal possibilities of replacing pharmacists or revolutionizing healthcare (dispensing medications in particular), the majority of people still prefer the ‘human touch’ when it comes to their medications. A survey of 1000 people by the National Pharmacy Association revealed that 93% of older people are against the shift towards digital online pharmacy retailers. The percentage dropped to 69% when spread across individuals of all ages. However, that being said, as technology becomes more mainstream in the current aging generation, a shift towards digital online pharmacies is inevitable. While this threatens the traditional business model of community pharmacies, it also opens new doors for new opportunities and innovations.
While Amazon’s definite move into the healthcare industry is unclear, however, if it does decide to invade community pharmacies, a significant portion of the lower-end market will likely be affected. That includes pharmacies relying heavily on dispensing services where ‘Amazonization’ is easily implementable. On the other hand, pharmacies that rely more heavily on other revenue streams where face-to-face interaction is required will likely be less affected. That being said, we need to take initiative to evolve our profession amidst the technology revolution and preserve our value in healthcare.