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Will Amazon Pharmacy Disrupt the Market?

Amazon has mastered shipping and delivery, which is an important factor in the pharmacy sector. 
Published Online: Jun 15,2017
Joshua Pirestani
Amazon is one of the largest retailers around the world and has conquered numerous markets over the years, including fashion, corporate computing, and even original TV programming. Now, it seems poised to make waves in the pharmacy industry with its very own Amazon Pharmacy.
 
Granted, the Amazon Pharmacy is not yet in place; you won’t find it anywhere on the Amazon website if you browse through its pages today. However, it won’t be surprising to see this business venture from Jeff Bezos’ company in the coming years. The pharmacy industry earns billions of dollars each year, and it would be uncharacteristic of Amazon to not at least try to grab a share of the market.
 
READY FOR PHARMACY?
Many industry experts believe that Amazon Pharmacy is ripe for picking. The retail giant already has the right infrastructure in place: it has mastered shipping and delivery techniques and can now get products to the customer’s doorstep in 24 hours and even less. As a result, customers won’t have to worry that their prescriptions will arrive late, and they’ll have more confidence in buying their medications from Amazon.
 
The retail company also has around 80 million subscribers to its Amazon Prime service as of April 2017, as estimated by Consumer Intelligence Research Partners. With this number of subscribers in place, Amazon won’t have to look hard to find customers who would be interested in its online pharmacy services.
 
Considering that Prime provides free two-day shipping to its members, it is even possible that more people will buy a membership to take advantage of zero shipping costs when buying medications online.
 
If the retail giant decides to make Amazon Pharmacy a reality, it can use many other tricks to increase its market share. According to Angela Mattie, who heads the health care management department of Connecticut’s Quinnipiac University School of Business, Amazon has the clout to acquire a small pharmaceutical company. It can also build partnerships with large companies to act as their pharmacy benefit manager (PBM) and provide pharmacy services to the companies’ employees.
 
PROS AND CONS OF AN AMAZON-LED PHARMACY
All of these factors show that Amazon does have the potential to disrupt the pharmacy industry. But the question here is: do you really want to make Amazon Pharmacy a reality?

To answer this, let’s take a closer look at the benefits and drawbacks that this service would bring.
 
PROS
Reduce medication costs
Amazon is in the business of offering high-quality products—or at least decent products—at affordable prices. If the company can do the same thing for OTC medications and prescription drugs, it can be a big help to low-income individuals who are struggling to manage their health and still put food on the table.
 
Provide easy access to medications
Older people, as well as those with physical limitations and disabilities, find it hard to get out of the house and visit their local pharmacy, which is why many of them opt for mail-order pharmacy services. If Amazon Pharmacy enters the market, these customers will have more options in terms of buying their prescriptions and having them delivered to their doorstep.
 
Disrupt PBMs
Some PBMs have been accused of overcharging both customers and their partner pharmacies, and refusing to pass on the savings that they get from drug manufacturers. Amazon has the potential to disrupt the business of PBMs and even force them to change their practices in order to stay competitive.