Amazon started out a little over two decades ago as a bookseller, eking out modest profits by selling literature. They’d buy for a dollar, sell for two. They’ve since grown rapidly, conquering every market they’ve ventured into: retail, cloud computing, digital media content, and more.
It now appears that health care might be next.
Bloomberg reported that Amazon is spending a whopping $1 billion to buy PillPack, a Boston-based startup that will give Amazon the potential to immediately shake up the American health care system. The corporation will now have the means to quickly and efficiently distribute prescription drugs to anywhere in America. This makes for a huge development, considering that U.S. consumers spent $328.6 billion on such drugs in 2016.
“This move signals just how big of a market opportunity there is to change the pharmacy landscape,” said Michael Rea, CEO of Rx Savings Solutions.
Lisa Bielamowicz, president of Gist Healthcare, added: “This provides an avenue for Amazon to disrupt major pharmacy chains the way that they’ve disrupted booksellers, pet supplies, clothing, and other big-box retailers.”
The deal is sure to bring disruption for retailers, suppliers, and middlemen across the prescription drug industry. CVS recorded $59.5 billion in such sales last year, while Walgreens had $57.8 billion. Amazon’s presence in the marketplace is almost certain to eat into those numbers.
Amazon CEO Jeff Bezos has been on a rampage invading new industries. A year ago, he purchased Whole Foods in an effort to take over the $800 billion grocery industry; before that, he moved into consumer electronics by releasing the Kindle e-reader and the Echo voice-controlled speaker. It appears that prescription drugs are next, and the stock prices of Walgreens and CVS are already plummeting in anticipation.
Bezos has made no secret of his opinion that the health care system is broken in the United States. He’s been vocal about rising costs, unnecessary complexity, and inconsistent health outcomes with prescription drugs. His hope is that Amazon’s business model can help streamline things. PillPack sells pre-sorted packets of prescription drugs and delivers them, and Amazon’s distribution network can make that process speedier and more cost-effective.
