Amazon Pharmacy


With the increase of Covid-19 that has resulted in more hospital patients, one exciting news that can cheer people up is that Amazon has launched the Amazon Pharmacy. This division allows Amazon Prime members to order prescription drugs online with discounts up to 80% on generic drugs and 40% on branded drugs, as well as a free two-day delivery. With hindsight, perhaps the acquisition of PillPack back in 2018 signalled Amazon’s strong will to challenge the traditional pharmaceutical industry worth over $300 bln.

Presently, only 45 states in the USA will have access to this service – though Amazon is definitely planning to expand on its offering. In order to use Amazon Pharmacy, customers over the age of 18 will need to answer questions like the date of birth, gender and other personal questions required by law. Doctors will then be able to send the prescriptions to Amazon Pharmacy to complete the delivery part.

It was no surprise that the competitors’ shares fell after the announcement. In particular, both Walgreens Boots Alliance’s and CVS Health’s shares dropped by 9%. However, this does not mean that Amazon can lay back and relax now. This is because the compliance on storing and shipping of drugs will be closely monitored by regulatory bodies. As Amazon Pharmacy disrupts the traditional pharmaceutical industry, this will attract more attention and scrutinisation. On the other hand, shoppers tend to be loyal to local pharmacists. This could be demonstrated by a set of statistics: 88% of prescriptions were purchased at physical stores. A potential reason for this may be the off-putting inconvenience and time delay in purchasing and receiving the prescription from the online store.

As a matter of fact, there are also some opportunities to better serve, and hence attract customers. For example, customers are likely to consult doctors for cheaper medicine alternatives or make further enquiries into the drugs. This has resulted in 900m calls a year according to the US Department of Health and Human Services. Amazon is evidently tackling this issue by developing a software to allow for seamless communications between customers, doctors, and pharmacists. If a customer is taking multiple prescriptions at once, Amazon will also examine the problematic drug interactions of the prescriptions.

The strong side of Amazon’s business model, advertisement, is hard to be incorporated into Amazon Pharmacy. Comparing it to receiving ads on clothing and accessories, an advertisement on drugs simply does not sound right. Nonetheless, even as a standalone business, Amazon Pharmacy is expected to capitalise on this big yet untapped market.

FEON WONG LLB student at The London School of Economics | Communication Officer at Japan Society at LSE

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