25 years ago, you could read all about prescription medicines thanks to Amazon’s vast book range, now you can also order them via the online giant – and at a significant discount, if you are a Prime member. On 17NOV20, Amazon announced its “Amazon Pharmacy: Prescription Medications Delivered” service go-live in 45 U.S. states for customers aged 18 or over, thus tapping into an industry worth over USD 300 billion.
“Amazon Pharmacy, a new store on Amazon, allows customers to complete an entire pharmacy transaction on their desktop or mobile device through the Amazon App. Using a secure pharmacy profile,
customers can add their insurance information, manage prescriptions, and choose payment options before checking out. Prime members receive unlimited, free two-day delivery on orders from Amazon
Pharmacy included with their membership,” reads Amazon’s press release.
Did Amazon have a crystal ball for 2020?
“Work hard Have fun. Make history.” is Amazon’s Leitmotiv, though “create the future” might be more apt as the last point. In the first months of this year, Amazon filed to register the “Amazon Pharmacy” trademark name in the UK, Australia, and Canada, having already started to operate under that name in the U.S. in late 2019, when it was applied to its “PillPack” brand. The USD 753 million acquisition of the 2013-launched PillPack startup – a medications mail-order and home delivery service – back in 2018, set the scene for the more ambitious move that has now taken place, yet one could hardly have predicted at the time, that 2020 would be such a perfect year for contactless, online, medication order and delivery.
“As more and more people look to complete everyday errands from home, pharmacy is an important and needed addition to the Amazon online store,” Doug Herrington, Senior Vice President of North American Consumer at Amazon, explained. “PillPack has provided exceptional pharmacy service for individuals with chronic health conditions for over six years. Now, we’re expanding our pharmacy offering to Amazon.com, which will help more customers save time, save money, simplify their lives, and feel healthier.”
Testing the waters in India
“We designed Amazon Pharmacy to put customers first – bringing Amazon’s customer obsession to an industry that can be inconvenient and confusing,” said TJ Parker, Vice President, Amazon Pharmacy. “We work hard behind the scenes to handle complications seamlessly so anyone who needs a prescription can understand their options, place their order for the lowest available price, and have their medication delivered quickly.”
In fact, the Amazon Pharmacy kicked off as a pilot in Bangalore, India, already back in August 2020. The country, which faced one of the world’s strictest lockdowns from March 2020 onwards, saw a huge surge in online medical services from specialist consultations to Covid-testing, through to e-Pharmacies. Speaking in an India-focused webinar at the time, Prashant Tandon, co-founder of 1mg, a key Indian online Pharmacy stated “With Covid, everything that is digital healthcare-related has received a massive boost. Perhaps what would have taken three to five years happened over three to five weeks, and we expect to grow pretty rapidly from here,” and statistics showed an explosive growth of the number of Indian households using e-Pharmacy services from around 3.5 million to 8.8 million within just a couple of months.
At the time, Amazon’s move was met with great criticism from The All India Organization of Chemists & Druggists, who feared that the livelihood of the around 800,000 people working in the pharmacy industry would be threatened by the e-commerce giant. At the end of the day, medication which is often based on repeat order and sent in small packages, fits perfectly into Amazon’s modus-operandi, so the industry will need to up its game to compete.
Disruption ruffles the stockmarket
“We understand the importance of access to affordable medication, and we believe Prime members will find tremendous value with the new Amazon Prime prescription savings benefit,” said Jamil Ghani, Vice President, Amazon Prime. “Our goal is for Prime to make members’ lives easier and more convenient every day, and we’re excited to extend the incredible savings, seamless shopping experience, and fast, free delivery members know and love with Prime to Amazon Pharmacy.”
Amazon Pharmacy will offer Prime members discounts of up to 80% on generic medicines and 40% on brand name medications when paying without insurance, at over 50,000 participating pharmacies across the U.S. News that shook the American Stock Market, according to the Financial Times: “Walgreens Boots Alliance fell more than 9% by afternoon trading on Tuesday, while CVS Health, the largest pharmacy operator in the US, dropped 9%, and Rite Aid shed more than 16%. Shares in GoodRx, a California-based company that offers discount partnerships with 75,000 US pharmacies, tumbled 20%.”
While the article goes on to state that it might be difficult for Amazon to truly penetrate the market, given that many who rely on medication, are older, prefer to buy from a trusted, familiar, local pharmacist, and less likely to shop online, I believe that convenience, price and a growing number of very capable silver-surfers will prove the author otherwise. The true barrier is in the domain of “regulatory compliance” and the types of drugs that can be sent by delivery – something that India was also working on back in August 2020.
Regulations for e-Pharmacies are still in their infancy.
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