CNBC reports that Amazon may move into the pharmaceutical industry. Elizabeth Keatinge (@elizkeatinge) has more.
SAN FRANCISCO â Amazon may be exploring a move into the $465 billion-a-year U.S. pharmaceutical market. It’s a market ripe for disruption but also a difficult one to enter, say analysts.
There have been some clues in recent Amazon moves. In November, the companyÂ launched a one-hour delivery service for non-prescription items from Bartell Drugs, a 127-year-old pharmacy chain based in Seattle, as part of its Prime Now offerings. Amazon frequentlyÂ tests programs around Seattle where it can beÂ hands-on with them.
Two months ago it hired Mark Lyons, a former executive with Washington state health planÂ Premera Blue Cross, to be a senior manager in its pharmacy benefits, a move first reported by CNBC.
Amazon has been holding an annual meeting on whether it should consider going into the pharmacy business for the last several years, said theÂ CNBC report,Â citing unnamed sources. And it’s currently advertising forÂ a professional health care program manager. It’s already made moves to beef up its offerings inÂ medical supplies, according to the company’s site.
Amazon declined to comment.
As consumers are moved to the center of the health-care universe and as high deductible insurance places moreÂ costs on them, thereâs a possible role that AmazonÂ could play, said Vaughn Kauffman,Â a global health analyst with PwC, a consulting service.
The company, which has upended the brick-and-mortar market for books, electronics and other goods, would pose a major competitive threat to existing heavyweights including Walgreens and CVS. But it wouldn’t be cheap or easy to break into the pharmacy market, say analysts.
In a note Wednesday, Mizuho Securities USA suggested that it would be too costly for Amazon to enterÂ the pharmacy market given that it couldnât offer generic discounts any higher than industry leaders already do. It would be competing with an already built-out mail-order drug environment.
InÂ 2016, about $106 billion of total U.S. prescription sales of $465 billion were through mail order, according to a Morgan Stanley note Thursday. All the major drug store companies, including CVS and Walgreens, already offer mail order delivery, though such programs have declined slightlyÂ due toÂ consumer preference for face-to-face interaction with pharmacists, the note said.
Other competition includes major players in the online prescription delivery field such asÂ Express Scripts and United Health/OptumRX.
âSeniors (who are the highest consumers of prescription drugs) want personal care from their local pharmacists,â said Mizuho analyst Ann Hynes.
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