Now, there are different pharmaceutical companies today. And while you would expect companies like Glaxo-Smithaline to expand their business, you wouldn’t really expect a consumer product site like Amazon to join onto the bandwagon. You would probably expect them to keep selling products like smart mirror gimmicks that are affordable yet attractive.
Yet, that’s exactly what seems to be Amazon’s plan now!
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Amazon’s Move to Healthcare: What it Means
Here’s the reason why Amazon is diving into healthcare.
Amazon has become the biggest e-commerce platform in the world because of the wide variety of products it keeps. When you visit the Amazon website, you know that you are going to get exactly what you are looking for?
If you are someone who has been wishing for Amazon to get associated with healthcare as well, then your dream is about to come true. Their $1 billion acquisition of PillPack, which is an online pharmacy, is one of the latest efforts made by the e-commerce platform to make a place for itself in the health-care space.
After establishing a close alliance with Berkshire Hathaway and JPMorgan Chase, the company now wants to strengthen its hold in this crowded sector. Not only will this help in enlarging their existing base of customers, but also reduce the cost of covering their employees.
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Effect on other companies:
It’s Amazon that we are talking about, a multi-billion dollar company having a billion day worth of sales on some days alone. The venture by Amazon can have repercussions for investors linked with competing companies. They may find it difficult to accept it considering that the shares of healthcare giants like Rite Aid, CVS Health, and Walgreens Boots Alliance are hard hit at this moment.
The only way to keep up with Amazon’s rapid development is consolidation. For example, Cigna declared in March that they are planning to buy Express Scripts for a whopping amount of $52 billion. On the other hand, Rite Aid and Albertsons are in the process of making a deal.
How did it begin and why?
In late 2017, Amazon was undecided if to sell drugs online on their website. It was in April this year that they ultimately created a plan to sell drugs to hospitals. They decided to use the Amazon Business marketplace in order to conduct the business.
The U.S. healthcare industry is not in its best shape at the moment. Commonwealth Fund conducted a recent study which found that the U.S. health system is among the worst when considering high-income nations although it is funded well. In fact, according to U.S. Centers for Medicare and Medicaid Services, the U.S. health expenditure was almost $3.5 trillion just last year.
Amazon wanted to partner up with JPMorgan and Berkshire and reduce some of the expenditure by eliminating the need for middlemen.
PillPack usually delivers all kinds of medicines according to your dose and packages them accordingly. It also takes the responsibility of refills and renewals. They make sure that shipments always reach on time because the medication can be a sensitive affair.
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