Disruption in the health sector

19 November, 2020

Amazon’s announcement (Tuesday, November 17) that it is launching an online pharmacy in the US will come as welcome news to consumers now able to purchase medications more easily and at discounted prices, but the move also raises questions around what the e-pharma sector of the future will look like – and Amazon’s role within it. Amazon may have started life selling other people’s products but has since expanded to become a consumer goods brand in its own right, with its Amazon Basics offering. This could easily be expanded to include a range of health and wellness devices in the future, but could we see something even more disruptive begin to happen?

When it comes to pharmaceuticals, it seems unlikely the company will want to fund R&D of new drugs but it’s not beyond the realm of possibility for Amazon to manufacture generic versions of existing ones. In terms of distribution, the prescription nature of many pharmaceuticals is likely to pose challenges in completely replacing traditional pharmacies, but this is not an impossible hurdle to surmount. Amazon’s experience in big data, from cloud computing to AI, is also likely to inform its plans and consolidation of large volumes of customer data will likely contribute to its healthcare innovations, while also raising potential concerns over how customer and patient data is handled.

The healthcare industry has evolved rapidly over recent decades to meet shifts in consumer and patient needs, behaviour and preferences, and has demonstrated its ability to bring innovations to market quickly to meet these demands. The Covid-19 pandemic has brought into sharp relief just how important this adaptability is and, given the speed of recent changes, it is likely that parts of the healthcare ecosystem will look very different in the coming years. Pharmaceutical and healthcare companies are already revisiting their customer-engagement models, including virtual care and interaction models, and this seems to be another area where Amazon could thrive. Will we see an Amazon telemedicine service in the coming years, for example?

Whatever the future brings, healthcare companies need to ensure they are well placed to adapt quickly to the increased competition and marketplace disruption that Amazon’s presence will undoubtedly bring.

  • Tatiana Sergeenko, Principal Consultant

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