Amazon might expand into the healthcare segment. The mere vision of it has the power to shake industry fundaments. In the past couple of years, experts outperform one another with ever more likely speculations: is it online pharmacy? or Pharmacy Benefit Management? is it the future of medecine manifesting itself in some Alexa-enabled apps? or is Amazon primarily going to handle the trillions of data sets necessary to ultimately fight cancer or fix human genomes? Nobody will know until Jeff Bezos might annouce a big healthcare coup. Nevertheless, iq! tried to outline some of the most likely strategies Amazon could assume in the medical sector.
1492 – Amazon’s healthcare strategy
A few hundred years ago, Columbus conquered the extremely huge market of the Americas. Amazon seems to set similar goals by giving its overall healthcare strategy the ambitious alias “1492”. Job vacancies gave the market the hint, that a strategic team is forming which is going to set the pillars of Amazon’s healthcare business of the future. Probably it is also there in order to consolidate the initiatives of the different Business units.
Amazon’s possible healthcare options based on existing businesses
Source: iq! Managementberatung GmbH
Amazon’s existing healthcare offers
Although Amazon did not enter the healthcare market with a “big bang” yet, like for example an acquisition similar to that of Whole Foods, the digital commerce giant is already operating retail business in the medical sector.
Medical products available on amazon.com
Source: Amazon Website
In the US, there are several non-prescription medical products and supplies available to customers. Part of that are OTC drugs. Another country with a similar offer is Japan, that even started to sell category No. 1 drugs (which require prior consultation with a pharmacist).
Despite of that, opening up a full-scale pharmacy is a completely different story. With the Whole Foods outlets, Amazon would have the opportunity to even add physical distribution to an online pharmacy. For OTC products, such an operation is relatively easily achieved.
But for prescription drugs, regulatory boundaries are high. Market structures and its key players put up additional obstacles for a new entrant foreign to the sector. In the US for example, Pharmacy Benefit Manager entities control the access to the insured part of the population and influence their choice of pharmacy.
Amazon’s Healthcare App sourcing
A non-retail approach to healthcare is Amazon trying to attract as many successful Alexa-enabled apps as possible in the medical sector. Language-based devices like the Echo have huge potential in the support of medical staff in hospitals or the domestic care of patients. Existing apps e.g. talk surgeons in the OR to the preparatory procedures or support parents at home with the handling of children’s diseases and fever. Amazon is also proactively seeking promising applications in distinct fields of medecine. As an example, they co-hosted a contest with the pharma giant Merck in order to detect interesting approaches to support patients with diabetes via Alexa.
Amazon is still missing the HIPAA compliance for Alexa (which would allow the handling of sensitive patient data), but the company is apparently working on it.
Amazon’s Healthcare Backend business
Amazon’s investment in the healthcare start-up “Grail” took many by surprise. But at a closer look, the strategy behind it is simple. Grail is trying to decode blood and genome sequences in order to detect cancer at a very early and mostly curable stage. In order to do so, a huge amount of data sets has to the handled and analysed. Amazon Web Services can support Grail with the task and in return, the start-up acts as a further showcase client in the healthcare segment. Amazon is also obtaining HIPAA compliance for a variety of its services.
Amazon is quietly expanding some of its businesses in the healthcare sector. The company is apparently hiring talent experienced in the medical field. The world might wait for the “big bang”, but perhaps it is never coming. Amazon might gain experience step by step and slowly gaining a foothold in some healthcare businesses. In a highly regulated environment with many regional specifics to take into account, it is perhaps the wisest step to learn patiently until a bigger step in the market is safe.
In any case, it will stay exciting to follow Amazon’s actions into the healthcare market. And for most of the market participants, the tension will remain high until we might get a clearer view of Amazon’s overall strategy in the healthcare segment.