CNBC reported on Tuesday that Amazon is considering breaking into the pharmacy market, hiring a general business manager to explore potential opportunities.
According to the article:
For the last few years, Amazon has held at least one annual meeting at its Seattle headquarters to discuss whether it should enter the pharmacy business, says two people familiar with the company’s plans.
But this year, with the rise of high-deductible plans and the trend toward consumers paying for health care, it is ready to get more serious.
“The company recently started selling medical supplies and equipment in the U.S., and is hiring for its ‘professional health care program’ to ensure that the company is meeting regulatory requirements,” CNBC said. “It also hired Mark Lyons two months ago from Premera Blue Cross. A source said that Lyons is tasked with building an internal pharmacy benefits manager for Amazon employees, which might be later scaled out.”
The retail pharmacy industry is worth a whopping $400 billion, an analysis by Adam Fein, President of Pembroke Consulting, reports.
The top 15 pharmacies in 2016, which accounted for approximately three-fourths of all prescriptions by revenue, include:
- CVS Health
- Walgreens
- Express Scripts
- Walmart
- Rite Aid
- UnitedHealth Group (OptumRx)
- The Kroger Company
- Albertsons Companies
- Humana Pharmacy Solutions
- Prime Therapeutics
- Diplomat Pharmacy
- Cigna Corporation
- Costco Wholesale Corporation
- Ahold USA
- PharMerica
Although Amazon may be entering into an already competitive market, the pharmacy industry suffered a big loss before the U.S. election in November, with “shares of CVS and Walgreens closed down more than 3 percent, to $76.34 and $81.73, respectively,” according to The Washington Post.
Still, experts predict that Amazon has the potential to enter the profitable business of generics, utilizing manufacturer coupons.
This potential big-name addition to the pharmacy industry comes at a time when the pharmaceutical supply chain is getting revamped. The Drug Supply Chain Security Act (DSCSA) and serialization efforts are well underway, with the November 2017 deadline for manufacturers to have all of their products serialized near at hand.
Lead image photo credit: Robert Scoble.
(Sources: CNBC, The Washington Post)
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