Pricing

Is Amazon planning to disrupt the $560B prescription drug market?

All the buzz out of Amazon these days indicates that the online juggernaut is looking to disrupt the giant US healthcare market. And now the rumblings point to a potential Amazon earthquake in the $560 billion prescription pharmaceuticals market.

Goldman Sachs assembled a 30-page report that essentially outlined how Amazon could revamp an industry noted for its puzzling pricing models, with potential for revolutionizing the way Americans order and get their drugs on a mass scale. Pharmacies would be unlikely to celebrate any of this, but the analysts see Amazon’s entry as one way to solve the puzzle on pricing transparency, while opening up broad access to a huge market with lots of cross-selling potential.

That in turn could have a huge impact on the way biopharma develops — and prices — new drugs for a retail system dominated by Amazon. What Amazon did for book prices would be a pale reflection of its potential for leveraging lower retail drug prices.

In future scenarios, Amazon could use its retail tech to do away with a visit to the doctor’s office. From CNBC’s report on the Goldman Sachs outline:

“Imagine seeing a virtual doctor on your Amazon app, having it prescribe you a certain medication, and then tapping a ‘buy now’ button — all without leaving your home.”

Amazon is all about grabbing the attention of consumers and not letting go — especially the younger ones that drive a large portion of discretionary spending. The challenge for Amazon, though, would be to forge closer relations with older Americans, who consume the lion’s share of drugs and healthcare services.

Goldman Sachs probably has a few ideas along that line as well.


Jeff Bezos introduces the Kindle Fire at a news conference in 2011 AP Photo/Mark Lennihan


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