Amazon, the eCommerce giant, is mulling a big push into the multibillion dollar pharmacy market.
According to a report in CNBC, Amazon is in the process of hiring a new general manager to lead the effort and come up with a strategy. The general manager would be placed under the consumables business.
While Amazon has mulled an entrance into the market at least once a year during a meeting, two people familiar with the matter told CNBC this time around talks are more serious and are being driven by a movement among consumers toward high deductible insurance plans and the fact that consumers have to take on more of the costs associated with healthcare.
CNBC reported the online retailer is also beginning to recruit from the pharmacy industry, since it recently began selling medical supplies and equipment in the U.S. It is hiring employees for the company’s professional healthcare program to make sure it meets regulatory requirements and recently hired Mark Lyons of Premera Blue Cross to develop a pharmacy benefits manager for Amazon workers, noted the report. In Japan, Amazon has expanded its Prime Now service to include medicine and cosmetics, reported CNBC.
It’s not surprising Amazon would want to get into prescription drugs given its big business in the U.S., with CNBC reporting that more than four billion prescriptions are ordered annually. In 2015, $300 billion was spent on prescription drugs. Amazon will face a lot of competition, but if it has the same success it has had in other segments of retail, it could be a boon for both the company and consumers.
Stephen Buck, co-founder of GoodRX, a company that aims to save consumers money on prescription drugs, told CNBC he thinks the market opportunity for the eCommerce giant is between $25 billion and $50 billion, granted it can execute. Because of the regulations in the medical drug market, the executive cautioned there are challenges ahead.
“Prescription transfer laws and e-prescribing make [it] a little bit more difficult than putting something in a cart and checking out,” he said in the report.