Future Pharma 2020

September 14 - 15, 2020

Boston Marriott Long Wharf, Boston, MA

Amazon is Bringing Its Ecommerce Might to Healthcare

Brought to you by WBR Insights



Hardly a day goes by in which we don't read about some new way Amazon is disrupting the ecommerce world. Jeff Bezos' online giant has been causing retail brands to regularly break into a cold sweat for years - now it's turning its attention to the healthcare market.

However, while Amazon's foray into the pharmaceutical world might be cause for concern, it also brings with it no small amount of opportunity. With its almost unlimited resources, Amazon isn't afraid to constantly innovate and take an open-minded approach to new services. Most brands must be careful where they devote time and resources, but Amazon has no such qualms.

This makes Amazon a great brand to watch and learn from. Now, the healthcare industry should pay attention to Amazon's plans for this new endeavor and see what lessons can be gleaned from its strategy.

Amazon

Through its commercial platform, Amazon Business, the ecommerce behemoth already sells a number of medical supplies. In a manner similar to its consumer-focused model, Amazon sells these products both directly and through third-party retailers who operate via its platform.

Amazon has, of course, become famous by being a one-stop shop for almost anything a consumer could want or need. But this model is challenging to copy and paste to the healthcare business. The often complex and detailed regulatory approval needed for sellers of such items, the range of supplies required by healthcare providers, and the fact that dedicated suppliers have already gained a competitive advantage with an established presence and a strong portfolio of products all conspire to challenge Amazon's penetration of the market.

Another big challenge for Amazon when it comes to healthcare is maintaining the constant and timely supply of products that hospitals need. Amazon's supply chain is impressive, but the needs of healthcare providers are very different from those of consumers or even other businesses.

It's far more likely that Amazon will leverage the power of its third-party marketplace platform. If it can bring existing healthcare suppliers under its umbrella and have them supply their products through its marketplace, a lot of the heavy lifting will have already been done and Amazon can just sit back and reap the rewards.

"Today, large hospital systems consolidate purchasing power by negotiating contracts with distributors on behalf of many hospitals," reports Nandu Anilal, Product Strategy and Operations, Thumbtack in entrepreneurship publication The Startup. "As such, distributors are willing to give up some margin in order to secure the high volume of sales. The challenge that Amazon hopes to address is focused on the 85-90% of suppliers that constitute only 5-10% of spend. Hospitals work with many suppliers, often making the contracting model cumbersome and hard to manage."

Using its marketplace model, Amazon can make it easier than ever for healthcare providers to search for the best prices. Having several suppliers in one place could help make Amazon a price comparison platform for the healthcare industry.

Prime Healthcare

Another way Amazon is planning to get in on the healthcare game is through its room assistant platform - Alexa.

Alexa devices such as Echo can already offer some healthcare related services such as breastfeeding support and first aid advice, but Amazon would like to make this part of its offering even more comprehensive. Services such as helping patients manage their diabetes and other conditions are being considered for inclusion.

However, one of the more interesting services being worked on by Amazon is using Alexa-powered devices to assist clinicians when they are consulting with patients. The room assistant devices would be able to listen in on doctor appointments and extract crucial information from the conversation. This information could then be automatically added to the patient's medical file, allowing the clinician to concentrate on interacting with them rather than constantly having to take down notes.

"One small hitch, however, is that Alexa isn't HIPAA compliant," reports ZDNet. "Until Amazon gets that compliance, its health uses are limited, as it can't be used to process identifiable health data. Once Alexa has achieved HIPAA compliance, however, it's easy to see how tech and health companies could run with Alexa's abilities, from monitoring chronic conditions to allowing nursing home residents to more easily control their environments."

Final Thoughts

Navigating the complex regulatory environment surrounding healthcare is clearly going to be the biggest roadblock to Amazon entering this lucrative market. However, one should never count the ecommerce titan out. It would be foolish to assume that it won't succeed at this in much the same way it's succeeded at almost everything else it's tried to do.

With challenge comes opportunity and, whether it's through accessing new clients through Amazon Marketplace or being able to deliver better clinical services via Alexa, the Healthcare industry has much to gain from Amazon's potential disruption.


Amazon's foray into healthcare is set to be a hot topic at Future Pharma 2019, being held in September, at the Boston Marriott Long Wharf, MA.

Please download the agenda today for more information and insights.