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Amazon shelves plans to crack US pharma market

Shares of major US pharmaceutical companies such as Walgreen Boots Alliance rose on Monday 16 April following reports from CNBC that online retailer Amazon has shelved plans to crack the market for distributing pharmaceutical products to hospitals.

Challenges

The potential ‘Amazonisation’ of the pharmaceutical products distribution network has been the subject of speculation in recent years. According to CNBC, Amazon Business (the company’s B2B bulk item-selling division) encountered greater-than-expected difficulties with regard to convincing hospitals to alter how they purchase products, “which typically involves a number of middlemen and loyal relationships”.

Tom Cassels of healthcare IT consulting firm Leidos Health said: “The hospital and healthcare systems have entangling alliances with their existing purchasing and supply chain partners. It’s very difficult to replicate the Amazon buying experience in healthcare.”

The complex logistics network required to distribute pharmaceutical products – including the capability to handle temperature-sensitive products – posed another challenge, according to the report. An individual who sells a healthcare product via Amazon told CNBC that it “would be a massive undertaking [to build the infrastructure]”.

Plans not yet written off

However, the company has apparently not completely ruled out plans to break into the pharmaceuticals distribution market at some point in the future, such as selling products directly to consumers.

An Amazon spokesperson told CNBC that it would continue to seek ways to enhance its offering to business customers: “As we’ve developed Amazon Business, we’ve used our working-backwards methodology for consumers and applied it to the needs of business consumers and sellers. One of the ways we do this is convening advisory boards from across the industry to give us feedback so we can continue innovating on behalf of customers.”

UK perspective: ‘Pharmacy must embrace new technologies’

When asked by Pharmacy Magazine what implications these developments could have for the UK community pharmacy sector, a Celesio spokesperson commented: “Regardless of activity from competitors or new entrants to the market, community pharmacy must embrace new technologies to help us better meet the changing needs of customers. As customer expectations evolve, online access to healthcare is becoming even more important, but this must be balanced with what is clinically safe for customers. 

“Many of our customers are already benefiting from the flexibility of our digital services, but direct interaction with a pharmacist is sometimes preferable.”




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