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Pharmazon Prime

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Speculation swirls around Amazon entering the pharmaceutical market, reports of Bezos hiring a general manager made front page news last week. How realistic is such a move, and what kind of secret sauce might the data crunching behemoth bring to the industry?

From the beginning, Jeff Bezos has settled for nothing less than taking over the world. Most predicted his imminent downfall every step of the way, first calling foul on an IPO of $18 now valued, exactly twenty years later, at nearly a thousand bucks a share. Happy birthday, Amazon! With his company’s market cap breaking $475B and his personal wealth exceeding that of Warren Buffet, Bezos is the second richest person on Earth thanks to principles he’s expounded and stubbornly stuck with since writing to his new shareholders back in 1997.

It’s all about the long term” is the Bezos mantra, his road to an enduring franchise paved with the investments necessary to expand Amazon’s customer base, unique brand, and evolving infrastructure. By dismissing short-term profitability concerns and Wall Street reactivity, Bezos instead embraced bold decision-making reinforced by data and analytics. Creating an adaptive organization thriving on innovation and empowering entrepreneurial employees, he’s made enemies and had failures, but continues to awe, inspire, and amaze.

 

 

Since citing the fundamental importance of scale more than two decades ago, Amazon has exponentially grown from an “online bookseller” to the “Everything Store,” Q1 2017 revenue recently beating the street at nearly $36B. Already selling medical supplies in the US and prescription drugs in Japan, the soon to be $600B+ drug market not surprisingly attracts Bezos zeal. Having dipped his toes into healthcare with an early ZocDoc investment, and deeply enmeshing Amazon Web Services in healthIT, moving into pharma seems inevitable.

Not so fast: Although the data, infrastructure, and analytics capabilities of big tech seem a natural and much-needed fit for healthcare, ongoing challenges from privacy and security concerns to fragmentation and interoperability problems have plagued the industry. Google, Apple, Microsoft, and all the major players continue to dabble in the $3.2 trillion market, yet none have brought the revolutionary disruption and systemic change futurists have hoped and hyped. But if Bezos can aim for the stars, might an e-pharmacy actually be possible?

 

Pharmacy Future

According to multiple sources, despite the obvious hurdles Amazon is making moves in the Rx direction: Back in November it launched a one-hour OTC delivery service in Seattle, in February hired a senior manager in pharmacy benefits from Blue Cross, and currently has an open position to jumpstart their “Professional Healthcare Program”—which will likely start internally for the company’s 128,000+ employees. News of Amazon even thinking about getting into the pharmacy space has already jittered CVS and Walgreens’ stock.

Analysts are already taking sides, speculating that the ecommerce behemoth—already known for disrupting and often dominating verticals many thought impossible—could bring their proven economy of scale and personalized user experience to pharmacy. Others see PBMs and the drug selling infrastructure too entrenched to penetrate or make profitable. Case in point: Back in 1999, Bezos first dabbled in online drug sales by acquiring a 40% stake in Drugstore.com, eventually bought and shut down by Walgreens just last year.

But most believe that a combination of sheer opportunity, vast profit potential, and Amazon’s proven persistence and mad technology skills should give pharmacies the heebie-jeebies. Meanwhile, the possible benefits to multiple system stakeholders are actually even more captivating. As Brian O’Donnell, Partner and EVP at Klick Health has pointed out, the real story goes beyond distribution networks, and is all about the data. In our era of personalized medicine, Amazon already offers a proven and compelling engagement model.

The overall cost of nonadherence to prescribed medications is staggering across the healthcare system: 20-30% of prescriptions are never filled, resulting in thousands of avoidable deaths and 10% of all hospitalizations, with a price tag in the hundreds of billions. By knowing patients as well as Amazon knows its customers, machine learning could help precisely profile end users and engineer customized experiences for optimal results. Health outcomes data could similarly be attained and analyzed, a boon to providers and payers.

 

Partner in Prime

Amazon’s success is based on their long-term commitment to people, platforms, and technology, an adaptive approach also taken by commercialization partners who’ve got game. The evolving media landscape has shifted the real power to brands and their audiences, making the data component of Amazon’s possible foray into pharma particularly compelling. Imagine millions fulfilling their prescriptions through a platform like Amazon, every interaction further customizing their experience across the patient journey.

Such a data-rich ecosystem empowers every stakeholder throughout the healthcare system, including providers and payers eager to contextualize their support for the right patient at the right time and in the right way. Partners like Klick Health already target and engage patients and professionals with innovative, customized experiences throughout their relationship with brands—so clients are already demanding similar levels of personalization and immediacy whether Amazon or a similar company actually enters the space or not.

Will drones one day be delivering prescription medicines to patients? Will e-prescribing and e-pharmacies disrupt and eventually dominate drug distribution, analytics, and the consumer experience in the same way Amazon has already conquered retail and media? Given the hurdles of handling personal health information, the regulatory environment and FDA, who can know for sure? But until then, stay informed with the Klick Wire, check out the latest from Klick Labs, and talk to us about how we can apply our long-term vision for your brands NOW.

More About the Author

Michael Spitz

A digital health expert since before digital health was cool, Spitz has since developed omnichannel campaigns for top pharma and device brands, and helps drive agency innovation, digital transformation, and emerging channels. See him present at conferences, read his blogs, and follow him for the latest trends and opinions on Twitter @SpitzStrategy.

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