amazon pharmacy- the challenges and why they’ll likely overcome them

By Lauren Bevan, Head of Health & Social Care at BJSS and
Ralph Robinson, Head of Retail & Consumer Markets at BJSS

Anyone who has attempted to read (or more accurately decipher) a handwritten prescription would not argue that a secure online way of prescribing and dispensing medications is not a good step forward in terms of efficiency and patient safety. About 30% of the over 16s in the UK take regular or repeat medication. With these vast numbers in mind, Amazon has launched its Amazon Pharmacy in the US offering significant discounts on proprietary and generic drugs and unlimited two-day deliveries. Although not yet live in the UK, a trademark application was made this month. To do this in the UK, a bonafide intention to use the trademark must be agreed as part of the application.

Lauren Bevan – Inherent Challenges for Amazon Pharmacy

There are some understandable concerns with Amazon’s planned foray into pharmacy. My thoughts on it revolve around two main issues:

  1. Online dominance cannot replace the essence of a community pharmacy – the ability to see when someone is struggling to take their inhaler or open the cap on their tablets can’t be replicated online. With online-only taking off in 2020 for obvious reasons, there is an inherent risk that pharmacies might go the same way as high street banks and reduce their high street presence. This disproportionately impacts people who are less digitally literate, older and have more complex needs. These individuals benefit from having medication reviews when another drug gets added to the list. (over 2m older people currently regularly take over seven medications at a time).  Yes, I do think community pharmacies are great. A possible solution would be that, similar to online GPs where they have to retain a brick and mortar presence in their CCG of operation, could the same be asked of massive online-only pharmacies? Not famed for being a fan of this model could mean that the UK market is less attractive to Amazon, but is it what is needed to ensure equity and accessibility?
  1. There is already a vibrant market in the UK for online-only and online + in-person pharmacies. A list of those in operation at the moment can be found here. Although Amazon is no stranger to market dominance, it’s a harder ask to make people switch from a service which works well. With national prescription prices fixed, it becomes harder for Amazon to make the economic argument for switching.

One area where I can see a real upside is for Amazon to aid in hospital and care home supply chain management.  The history of what is currently called NHS Supply Chain is long and convoluted – the entity has struggled as a private and public sector organisation. Even when run by DHL, a logistics organisation, it was felt that it wasn’t working for NHS Trusts. Amazon’s best feature is that it gets you what you need when you need it. With supply chain logistics getting ever more complicated due to Brexit and some drugs having a short life span, having an organisation used to navigate these tricky waters is likely to be a real bonus.

Ralph Robinson – Why Amazon should not be underestimated in the sector

Whilst the challenges are numerous; it would be unwise to underestimate Amazon’s ability to circumnavigate them. As a business that began life as a bookstore, yet now owns over 52% of the US online retail market and 14% worldwide[1], one thing Amazon has shown is its ability to test and learn, and conquer new markets, by offering innovative new services that disrupt entire industries.

Here are three reasons that make Amazon a contender in this market:

  1. Vertical Integration

One of the biggest challenges to overcome in the online pharmacy market is the ability to validate prescriptions, link them to their owners, monitor and interact with consumers to ensure their safety, and deliver medicines securely and on time. Amazon can pull not only on its world-class logistics network but could also provide educational resources and advice via Alexa or even Kindle or Audible. Indeed, Amazon already has its proprietary video conferring service in Chime, and (according to Diffbot) is the company with the second-largest number of data scientists and engineers in the world after IBM[2], giving it a strong ability to innovate.

  1. Ease of use

In creating innovations like their one-click payments and subscription model, Amazon took complex highly regulated processes and made them simple for consumers. The pharmacy market is not typically known for its ease of use. The numerous validations and authorisations needed are usually seen as a necessary evil to keep people safe. However, if all the relevant checks can be made whilst still facilitating a quick and simple user experience, then like other fast-growing contenders in the ePharmacy world such as Pharmacy2u, Co-op Health, AllianceRX Walgreens Prime or Zipdrug, Amazon will surely grow fast in this market.

  1. Advanced analytics and personalisation

Health is becoming an increasingly broad topic. It’s no longer just about prescribed medicines but about wellbeing, nutrition, fitness, and mindfulness. As such, Amazon is uniquely placed to offer a broader package than most, drawing on its wider network of products and services on offer. Using machine learning to suggest relevant healthy eating cookbooks, Alexa enabled recipes, or an online fitness plan to those receiving prescription diet pills, or cardiovascular medications could well become that immersive, all-round remedy with which simple drug prescriptions can’t compete with.

In terms of monitoring, alerting, and predictive analytics, the possibilities of voice technology such as Alexa are still relatively untapped. There have already been advances towards monitoring voice signals to identify heart attacks. With an ageing population, the potential of this data source to both monitor and communicate would seem a logical means to keep loved ones safe.

conclusion 

Within the pharmacy sector, even if the barriers in consumer deliveries prove prohibitive to growth, Amazon may well be able to pivot and find sufficient revenues in B2B deliveries, delivering medicines and medical supplies to hospitals, doctors and perhaps even the pharmacies themselves. This would come at a time when the supply chain  has creaked under the pressure of the stockpiling of PPE and medicines by the billion during the pandemic

Whether Amazon’s expansion in pharmacy succeeds or not, this initiative shows they are ready to adapt their core competencies, including its existing logistics network and its Prime membership base, to venture into new industries. It may be pharmacy today, but tomorrow it could be takeaway food or even regular postal mail – only time will tell!

If you would like to know more about our experience in the above, either from a Healthcare or a Retail perspective, and how we are helping businesses adapt to the market, please get in touch. We would be happy to have a free of charge, no-obligation chat.