- Amazon's filings with state pharmaceutical regulators reveal the company is not looking to sell drugs on its marketplace, according to reports from CNBC and the St. Louis Post-Dispatch.
- The filings to distribute to at least 12 states from three facilities in Indiana reveal Amazon could distribute medical devices, supplies, gas or pharmaceuticals from the warehouses. However, to distribute drugs the company would also have to pursue a deal with a pharmaceutical benefits manager.
- The biggest rebuke of rumors on Amazon's pharmaceutical dreams came from correspondence with regulators in Tennessee and Indiana, where the company explicitly said it would not "store or ship drugs."
Spinners have spread rumors Amazon will soon disrupt the pharmaceutical supply chain, but it turns out the opposite is true: drugs, at least, are safe from e-commerce — but medical distributors are not so lucky.
Companies like McKesson and Cardinal Health have long had a stranglehold on the medical supply distribution market, serving as middlemen between countless suppliers and the dozens of hospitals and clinics they serve. As healthcare providers continue to consolidate, so does suppliers' opportunities to sell to big clients.
Or they did until the rise of e-commerce. Amazon's rise has transformed buying habits so much, digital shopping began to shape business-to-business procurement. As digital tools became commonplace, previously limited suppliers began list their products on online marketplaces as well as catalogs or at trade show booths. At the very least, e-commerce opens an additional revenue channel for sales-driven companies.
Using that strategy, Amazon has broken into the apparel, electronics and food industries. It should be no surprise the company is now entering the medical supply field. After all, the company is only limited by its fulfillment capabilities, and the number of brands it can incentivize to join its marketplace. Given the highly competitive medical supply market, the latter should not be a problem. And the complexities of cold storage facilities could only hold off the giant for so long.
By that logic, it would not be surprising if Amazon did, eventually, break into the pharmaceutical space too. After all, the company is known for its long-term strategy and preparation, and it already applied for a license to distribute drugs in some states although it will not pursue the strategy at first, per the recent report.
However, the timing of such a move will likely depend, first, on the company's success in the medical supply industry. If it can successfully navigate the regulations and build up cold chain storage expertise, it is not too far a reach to move into pharmaceutical distribution. Even then, Amazon must still file for additional licenses and strike a deal with benefits managers.
Nonetheless, pharmaceutical companies and healthcare providers alike should watch the e-commerce giant's healthcare experiment with interest, as its success will likely anticipate further expansions — either in distribution or logistics.