Amazon’s Effects On The Online Prescription Drug Market

February 22, 2019 0 By

In 1999, Amazon tried to create the first ever major online pharmacy. While this attempt failed due to various FDA regulations, logistical challenges, and pre-existing business alliances, they’re making a second attempt at disrupting the online prescription drug market by becoming a major player in their own regard. Effective market research must first analyze the effects of major players in the field, such as Amazon’s effect on the online prescription drug industry: it makes sense to understand their positioning in order to figure out where the industry is headed.

Analyzing The Current Industry Trends

The Chief Executive of the Drug Channels Institute, Adam Fein, noted in the same study about that “In the United States, we process and pay for almost 6 billion 30-day-equivalent prescriptions a year for a population of 326 million people. We’ve built a very complicated infrastructure to do so, and that infrastructure cannot be easily dismissed.” What this means for Amazon is that, in an industry where three major companies control pharmacy benefitsfor about 80% of the US population, the major marketplace has to either form alliances with one of these companies or create their own positioning as a major PBM (pharmacy benefit manager). In doing so, they’ll have to monitor industry trends and ensure they’re complying with regulations surrounding safe ingredients and the safe distribution of pharmaceuticals.

Where Amazon Enters The Market

As Amazon aims to become a leader in the online prescription drug market, its massive existing online customer base plays to their benefit. Dominating nearly 50% of the e-commerce market plays to their benefit, as it means their custom reach and audience potential are already huge. The next step lies in handling a complex system of logistics that involves the proper storage and distribution of various different types of drugs. Seeing as Amazon has already built a strong logistical system, this also plays to their benefit. The final hurdle in entering the online prescription drug market lies in becoming a full-service online pharmacy where customers can purchase all of their medications in one place as opposed to searching for each item across various providers in a marketplace. Assuming Amazon is capable of accomplishing all of these, industry experts are hopeful that they will be able to not only enter but disrupt the market, particularly targeting customers who pay out-of-pocket for their prescriptions. In the studies quoted above, it’s noted that at least 13% of US customers pay out-of-pocket for their medications.

Creating Solutions To Age-Old Problems

The question really remains as to what Amazon is set to gain by entering the online prescription drug market. However, analysts note that it seems that the mega-marketplace is actually trying to zero in on unnecessary costs and issues in the supply chain to ultimately reduce costs and hassle for consumers. This is a major advancement in the pharmaceuticals industry, and one that could revolutionize both access and safety.

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