Amazon expands push into health care with online pharmacy

[SEATTLE] Amazon is making its biggest push into selling prescription drugs yet, launching a digital pharmacy and offering discounts for medicines to paying Prime members in the US.

The e-commerce giant on Tuesday unveiled Amazon Pharmacy, a section of its retail website and mobile application that lets people order medication. Shoppers can pay using their health insurance. Prime members who don't use their insurance are eligible for discounts on generic and brand-name drugs on Amazon's site or at about 50,000 participating pharmacies.

Amazon's new offering comes more than two years after its US$753 million acquisition of PillPack, an online pharmacy known for organising prescriptions into packets. This expansion puts the Seattle-based e-commerce company into more direct competition with pharmacy giants CVS Health and Walgreens Boots Alliance, the two largest chains in the US.

The move also helps Amazon compete with Walmart and other big-box stores that already sell prescription drugs.

Analysts have long expected Amazon to dive deeper into health care in a bet the company can bring its digital real estate and logistical prowess to bear on a roughly US$4 trillion industry in the US with a reputation for inefficiency. The company rattled drug retailers with its PillPack acquisition, but Amazon has been slow to integrate the online pharmacy startup into its offerings.

The announcement Tuesday marks the first time that shoppers can order prescription drugs directly on Amazon. Previously, they were redirected to PillPack's website. An integrated pharmacy removes one of the few gaps in Amazon's offerings compared with major big box and grocery rivals, some of whom have long filled shoppers' prescriptions in the same stores where they sold flat-screen televisions or cans of soup.

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Amazon's push comes as consumers are shunning stores and ordering more items online, a trend the coronavirus pandemic has accelerated. With consumer behavior shifting, chain drugstores have already started rethinking their strategies. CVS acquired health insurer Aetna for US$68 billion in 2018 and is adding more health services to its stores. Walgreens is dabbling with numerous partnerships to add items like groceries and mobile phones to its stores.

Amazon's entry into a market doesn't guarantee its dominance. Drugstores have long insisted that patients prefer to talk to their pharmacist at the counter, an experience Amazon will try to recreate digitally.

Amazon chief executive officer Jeff Bezos has positioned Prime, Amazon's paid membership programme, at the centre of the company's efforts to create loyal customers. What was originally an unlimited shipping programme has grown in recent years to include video streaming, games and digital storage, and discounts at Amazon-owned Whole Foods Market.

BLOOMBERG