Historically, the pharmaceutical space has been widely considered to be “Amazon-proof”—complex healthcare systems, high regulatory hurdles, stringent warehousing requirements, and a complicated billing system are all solid reasons for Amazon (AMZN) to not make the move into such a challenging industry vertical. However, a recent search for the query "Life Sciences" on the amazon.jobs site revealed over 1500 job openings. So clearly, Amazon does have interest in the healthcare and life sciences space.

Where Amazon could find leverage

Amazon is not a stranger to selling pharmaceuticals online. For instance, according to the Japan Times, in April of this year, Amazon announced same-day delivery service for both food and medicine. In addition, Amazon already sells beauty care, personal care products, vitamins, diet supplements, over-the-counter pharmaceuticals, and some medical supplies online. Amazon could easily leverage the above experiences to ease the transition into the prescription pharmaceutical industry.

From a technology standpoint, Prime Now, Alexa Echo and Dot, Dash buttons, and their AI-driven recommendation system are additional leverage points where Amazon could reduce customer friction, lower costs, and increase revenue for the company. You can also expect, due to the large scale that they would be operating, that Amazon would use its innovation expertise to automate as much of the fulfillment process as possible.

Additionally, according to US Senate Lobbying Disclosure Database, since 2008, Amazon has spent over $48 million in lobbyist activities. So, Amazon would be able to leverage its political experience to influence regulations in their favor.

Where would potent compound safety expertise be required?

If Amazon decides to enter the pharmacy space, it wouldn’t take too much imagination to envision the large differences that an “Amazon Pharmacy” would have from the local corner drugstore. These difference include the following:

1. In order to leverage their distribution strengths, an Amazon Pharmacy would be located within one of their large regional distribution centers. Due to the large number of order fulfillments, instead of having just a single pharmacist and a technician or two, Amazon would likely have a large number of pharmacists and dozens of technicians. From a potent compound safety standpoint, training on exposure prevention, hazard communication and spill procedures would be on the list of minimum safety training requirements.

2. In order to meet regulatory requirements, Amazon would need to build-out temperature control warehouses.

3. Because many drugs have fairly short shelf-lives, Amazon will need to carefully manage its reverse-distribution process to comply with hazardous wastes regulations for waste pharmaceuticals. This will be tricky since hazardous wastes regulations on expired pharmaceuticals continue to evolve and vary greatly between different states.

4. Finally, if Amazon intends on processing orders for DEA scheduled pharmaceuticals, such as hydromorphone or amphetamine containing pharmaceuticals, they will need to establish all the tracking and security systems necessary to comply with current regulatory requirements.

As you can see from the above items, potent compound safety expertise would be required in many areas.

Acquisition may be an option

However, just like they did with the recent acquisition of Whole Foods, with Amazon’s annual revenues over $135 billion, they could easily just snap up a Walgreens, CVS, Rite Aid or other existing pharmacy outlets and build out their presence in the industry from that starting point. In any case, the one thing that you can count on is that as long as Amazon is under the visionary leadership of Jeff Bezos, they will be continuing to look for any industry that is inefficient and needs disruption.

Stay tuned to the Potent Compound Corner for updates on this evolving story.

Published November 27, 2017

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