A little over two years after its $753 million acquisition of the prescription medicine delivery service Pillpack, Amazon has finally launched Amazon Pharmacy, its online and mobile prescription medication ordering and fulfillment service.
Using a secure pharmacy profile, customers can add their insurance information, manage prescriptions and choose payment options all through Amazon’s service.
After launching its own line of over-the-counter drugs in 2019, this is arguably Amazon’s broadest push into the healthcare business to-date, one that could open up big new revenue opportunities for the company, especially as the ongoing COVID-19 pandemic pushes consumers both toward more remote care, and using online channels for all their shopping needs.
Indeed, this is also more than just Amazon’s continued expansion as a one-stop shop for medicine and wellness. For many consumers, shopping at the pharmacy and shopping for groceries goes hand-in-hand (and of course over decades, many standalone pharmacies have moved more into becoming like stores selling food, while those selling food also have pharmacy counters).
Having this alongside Amazon’s very aggressive and ambitious grocery and food play — which mirrors its drug strategy by spanning its own brands as well as those it has bought it, including Amazon Fresh, Whole Foods, Amazon’s own brand items, and physical Amazon grocery stores — gives the company a more complete experience, where shoppers can more fully replace their shopping needs using Amazon alone.
While Amazon Pharmacy looks to be a US-only launch for now, it’s a global opportunity. Online pharmacy services are projected to hit revenues of $131 billion by 2025 worldwide. Prescription drugs, meanwhile, have been estimated to be a $904 billion industry this year, growing to nearly $1.3 trillion by 2025.
“As more and more people look to complete everyday errands from home, pharmacy is an important and needed addition to the Amazon online store,” said Doug Herrington, Senior Vice President of North American Consumer at Amazon, in a statement. “PillPack has provided exceptional pharmacy service for individuals with chronic health conditions for over six years. Now, we’re expanding our pharmacy offering to Amazon.com, which will help more customers save time, save money, simplify their lives, and feel healthier.”
In addition to the basic Amazon Pharmacy service, Amazon is rolling out special features for Prime members: those subscribing to Amazon’s premium membership tier can receive unlimited, free two-day delivery on Amazon orders, the company said in a statement.
Prime members can also save on medications when they pay without insurance on Amazon Pharmacy — and receive the same discounts at 50,000 other participating pharmacies nationwide. Amazon Prime prescription savings benefit can save members up to 805 off of generic and 40% of of brand name medications when paying without insurance.
Prime members can access their prescription savings at checkout and all Amazon customers will be able to shop for medications — including branded and generic versions and different form factors and dosages — and order them online.
Amazon is also letting customers compare prices with their insurance co-pay, without insurance or with the savings available through the Prime prescription savings plan to choose the lowest option. Amazon is also staffing a pharmacy service accessible at all hours so that customers can answer questions about their medications.
“We understand the importance of access to affordable medication, and we believe Prime members will find tremendous value with the new Amazon Prime prescription savings benefit,” said Jamil Ghani, Vice President, Amazon Prime, in a statement. “Our goal is for Prime to make members’ lives easier and more convenient every day, and we’re excited to extend the incredible savings, seamless shopping experience, and fast, free delivery members know and love with Prime to Amazon Pharmacy.”
The launch of the new Pharmacy service within Amazon is a blow to other discount prescription services like the publicly traded GoodRx and companies like RxSaver and delivery services like ExactCare Pharmacy.
The competition from Amazon was likely one reason why GoodRx began offering telemedicine services as a point of differentiation and to move up the value chain. It will be interesting to see if Amazon will also move to providing virtual care for more than its employees. Last year, the company rolled out Amazon Care for its workers in Seattle as part of a pilot service that provided both in-person and telemedicine services.
At the time, the company limited its pilot to employees, but (as TechCrunch reported) the highly publicized nature of their approach, and the amount of product development that clearly went into developing the initial app, user experience and brand could indicate that it has the broader U.S. market in mind as a potential expansion opportunity down the line. Reports from last year also suggested that Amazon could make a play in consumer health with new wearable fitness tracking devices, which could very nicely complement insurance and healthcare services offered at the enterprise and individual level.