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Can Amazon figure out the drugstore model?

For months now, pharmacy and health benefits companies have fretted that theyre the next targets of Jeff Bezoss disruption steamroller, but Amazon hasnt yet figured out how to shake up a notoriously complex business.

By Spencer Soper, Caroline Chen | Updated on December 19, 2017
Selling prescription drugs is far more complex than anything else Amazon has attempted, thanks to a fragmented health care reimbursement system and layers of middlemen between pharmacists and their customers. (Photo: Shutterstock)

For months now, pharmacy and health benefits companies have fretted that they’re the next targets of Jeff Bezos’s disruption steamroller. In September Amazon.com Inc. acquired Whole Foods Market, a grocery chain that could theoretically add drug counters to stores; a month later came word that the e-commerce giant had secured pharmacy licenses in more than a dozen states. Analysts issued dire warnings; shares see-sawed.

The industry’s paranoia is justified given Amazon’s propensity to disrupt one sector after another. But it’s worth remembering Bezos has been thinking about the corner drugstore for almost 20 years. No clear strategy has emerged, according to three people familiar with the company’s plans, because Amazon hasn’t yet figured out how to shake up a notoriously complex business. So for the time being Amazon is focused on the $200 billion market for medical supplies. The company already sells bulk packs of latex gloves, bed pads and syringes; now it’s getting into medical devices and instruments. Amazon declined to address speculation regarding its potential pharmacy ambitions.

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