The Amazon share price has done extremely well over the last 12 months as the company looks to expand and sell more products to its ever growing client base. It is believed that Amazon has an annual meeting regarding the pharmaceutical industry and whether indeed it is time for the company to become a player in this sector. This year could be the year with Amazon having already recruited experienced management to put together a strategy as well as testing the market through its Japanese subsidiary.
Changes in US medical care regulations
Changes in US medical care regulations, brought about by President Trump, may also play into the hands of Amazon. Statistics show that in 2015 alone there was an estimated $300 billion spent on prescription drugs by patients, insurance companies and other third parties. For many years now there have been concerns that consumers were being “overcharged” and with Amazon’s track record, there would likely be significant downward pricing pressure if it did enter the market.
When you bear a mind the array of fake drugs available on the Internet we can only imagine the opportunity to deal with a trusted figure such as Amazon would go down very well with customers. The very fact that the company has already started recruiting experienced personnel would suggest Amazon has moved beyond a review period and appears to be getting more serious about the sector.
Breaking into the marketplace
If you delve beneath the surface of the pharmaceutical industry it is a very complicated sector with many participants. It is difficult to say whether Amazon would be welcomed by the pharmaceutical giants because on one hand it could potentially increase sales while on the other it would introduce pricing pressure. Regulators may also become involved in any potential move into the pharmaceutical industry because, as we have seen in the past, Amazon literally has the power to crush competition and leave the way clear to dominate markets.
We know that Amazon has recently tested pharmaceuticals and cosmetics in the Japanese market via its Japanese subsidiary. This is something which the company has done on many occasions in the past with Canada used as a testing ground for the company’s drone delivery system – prior to any US launch. So, all the signs are there that Amazon has decided to move into the pharmaceutical sector, watch this space!
Challenging environment
As we touched on above, the pharmaceutical industry is an extremely close-knit sector which is often not very welcoming of new entrants. Whether a company with the power of Amazon will prompt an array of deals with the pharmaceutical giants remains to be seen but if Amazon does decide to have a go at the pharmaceutical industry there will certainly be fireworks.
Over the years Amazon has expanded into an array of new markets, the majority of which have been very successful. The key to this success has been extensive research into these new markets and entry only when management can see an opening. Online pharmaceutical sales have been in the pipeline for many years now, regularly discussed by all accounts, but the recent recruitment of experienced pharmaceutical industry personnel would seem to suggest the company has spotted an opening. Watch this space!