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Amazon RX and Medical/Dental Supply Idea Proposal (AMZN, HSIC, PDCO)

Amazon RX and Medical/Dental Supply Idea Proposal (AMZN, HSIC, PDCO)
 

How soon until Amazon’s venture into RX and medical/dental supply sales and distribution disrupts traditional channels?

Report Available: February 22, 2018

 

Blueshift’s initial research found AMZN putting the prescription drug and medical/dental supply distribution channels on notice. Recent actions by AMZN, which include obtaining pharmacy licenses in 12 states, hiring professional health care staff, and meeting with major drug manufacturers, would seem to justify the traditional pharma and medical/dental sales channel fears of pending disruption. AMZN’s true intentions are not known as the company is not openly discussing them. When and if AMZN enters this space, it will face a new challenge in a highly-regulated market, something it has not done before.

 

Observations

  1. In October 2017, the St. Louis Post-Dispatch reported that AMZN had obtained pharmacy licenses in at least 12 states: Nevada, Alabama, Arizona, Connecticut, Idaho, Louisiana, Michigan, New Hampshire, New Jersey, North Dakota, Oregon, and Tennessee. At the time, AMZN had a license application pending in Maine. However, in December 2017 the application was cancelled because it was incomplete. Some view the cancelation as a sign of AMZN’s inexperience in the pharma space and the difficulties of disrupting a heavily-regulated industry.
  2. High-level meetings between AMZN and generic drug makers MYL and NVS’ Sandoz were recently held. The CEOs of PFE and Allergan were asked about the prospect of working with AMZN during their quarterly earnings conference calls. They responded enthusiastically but said no formal discussions were taking place. No clear AMZN plans have emerged from these exploratory efforts.
  3. The dental supply market segment is in AMZN’s crosshairs, according to Morgan Stanley which recently warned dental investors that “Amazon is here.”  AMZN acknowledges that 50% of the dental products it sells come directly from the manufacturers and the other 50% from third-party sellers. Sources indicated that XRAY is selling directly to AMZN, however an XRAY spokesperson denied that the company has a deal in place. What is known is that products from 50 different dental manufacturers are sold on AMZN and over 16,000 XRAY products are available for purchase on the site, posing a major potential threat to distributors HSIC and PDCO.
  4. According to a CNBC study, AMZN’s disruption of the medical device and dental supply chain is already underway. The survey said 34% of participating physicians already use AMZN to purchase needed medical and dental supplies, leading to questions of how long before the sale and distribution of prescription drugs become the new AMZN domain.

 

How far along is AMZN on its exploratory journey into the sale and distribution of prescription drugs and medical/dental supplies? How long will it take AMZN to negotiate the regulatory requirements to begin RX sales and distribution? How will the distribution and sale of drugs and medical/dental supplies be reshaped by AMZN’s presence? What will happen to the pharmacy benefit manager (PBM) market segment? Which companies stand to be most disrupted by AMZN’s moves? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: State pharmacy boards, Drug and dental wholesalers and retailers, Pharmacy benefit managers (PBM), Group purchasing organizations (GPOs), and Industry specialists.

 

Companies: AmerisourceBergen Corp. (ABC), CVS Health Corp. (CVS), Dentsply Sirona Inc. (XRAY), Express Scripts Holding Co. (ESRX), Henry Schein Inc. (HSIC), McKesson Corp. (MCK), Patterson Companies Inc. (PDCO), Rite Aid Corp. (RAD), Walgreens Boots Alliance Inc. (WBA)

 

Research Begins: February 5, 2018

 

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