Amazon Pharmacy and the future of e-Pharmacies
Updated: Dec 21, 2020
Emma Prévot examines the successes and data security concerns surrounding Amazon’s newest addition to its e-commerce store: the company’s major venture into the healthcare business area.
A few days ago, Amazon announced its first notable step into the e-Pharmacy business.
Amazon announces Amazon Pharmacy in the US
On the 17th November, e-commerce giant Amazon announced a new pharmacy offering for its customers in the US, namely Amazon Pharmacy. This new service offers online prescription or generic medication ordering, with a guaranteed two-day delivery. Reassuring the public, the company has already said that they won’t sell any medication that can be abused, including many opioids.
Customers can easily compare prices with their normal pharmaceutical services as well as the cost of drug prescription using their current health insurance plans. Available savings for Prime Members include up to 80% off for generic drugs and 40% off for brand-name medications when paying without insurance. Regarding distribution, doctors can easily send the drug prescriptions they approve to Amazon’s pharmacy service, if of course, the patient has subscribed. Alternatively, patients can request a transfer from an existing retailer. Furthermore, there are knowledgeable pharmacists available 24/7 to answer questions.
Despite being currently available only in the US, Amazon Pharmacy is designed to become a worldwide service.
Amazon Pharmacy is not the first move Amazon made in the Healthcare business and it’s not the only company in the business.
The current Pharmacy and Health market
When examining the pharmacy market, we can see that Amazon is not the only player in the game. In fact, there are other big health retailers and pharmacy chains trying to boost their online commerce strength: CVS Health Corporation, the largest pharmacy chain in America; Walgreen Co., the owner of Boots in Britain and Walmart Stores Inc.…
Even if Amazon enters the pharmacy business, the competition is still very high. Earlier this year, CVS started testing prescription deliveries with self-driving vehicles to optimise the distribution process and Walgreens experimented with drones that can deliver minutes after being ordered. Nevertheless, after the announcement of Amazon Pharmacy, shares in US pharmacy chains immediately and significantly fell: Walgreens Boots Alliance was down 9.6% and CVS Health by 8.6%.
Amazon's previous step into the Healthcare business
This e-Pharmacy service in the US is not Amazon’s first jump into the HealthCare business. In 2018, Amazon acquired PillPack, an online pharmacy which sends medicines in pre-made doses to customers with chronic health diseases.
On the 14thAugust 2020, the tech giant launched its online drugstore in India, starting with a trial in Bangalore. Despite being an undoubtedly profitable choice, Amazon encountered a huge hostility from The All India Organization of Chemists & Druggists (AIOCD), who represents retail pharmacies and distributors in the country. In a letter to Founder, CEO and President of Amazon Jeff Bezos,, the AIOCD released a statement declaring that “E-Pharmacies are illegal and not recognised”.
In late August 2020, the tech giant introduced a new membership program called Halo, which provides comprehensive personal health and wellness monitoring on the Amazon Halo mobile app, through a wrist-worn activity tracker. Thanks to Amazon’s own considerable advances in machine learning and computer vision, the Halo service is able to provide tailored advice to users and look at various measures of health such as your body fat percentage using the user’s smartphone’s camera or your general mood using voice monitoring technology
What is Amazon doing with all the information that users deliberately provide them with?
Potential data problems
Inevitably, we might question the wisdom of deliberately giving important health data to a Tech corporation. When accessing Amazon Pharmacy for the first time, the website asks customers to provide general information such as date of birth, gender, whether they are pregnant or not, in addition to the insurance details they have to provide. The system also tracks your purchases, your conversations with the pharmacists, your “wish-list” and so on.
PillPack would be informed in terms of whether you have a chronic disease and which kind of medicines you take every day. Therefore, Amazon Halo knows your daily routine: it monitors your voice and consequently your conversations; your humour and energy; what you eat and drink in a day, your temperature and your heart rate…
The amount of data collected on a daily basis would be colossal. The question naturally arises: what is Amazon doing with all that data? The tech giant declared that health data would remain separate from those acquired on its retail platforms and customers’ information would not be shared with advertisers or marketers. Vice President of Amazon Pharmacy TJ Parker has stated that “The information and experience you have inside the pharmacy is separate and distinct from the experience that you have on Amazon.com.”
When it comes to the Halo service, Amazon said that this service was built with “privacy in mind”: body scans are only saved on your smartphone and voice and speech data are analysed locally on your mobile and then immediately deleted after processing.
While raw data may be truly protected, the anonymised insights gathered are presumably used to refine its ability to fine-tune its overall product offerings. It is also likely that users will be asked to opt-in for personalised advice based on the health data you provided in the near future. Former Amazon executive James Thomson, told the BBC that he could imagine Amazon advertising gym equipment, specific groceries or supplements tailored to its customers.
Concerns about mass data security issues may arise in the process of using the service.
Despite concerns about its data security policies, Amazon is undoubtedly a giant in the world of e-commerce. Below is a brief analysis on some of the reasons why Amazon has managed to reach its current level of success and how this could forecast its move into health business.
Why Amazon might find success in the Pharmacy business
The success of Amazon relies on its superior customer experience offerings. Jeff Bezos has always managed his tech giant on the principles of excellent customer service, greater choice of products and unmatched efficiency, which is exactly what the existing pharmacy market lacks.
As a matter of fact, according to the Siemens Healthiness report, there are often misinterpretations and miscommunications between patients and pharmacists. Only 38% of patients declared that they received understandable medical information during their last visit to the doctor and felt free to ask for further details. In addition, it turns out customers prefer e-pharmacy services because of the ease of use and access. The fact that Amazon offers round-the-clock support from qualified pharmacists matches customers’ needs for efficient service.
Would users substitute in-store pharmacy with e-pharmacy? It’s too early to say. The future of online Healthcare and e-commerce share the same growing pace.
The future of E-Pharmacy
As a result of the stay-in-home trend from the coronavirus pandemic, e-commerce has risen exponentially, accelerating a trend that began several years ago. According to Fortune Business Insights, the global e-pharmacy market is expected to generate around USD 177.795 billion by 2026. However, the e-commerce experience will never be able to replicate the in-store experience; companies acknowledge the fact that they need to give customers the best of both worlds. How exactly would companies go about providing this double service? We will have to see in the near future...
The UCL Finance and Technology Review (UCL FTR) is the official publication of the UCL FinTech Society. We aim to publish opinions from the student body and industry experts with accuracy and journalistic integrity. While every care is taken to ensure that the information posted on this publication is correct, UCL FTR can accept no liability for any consequential loss or damage arising as a result of using the information printed. Opinions expressed in individual articles do not necessarily represent the views of the editorial team, society, Students’ Union UCL or University College London. This applies to all content posted on the UCL FTR website and related social media pages.