Amazon launches new initiatives in healthcare
aS big tech companies are facing brutal slowdown New expansion areas are being explored. AmazonIt is currently the second largest company in the US by revenue.In the final quarter of 2022, sales are expected to grow by just 6.7% year-over-year. On November 17th, Amazon CEO Andy Jassy confirmed that the company has begun laying off employees and plans to lay off more in the coming year. Jassy said it was the most difficult decision he has made since becoming president. But he also noted that there is a “big opportunity” in front of him. He highlighted America’s largest, most profitable and hellishly difficult business: healthcare.
Many tech companies have healthcare ambitions. Apple tracks wellbeing through the iphoneMicrosoft provides cloud computing services to healthcare providers, and Alphabet sells wearable devices. pumping money For biotechnology research. But Amazon is currently creating its most ambitious product. Two days before Jassy’s statement, on Nov. 15, the company launched the “Amazon Clinic,” an online service that operates in his 32 states. Amazon describes the new service as a virtual store that connects users with third-party healthcare providers.
Amazon Clinic’s launch follows the $3.9 billion acquisition of One Medical, a primary care provider that offers telemedicine services and operates brick-and-mortar clinics, announced in July (the deal not yet completed). It has 790,000 members. The deal was led by Neil Lindsay, the former head of Amazon’s subscription service Prime, who said healthcare was “high on the list of experiences that need to be reinvented.”
These latest moves complement Amazon’s existing assets. The Halo band, a wearable device launched in 2020, monitors the user’s health. In 2018, he acquired digital pharmacy PillPack, now part of Amazon Pharmacy, for $753 million. Amazon Web Services will launch certain cloud services for healthcare and life sciences companies in 2021.
The transition to primary care, the lingo of the traditional family physician role, is a big step, but there’s a clear logic. Pharmacy chain Walgreens believes the industry is worth $1 trillion a year. About half of Gen Z and millennial Americans don’t have a primary care doctor, and One Medical’s membership has nearly doubled since 2019. Rather than relying on America’s nightmare insurance system to recoup its costs, Amazon Clinic accepts cash for its services.
The company is betting that primary care will become more digital. And it will likely seek to integrate these services with other parts of Amazon’s healthcare offerings. In the future, the company may add features to Halo bands that remind users to take their medication. There is also the possibility of setting up a clinic in a branch of Whole Foods, the supermarket chain he acquired in 2017. There is also the possibility of incorporating healthcare into Prime. “An easy win is offering Prime members discounts on memberships,” said Daniel Groswright of bank Citigroup.
Amazon’s health efforts come with a number of risks. For one, their own records are far from perfect. The company will shut down Amazon Care, which it launched to provide health services to its own employees and expanded to provide some services to external customers. Haven was founded in 2018 in partnership with Warren Buffett’s investment firm Berkshire Hathaway and bank JPMorgan Chase to procure low-cost healthcare for employees. , died less than three years later.
Another danger is competition. cvsAmerican retail pharmacy Walgreens increased its stake in Village in October.md with an investment of $5.2 billion. JP Morgan recently opened its own primary care center. Amazon’s new venture will also compete with tech startups focused on providing virtual healthcare, such as Ro and Hims & Hers.
Finally, Amazon has to deal with regulators. The Federal Trade Commission, a discrediting agency, is investigating One Medical’s deal. This acquisition and the launch of Amazon Clinic raises the question of who should be allowed to hold sensitive medical data. Amazon said it “continues to focus on the important mission of protecting customer health information.” The company may need to set up strong firewalls to separate customer information held by the clinic from information collected through other products and services. But satisfying data privacy concerns could wipe out many of the data-sharing opportunities Amazon has successfully deployed across its other businesses.
Amazon’s attempts to disrupt healthcare are subject to intense scrutiny. Nonetheless, it should have a positive impact on healthcare in America. It could also push other tech giants to do more to disrupt healthcare itself. All of this could be just the drugs America’s healthcare system, and Mr. Jussy’s tenure as Amazon boss, desperately need.■
https://www.economist.com/business/2022/11/20/amazon-makes-a-new-push-into-health-care Amazon launches new initiatives in healthcare
