Reinventing the Healthcare Supply Chain

March 14, 2019


In 2018 Amazon acquired online pharmacy, PillPack for about $753 million. PillPack manages multiple prescription medications for customers by pre-sorting, packaging and delivering the drugs—all with an around the clock pharmacy staff that customers can contact either online or via phone. The acquisition sent shock waves across the industry and resulted in leading U.S. pharmacies Walgreens and CVS to step up their omni-channel strategies. Since the acquisition, PillPack has been expanding its state pharmacy licenses with nine obtained in the last two months alone.  To date, PillPack has active mail-order sites in Arizona, New Hampshire, Florida, Texas and New York. New Hampshire has licenses in 49 states; Florida has licenses in 45; Texas has 43; New York has two and the Arizona site has licenses across 19 states with three applications pending. In comparison, CVS Caremark and Optum, two of the largest mail-order companies in the U.S., have 26 and 18 facilities respectively. Could Amazon disrupt the pharmacy market like it has done to retail? Many analysts believe it can but it would possibly take at least another acquisition before Amazon could offer a nation-wide consumer pharmacy offering. Meanwhile the two leading consumer pharmacies, Walgreens and CVS, are investing in operations to stave off competitive threats from Amazon or anyone else. Walgreens plans to transform its stores into “neighborhood health destinations.” As part of the strategy, Walgreens recently opened Aspen Dental Office at a Florida location with plans to expand. Other locations allow customers to also get lab work done or their hearing and vision checked. CVS’ approach is similar. According to the company, “CVS Pharmacy is committed to making health easier and more convenient for our customers.” The company launched its Minute Clinics in 2006 and in 2018, it acquired Aetna, one of the country’s largest health insurers. There are many other initiatives implemented and planned by the two consumer pharmacies but will they be enough? In 2018, Amazon announced a healthcare venture with Warren Buffet and JPMorgan Chase. Named ‘Haven’, the aim of the venture according to the website is “to make primary care easier to access, make prescription drugs more affordable and insurance benefits easier to understand.” The way they plan to achieve this is to look at new ways to use data and technology to better the healthcare system. While CVS and Walgreens are taking advantage of its many physical locations by partnering or acquiring healthcare providers, Amazon appears to have moved beyond this approach and is working towards reinventing healthcare as we currently know it. How Amazon’s approach will affect supply chains will perhaps mean more deliveries direct to customer, increased need for white glove services for medical equipment setup, and instructions for home-bound customers. In addition, transparency of healthcare supply chains that will include the consumer as a collaborating partner and sharing data with other supply chain partners will be imperative.

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Reinventing the Healthcare Supply Chain

March 14, 2019


In 2018 Amazon acquired online pharmacy, PillPack for about $753 million. PillPack manages multiple prescription medications for customers by pre-sorting, packaging and delivering the drugs—all with an around the clock pharmacy staff that customers can contact either online or via phone. The acquisition sent shock waves across the industry and resulted in leading U.S. pharmacies Walgreens and CVS to step up their omni-channel strategies. Since the acquisition, PillPack has been expanding its state pharmacy licenses with nine obtained in the last two months alone.  To date, PillPack has active mail-order sites in Arizona, New Hampshire, Florida, Texas and New York. New Hampshire has licenses in 49 states; Florida has licenses in 45; Texas has 43; New York has two and the Arizona site has licenses across 19 states with three applications pending. In comparison, CVS Caremark and Optum, two of the largest mail-order companies in the U.S., have 26 and 18 facilities respectively. Could Amazon disrupt the pharmacy market like it has done to retail? Many analysts believe it can but it would possibly take at least another acquisition before Amazon could offer a nation-wide consumer pharmacy offering. Meanwhile the two leading consumer pharmacies, Walgreens and CVS, are investing in operations to stave off competitive threats from Amazon or anyone else. Walgreens plans to transform its stores into “neighborhood health destinations.” As part of the strategy, Walgreens recently opened Aspen Dental Office at a Florida location with plans to expand. Other locations allow customers to also get lab work done or their hearing and vision checked. CVS’ approach is similar. According to the company, “CVS Pharmacy is committed to making health easier and more convenient for our customers.” The company launched its Minute Clinics in 2006 and in 2018, it acquired Aetna, one of the country’s largest health insurers. There are many other initiatives implemented and planned by the two consumer pharmacies but will they be enough? In 2018, Amazon announced a healthcare venture with Warren Buffet and JPMorgan Chase. Named ‘Haven’, the aim of the venture according to the website is “to make primary care easier to access, make prescription drugs more affordable and insurance benefits easier to understand.” The way they plan to achieve this is to look at new ways to use data and technology to better the healthcare system. While CVS and Walgreens are taking advantage of its many physical locations by partnering or acquiring healthcare providers, Amazon appears to have moved beyond this approach and is working towards reinventing healthcare as we currently know it. How Amazon’s approach will affect supply chains will perhaps mean more deliveries direct to customer, increased need for white glove services for medical equipment setup, and instructions for home-bound customers. In addition, transparency of healthcare supply chains that will include the consumer as a collaborating partner and sharing data with other supply chain partners will be imperative.

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