JAPAN – U.S. e-commerce giant Amazon.com Inc is considering entering the prescription drug sales market in Japan, starting next year when electronic prescriptions are allowed for the first time in Japan, the Nikkei newspaper has reported.
The plans would be a sign that the US-based online retail giant is seeking to further expand its healthcare capabilities after it announced its planned acquisition of primary care company One Medical for US$3.9 billion.
Customers in Japan would use Amazon’s service to get prescriptions delivered, rather than going to a pharmacy, according to Nikkei’s report.
If Amazon finalizes the intended move, it will be able to compete for the Japanese prescription drug market valued at approximately 10.6 trillion Japanese yen (US$75 billion) according to Statista.com.
Amazon would not operate its own pharmacies or carry its own inventory, the report said. Instead, the company would work with small- and medium-sized pharmacies in Japan and use its delivery network to get drugs from pharmacies to customers’ homes.
Prescription drug prices in Japan are set by the government, while the distribution system is highly fragmented, with 70 wholesalers nationwide and almost 60,000 pharmacies.
Amazon is already active in the online pharmacy business. In 2018 the company acquired the startup PillPack, which it turned into its Amazon Pharmacy business.
Japan could represent a growth opportunity for Amazon. As of 2020, there were some 60,000 pharmacies selling prescription drugs in Japan, up 10% in the past decade, Nikkei reported.
Prescription drug prices in Japan are set by the government, while the distribution system is highly fragmented, with 70 wholesalers nationwide and almost 60,000 pharmacies.
Expanding with focus on healthcare
Amazon has been making various acquisitions and business expansions lately, including looking more at healthcare.
The tech giant originally entered the health sector after it acquired PillPack, an online pharmacy, in 2018 and later rebranded as Amazon Pharmacy.
Amazon also acquired One Medical, which is currently being looked at by the Federal Trade Commission (FTC). One Medical operates clinics in numerous US markets.
One Medical is a membership-based primary care practice that offers on-site offices in big US metro areas. It also comes with telehealth offerings.
Amazon’s buy of One Medical was also the catalyst for the eCommerce giant to shut down its Amazon Care service, which it had rolled out in 2019 as an employee-based telehealth service, which also sent healthcare providers to peoples’ homes.
Following Amazon’s US$3.9 billion acquisition of One Medical, Business Insider reported the company would add mental health services to its portfolio.
Although there are skeptics who fear Amazon’s privacy track record in the context of healthcare, some say the company’s moves could be positive for the industry.
Although those endeavors seem to be bearing fruit, Amazon also had a failed venture, Haven, with Berkshire and JPM that disbanded after multiple internal issues.
Other tech giants such as Apple and Google, among others, have entered the healthcare market.
Despite the fact that Apple has not acquired a company, it has partnered with a number of healthcare providers to provide healthcare professionals with patient biometric data collected via an Apple Watch.
A patient, for example, can monitor their heart rate, download apps to help with neonatal care, and manage medication intake, to name a few features.
Google, on the other hand, has been more focused on healthcare research. They have been able to expand research in digital well-being, provide information on suicide, and expand Fitbit features thanks to partnerships at various universities.
Bigger players focusing on healthcare may steamroll new entrants, but it may also push startups to investigate aspects of the space that haven’t received much attention in the past, but which could drive significant improvements for patients and payers alike.
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