In October 2017, reports surfaced stating that Amazon’s entry into healthcare was imminent. Overnight, stock prices for top pharmacies, PBMs, and wholesalers plummeted, losing a sum total of ~$40B in market capitalization [1].
But how well-equipped is Amazon to disrupt the entire healthcare supply chain?
Having worked as a healthcare consultant, and as a member of a family entrenched in the business of healthcare, I can say: this is one of the most critical unknowns facing the industry.
The digital transformation of the entertainment industry has given rise to a gamut of Over-the-Top (OTT) streaming services to rival the traditional pay-tv powerhouses. Starting with Netflix in 2007, OTT services have proliferated to cater to the growing demand base, which still is projected to grow at a CAGR of 17% through 2020 worldwide. What is Amazon’s response?
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Amazon has its eye on the healthcare industry. Medical suppliers, such as Owens & Minor, have the option of embracing and partnering with the e-commerce giant, or fighting back and developing their own marketplace. Owens & Minor seems to have chosen the first option. But did it make the right decision on the long term? What are the benefits and drawbacks to Amazon’s pressure? How can we predict the future dynamics of healthcare logistics?
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The last mile is the key step in each supply chain. Developing and testing new technologies, Amazon is at the forefront of digital innovation with technologies that will change how customers will order and receive deliveries in the future
Amazon has lately put heavy resources in Mexico, aiming to open a 1 million square-foot mega-warehouse near Mexico City to gain market share and reinforce its supply chain in North America. However, the political tension between the U.S and Mexico, fueled by President Trump's threat to cancel NAFTA, casts serious doubt on this strategy.
CVS Health has transformed itself into the largest health care conglomerate in the United States. Do its size and supply chain integration drive further competitive advantage, or leave it open to disruption?
