As Amazon warms up to enter into the crowded healthcare space with the recent announcement to acquire US-based online pharmacy PillPack for nearly $1 billion, the online giant’s business model could be inspired by its Chinese counterpart Alibaba, according to data and analytics company GlobalData.
The primary business of both Amazon and Alibaba is online retail and their strengths come from their scale and network of distribution. However, Alibaba’s proposition in health is older and more established than Amazon’s.
Alibaba’s subsidiary, Ali Health, provides a range of health services such as medication delivery, doctor network, health management, health insurance, product traceability and artificial intelligence-assisted diagnosis tools.
Danielle Cripps, insurance analyst at GlobalData, says: “Amazon and Alibaba are similar companies with a focus on online retail. With the purchase of PillPack, Amazon seems to be developing a similar proposition in healthcare.”
The purchase of PillPack will allow Amazon to enter into retail pharmacy on a large scale, making use of its large-scale distribution network and wide consumer reach. PillPack will bring its ecommerce pharmaceutical business and operating system that uses to aggregate patient data to Amazon’s stable.
In an age where healthcare companies are moving towards data-driven business decisions, PillPack will help Amazon to venture into other healthcare settings: the ability to set up proprietary healthcare databases and manage them is directly translatable to other sectors of the healthcare industry.
The latest announcement of Amazon follows its alliance with JPMorgan Chase and Berkshire Hathaway to address healthcare for their 1.2 million combined employees and their families in the US with simplified, high quality and transparent healthcare at a reasonable cost.
In addition, besides selling medical supplies and equipment to hospitals and clinics, the company’s cloud business— Amazon Web Services—is already offering services to healthcare customers and competing with Alphabet’s Google Cloud and Microsoft Azure.
“This is not the first time an online retailer has forayed into the healthcare industry,” Cripps said.
“While Amazon’s announcements are new to the European and US markets, its business model seems to be inspired by Alibaba. The Chinese online retail giant’s model might be the type of offering Amazon seeks to emulate. If the US and European markets want to predict Amazon’s next move in healthcare, they may be best looking towards Asia.”