Disrupting the pharmaceutical industry: Amazon & Pillpack
Unlike a leisurely browse through your neighbourhood bookstore, waiting in-line at the pharmacy for another month’s supply of Prinivil isn’t exactly an enjoyable customer experience. Nor is the tedious task of sorting through your meds and making sure they are taken as prescribed – a chore that only 50% of Americans manage to do correctly. With Amazon’s latest $1bn acquisition of PillPack, these things are beginning to change.
PillPack has built a digital pharmacy that is centred on a unique approach to packaging prescription drugs. It had raised a total of $118m before being bought by Amazon. The deal instantly sent shockwaves across the healthcare industry, with operators like CVS and Walgreens losing billions of dollars in market cap.
Bringing Amazon into the picture adds a whole new level of significance. The retail behemoth is well known for its willingness to slash prices in order to win over customers. This strategy should prove particularly disruptive in an industry riddled with complexities that tend to manifest themselves in unnecessarily high prices for consumers. If people are willing to forgo their beloved physical bookstores in return for cheaper prices, it is no big stretch of the imagination to consider the effect Amazon could have on healthcare.
Furthermore, common defences of brick and mortar retailers are not so easy to apply to pharmacies. As much as one may enjoy the allure of the real bookshop experience, most of us would happily do away with the slight awkwardness of the stranger behind the counter knowing exactly which ailment we are suffering from, and PillPack provides a convenient alternative.
Of course, pharmacy work is much more complex than just delivering certain pills. For example, pharmacies in the US have to compete for close relationships with health insurers, who often control where the prescription is picked up or how it is delivered. Amazon will also face regulatory hurdles regarding the privacy of medical information under the Health Insurance Portability and Accountability Act.
Nevertheless, PillPack has clearly identified a deep customer problem, and having the guts to address it is something that both PillPack and Hadean seem to have in common. Like PillPack, we have identified a crack in the market that was mostly neglected by large players, and built a team with the necessary expertise to deal with it.