Amazon.com, Inc. (NASDAQ:AMZN) knows a major opportunity when it sees one, and the e-commerce giant isn’t afraid to jump right in with both feet when it feels the time is right.
Until now, the Seattle-based company has largely avoided the healthcare space. Sure, it sells over-the-counter medical supplies on its shopping platform, but prescription drugs and other services have thus far been out of reach.
Goldman Sachs believes that will change very soon, however. The firm just published a massive 30-page report on Amazon’s opportunity in the space, and CNBC has picked out some of the highlights:
Rather than replacing pharmacies right away, Amazon might start by partnering with a pharmacy benefits manager (PBM), which acts as an intermediary between payers, like health insurers, and the rest of the health system. That would provide “access to patient data and the potential to cross-sell related products.”
Amazon could ultimately improve price transparency for the consumer and reduce out-of-pocket drug costs. But it would likely start by speeding up the drug delivery process and facilitating at-home delivery.
Amazon could also become an online pharmacy, retail and online pharmacy, integrated PBM and online pharmacy, or handle drug distribution to pharmacies.
However, one potential stumbling block to the company’s ambitions is the age gap between its typical customers — which tend to be younger and thus healthier — and the sweet spot age for prescription drugs. Baby boomers are the key demographic there, but the company doesn’t quite have the penetration for that age cohort yet.
Still, the opportunity looms large, and analysts expect Amazon to make a major move sooner rather than later.
Amazon.com, Inc. shares closed at $967.99 on Friday, up $11.07 (+1.16%). Year-to-date, AMZN has gained 29.09%, versus a 10.22% rise in the benchmark S&P 500 index during the same period.