Amazon.com, Inc. (NASDAQ:AMZN) is reportedly shelving its initial plans to sell and distribute pharmaceutical products to hospitals. The company had planned to distribute the products to its potential clients through its newest entity, Amazon Business that sells bulky items to the business enterprises. Several healthcare and pharmaceutical distribution giants including the Cardinal Health and McKesson were already predicting a drop in their market shares if Amazon was allowed to enter into the pharmaceutical space.
According to the latest news from CNBC, Amazon has been preparing to distribute the pharmaceutical products since last year but it has changed after considering the entry setbacks into the healthcare industry, though the company is still in the process of convincing the large hospitals to adjust their long-established purchasing networks that favor the middlemen and customer loyalty networks.
The company currently focuses on selling the products to the less sensitive medical supplies to the most established hospitals as well as smaller clinics. Amazon has been distributing smaller medical products such as the glucometers, gloves, stethoscopes and much more to various clinics for quite some time. For instance, the firm has licensed entities in more than 47 states in the US though it’s still struggling to win big contracts with large hospitals.
Amazon is facing various challenges particularly in penetrating the medical supply and pharmaceutical industry. Another major setback to entry to the healthcare industry for Amazon is the nature of its warehouse and logistics infrastructure, which has limited storage space for temperature-sensitive pharmaceutical products.
Most biopharmaceutical firms demand that their products should be carefully stored and shipped under tightly controlled delivery networks that Amazon’s current warehouse doesn’t support. Hence the company could be required to build sophisticated logistics network that will control temperature-sensitive pharmaceutical products if it plans to launch into the drug industry.
Amazon has strong logistics and shipping delivery systems for almost every household products from groceries to the most complicated huge items and there’s a worrying trend that the company could disrupt the healthcare industry if it will be allowed to distribute drugs and other medical supplies.
