Amazon Acquires Second Healthcare Business

Amazon continues its expansion into the healthcare arena with the recent acquisition of healthcare startup, Health Navigator.

Health Navigator provides technology and services to digital health companies, CNBC reports. At Amazon, Health Navigator will join the Amazon Care Group, which serves as a medical benefit for employees. Amazon Care provides care virtually and with home visits, if additional care is needed, CNBC says. 

The merger is simply a “small first step that will let Amazon begin growing a pharmacy dispensing business,” Adam J. Fein, PhD, writes in Drug Channels. “We are still a long, long way from a fundamental restructuring of the complex U.S. drug channel. The incumbents still have opportunities to defend their position, capture value from internet technologies, and streamline distribution.”

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While Health Navigator is a relatively small acquisition, “if Health Navigator succeeds with Amazon employees, it opens the door to possibly expand it to Haven Healthcare-its venture with J.P. Morgan and Berkshire Hathaway,” Ash Shehata, national sector leader for Healthcare & Life Sciences at KPMG, tells Drug Topics.

Last summer, Amazon acquired PillPack, which delivers medications in pre-sorted dose packaging and coordinates refills and renewals. At the time, the news shook pharmacy stocks hard. CVS Health, Walgreens Boots Alliance, and Rite Aid collectively lost more than $11 billion in stock market value the day the news was announced, says Fein.

“Healthcare organizations will often try service offerings on their own employees before bringing them publicly to customers. This gives an opportunity to see how services will fare with real patients and engagements with healthcare providers,” Shehata says. However, KPMG is not sure whether Haven will provide healthcare services to other employers or individuals outside of the three companies in the venture. “Each company is well resourced, and Haven has the scale of a small health plan with a high degree of technological sophistication at its disposal. The question is how and where it wants to deploy healthcare services,” Shehata says.

Amazon could make much bigger advances into the healthcare and pharmaceutical sector in the future. In addition to PillPack, Amazon could consider buying drugstore chains such as Rite Aid, Anthony Chukumba, analyst for Loop Capital Markets, tells CNBC.

Amazon could also provide healthcare service to customers at Whole Foods Market, or the grocery chain it is launching, Chukumba says.

“It is conceivable for Whole Foods to devote floor space for pharmacies or clinics, extending PillPack/Amazon’s healthcare brands,” Shehata says. “Retailers are eager to make a push into healthcare and healthcare organizations are looking to make themselves more patient-centered or even consumer-friendly. Amazon would have to analyze the most productive uses of the store space and what sort of impact a health clinic would have on the retail experience at its Whole Foods stores. With that in mind, there is a lot of speculation that pharmacies will be opened in Whole Food in the coming years.”    

“The big question remains about what Amazon aspires to do in healthcare,” Shehata says. “It’s piecing together businesses that can affect primary care and it has the AI and analytic capabilities to engage patients and consumers. Amazon can make more investments in healthcare.” 

Whether the company actually wants to make those investments remains uncertain.