Sector News

Eyeing drug sales, Amazon starts talks with PBMs: report

September 21, 2017
Life sciences

Rumors that Amazon is looking to parachute into the drug field are getting louder. Amazon is already in talks with pharmacy benefits managers, an analyst reports, and that poses a larger threat to the pharma industry than some might realize.

The retail giant has stayed quiet about its pharma ambitions, but a Goldman Sachs analyst last month outlined some potential pharmaceutical strategies the company might use. Now, Leerink Partners has published a report saying the category-killer is in talks with mid-size PBMs “in an effort to get into various contract arrangements,” according to multiple media reports.

A potential entrance into the drug business could take 18 to 24 months, according to Leerink, but Amazon could be a “bigger threat” to the pharmaceutical status quo than many appreciate.

There’s plenty of reason Amazon might want to get into the drug supply chain. According to the Goldman Sachs analysis, the field is worth $125 billion each year, or 30% of U.S. net pharma spending. To start, the company might offer a strong user experience and a top-notch logistics network, later looking to change transparency dynamics on pricing, according to the Goldman analysts.

Goldman Sachs analysts published their 30-page report in August as a way to spark conversation among investors about Amazon’s options in pharmaceuticals. They said the company might partner with a PBM as a “path of least resistance.” Other routes into pharma for Amazon would be as an online pharmacy, a retail plus online pharmacy, an integrated PBM or a distribution player to pharmacies, according to Goldman.

But the PBM space is dominated by a few major players, and any potential disruptor would need to build up scale to make meaningful change. Other complexities such as pricing could pose challenges for Amazon in the field.

Talk of Amazon’s entry into the drug supply chain comes as tensions have been somewhat strained between pharmaceutical companies and drug middlemen, amid ongoing public angst over drug prices. Drug companies have been blaming growing PBM rebates for a rise in prices, while PBMs say their tough negotiations save the health systems billions in costs.

By Eric Sagonowsky

Source: Fierce Pharma

comments closed

Related News

February 4, 2023

MedTrace receives U.S. patent for diagnosing the human heart

Life sciences

The U.S. Patent and Trademark Office issued a patent to MedTrace for their method of diagnosing the human heart via 15O-water PET. The patented method is the foundation of the company’s software aQuant, currently under development. Hendrik “Hans” Harms, PhD and Senior Scientist at MedTrace, and Jens Soerensen, Professor and Clinical Advisor to MedTrace, are the originators of the method.

February 4, 2023

Roche taps insider Teresa Graham for top pharma job as setbacks prompt M&A questions

Life sciences

Teresa Graham, currently head of global product strategy for Roche pharma, will become the division’s new CEO next month, Roche said Thursday. Simultaneously, Roche is elevating Levi Garraway, chief medical officer, to the executive committee.

February 4, 2023

J&J’s pharma group quietly works through global overhaul, with layoffs expected to reach multiple countries

Life sciences

Fierce Pharma has obtained internal documents and video of a town hall meeting conducted this week describing what J&J called a “comprehensive review” of its portfolio. Moving forward, J&J plans to operate its vaccines and infectious diseases outfits as one group, the executives explained.

How can we help you?

We're easy to reach