Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Amazon’s online pharmacy business is benefiting from the frenzied demand for anti-obesity drugs among Americans, according to the division’s head, in a boost to ecommerce giant’s bid to disrupt the $4tn US healthcare industry.
The retail giant struck a deal earlier this month to dispense medication on behalf of Zepbound maker Eli Lilly’s direct-to-consumer service LillyDirect. That is likely to help drive the “rapid growth” the business is experiencing as patients seek “more convenient options to engage with their healthcare”, John Love, general manager and vice-president of Amazon Pharmacy, told the Financial Times.
Amazon Pharmacy stands to generate “a lot of revenue” from drugs such as Eli Lilly’s Zepbound injection and Novo Nordisk’s Wegovy, which are both available to patients directly through the Amazon website, as patients scramble to access limited supply, he said.
“Look at how many million Americans have . . . obesity or pre-diabetes,” said Love. “It’s a huge potential clinical breakthrough and so I do think [sales growth is] going to be material”. The market for weight-loss drugs is projected to grow to $100bn by 2030, according to Goldman Sachs.
Amazon’s online pharmacy business is part of the Seattle-based retail giant’s effort to crack the US healthcare sector. The group acquired healthcare provider One Medical in 2022 and last year announced the rollout of RxPass, which allows Prime members to order an unlimited amount of some unbranded prescription medications for $5 a month.
Amazon is also launching same-day delivery for certain treatments in New York City and Los Angeles starting on Tuesday. The speedy delivery service — which in some places will use drones to deliver drugs — is expected to expand to other US cities by the end of the year.
Four years after its launch, Amazon Pharmacy has struggled to make a dent in the powerful entrenched network of insurers, pharmacy benefit managers and manufacturers in the US healthcare industry. Mail-order pharmacies accounted for just 8.9 per cent of prescriptions last year, down slightly from a year earlier, according to data from Drug Channels Institute.
Amazon does not publish sales figures from its pharmacy division. Adam Fein, president of Drug Channels Institute, said Amazon Pharmacy “continues to garner attention . . . beyond its actual impact on the pharmacy industry”. But unless the Seattle-based company acquires more healthcare groups, “its overall share of the prescription dispensing market will likely remain in the low single digits for the foreseeable future”, he added.
The deal between Amazon Pharmacy and Eli Lilly, the world’s largest drugmaker by market value, will allow Amazon to dispense medicines including the pharma group’s popular weight-loss injection pen.
Although Amazon automatically applies manufacturer coupons to orders, which lowers the price for customers, the drugs still carry a hefty pricetag of more than $1,000 for four doses. Many customers are buying weight-loss drugs outside insurance schemes as obesity is not a widely covered condition in the US.
According to the Health Transformation Alliance, a co-operative of American employers seeking cheaper healthcare, the use of anti-obesity drugs among its members was 64 per cent higher in 2023 than in 2022, while the number of non-diabetic users doubled to 22 per cent.
Robert Andrews, chief executive of the HTA, said it was “almost impossible to overstate the financial and health impact” of the drugs, given that chronic diseases driven by obesity were a major source of healthcare costs in the US.
However, analysts have pointed out that the majority of US healthcare spending occurs via insurance and that Amazon would need to diversify beyond the consumer-facing space into the insured market to become a substantial player.
Love would not be drawn on the prospect of further partnerships but said the pharmacy team was “having conversations with everyone” and working on “agreements” for “2025 or 2026 for really novel things”.
“We are seeing rapid growth . . . and I expect it to continue,” he said.
Read the full article here