Walgreens CEO isn't convinced Amazon will get into healthcare

BloombergWalgreens Boots Alliance CEO speaks to Bloomberg in Davos in 2016.
  • Walgreens Boots Alliance CEO Stefano Pessina doesn’t see Amazon getting into the pharmacy business.
  • His comments come at a time when other healthcare companies have been taking Amazon’s potential entry into healthcare very seriously.
  • Pessina said if Amazon were to get into the pharmacy business, it would have to “buy or team up.”
  • But if Amazon does start offering direct delivery of medicines to customers, that would hurt Walgreens’ retail business as people have less reason to stop by a drug store.

There’s a lot of speculation these days about whether Amazon is going to enter the pharmaceutical industry. Not everyone in the industry is worried about this, though.

“They will not come in an industry so complicated as our industry,” Walgreens Boots Alliance CEO Stefano Pessina said at the Forbes Healthcare Summit on Wednesday.

If Amazon does want to enter the pharmaceutical industry, it would have to “buy or to team up,” Pessina said.

That’s a different sentiment than we’ve seen lately: worry about the drug-sales business being Amazon’d has sent healthcare stocks tumbling, and is even credited with sparking a potential $US60 billion takeover.

Whether Amazon does enter the business, and if it does, what that business will look like, remains to be seen. There are a lot of people involved in the process of delivering and paying for your prescription, from the drugmakers, to insurers, to the pharmacy.

But one way Amazon could get into the pharmacy business would directly impact Walgreens.It could distribute drugs to people who aren’t using insurance, at a cash price. If patients could get their drugs through Amazon, they might not have to stop by a pharmacy like Walgreens, which could hurt its retail business.

But if Amazon wants to serve people who do have insurance, that will require extra legwork, which could mean buying or teaming up as Pessina mentioned.

ZS principal Pratap Khedkar told Business Insider that ultimately, should Amazon decide to get into the pharmacy business, it will have to acquire a pharmacy benefits manager, which negotiate discounts to drug prices for health plans. “Things are so arcane that they will have to buy something and fix it instead of build it from scratch,” he said.

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