Amazon is reportedly talking to generic drugmakers

  • Amazon could be getting into healthcare, and the company's reportedly had conversations with generic drugmakers about it, CNBC reports.
  • It's the latest hint in recent months that Amazon is serious about healthcare. Worry about the prescription drug business being Amazon'd has sent healthcare stocks tumbling, and is even credited with sparking the potential $60 billion+ CVS-Aetna deal.
  • Conversations with generic drugmakers could mean that Amazon is interested in either helping generic drugmakers distribute prescriptions to pharmacies or by selling the generic prescriptions itself. 

We just got another hint about Amazon's ambitions in healthcare.

CNBC reported on Thursday that Amazon has had exploratory talks with the drugmakers Sandoz, the generic drug unit of Novartis, and Mylan.


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According to a note from Leerink cited by CNBC, the president of Sandoz "met and discussed with Amazon its plans for getting into the U.S. healthcare market." 

Amazon, Sandoz, and Mylan did not immediately respond to a request for comment. 

7 shock-worthy facts about Amazon:

7 shock-worthy facts about Amazon
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7 shock-worthy facts about Amazon
7.5 percent of Seattle's working-age population are Amazon employees

Amazon has more than 300,000 employees worldwide, and 40,000 in Seattle alone.

As a portion of the city's working-age population — roughly 528,000 — that comes out to 7.5% of the city working at Amazon.

For perspective, if the same portion of New York City's adults worked for one company, that company would have about 488,000 locals on staff.

Amazon accounts for 43% of all online sales

Amazon used to be a way to buy books online; today, it's the default buying site for just about everything, especially for people who have Amazon Prime.

An analysis by Slice Intelligence released in February found that 43% of all US online retail sales were done through Amazon in 2016.

That's up from 33% in 2015 and 25% in 2012.

1 out of every 4 US adults has Amazon Prime.

Speaking of Amazon Prime, the company now counts approximately 63 million people among its subscriber base, or about 25% of the total US adult population.

That number may underestimate the true coverage, however, since it doesn't account for multiple adults in one household all sharing the same Prime account.

Amazon ships 1.6 million packages a day

Amazon fulfillment is a beast of its own.

A report from 2013 (the latest year for which data are available) found Amazon shipped 608 million packages that year, or 1.6 million packages a day.

As of 2015, Amazon estimated its fulfillment centers were within 20 miles of 31% of the US population, and within 20 miles of 50-65% of its core, same-day-accessible market.

That's enough cardboard to span all of West Virginia

A back-of-the-envelope calculation reveals all those packages (not including padded envelopes) yield roughly 26,400 square miles of cardboard.

The total land area of West Virginia, meanwhile, is just north of 24,000 square miles.

Given the speed of Amazon's shipments, the company could blanket the whole US in cardboard in about five months.

45,000 robots roam the floors of Amazon's warehouses

To help those shipments leave the warehouses on time, Amazon relies on a growing fleet of autonomous robots that fetch packages from their shelves and bring them to human employees.

The 45,000 robots live across 20 fulfillment centers in the US. In 2016, the company increased the fleet 50% from its prior head count of 30,000.

Amazon is more valuable than all major brick-and-mortar retailers combined

The sum total of those investments in infrastructure and supply chain management have made Amazon by far the most valuable retailer in the United States.

Amazon's $356 billion valuation is so big, it's larger than Wal-Mart, Target, Best Buy, Macy's, Kohl's, JCPenney, and Sears combined.

With the recent acquisition of Whole Foods, there are no signs the retailer has any plans of slowing down.


Of course, it remains to be seen what an Amazon entry into the prescription drug business would look like.  There are a lot of entities involved in the process of delivering and paying for your prescription, from the drugmakers, to insurers, to the pharmacy.

Chatting with generic drugmakers could mean that Amazon is interested in helping generic drugmakers distribute prescriptions to pharmacies (much like wholesalers Cardinal Health, McKesson, and Amerisource Bergen do today), or by selling the generic prescriptions itself. 

Members of the healthcare industry have conflicting opinions on Amazon's ambitions in healthcare. 

"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 others have: Worry about the drug-sales business being Amazon'd has sent healthcare stocks tumbling, and is even credited with sparking a  potential $60 billion+ takeover.

Shares of Mylan were up 3% on Friday, while the wholesalers were slightly down. 

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SEE ALSO: Walgreens CEO isn't convinced Amazon will get into healthcare

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