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Amazon purchase of online pharmacy could 'threaten' UK pharmacies

Amazon announced its acquisition of PillPack yesterday
Amazon announced its acquisition of PillPack yesterday

Amazon’s purchase of an online pharmacy could "threaten" community pharmacies in the UK, an NHS deputy chief pharmacist has warned.

The delivery giant announced yesterday (June 28) that it had agreed to acquire PillPack, a US online pharmacy business licensed to deliver pre-sorted medicine doses to patients across all 50 states.

Amazon’s CEO of Worldwide Consumer Jeff Wilke said in a statement: “We want to help [PillPack] continue making it easy for people to save time, simplify their lives, and feel healthier.”

The news comes after months of speculation that Amazon was planning to move into the US pharmacy sector.

Posting on LinkedIn this morning, NHS deputy chief pharmacist Johnny Bane said “community pharmacy [is] threatened if it doesn’t respond with [a] new business model”.

Mr Bane later told C+D: “If this a signal of Amazon looking to apply their business model to pharmacy, then revenues based on traditional dispensing in community pharmacy will be at risk.”

“Online pharmacies [are] already making inroads, but Amazon would completely disrupt [the] market.”

Boots CEO “not worried”

Meanwhile, Stefano Pessina – the CEO of Boots’ parent company Walgreen Boots Alliance – told journalists yesterday (June 28) that his company is “not particularly worried” by Amazon’s acquisition.

Speaking to journalists, Mr Pessina continued: “Of course, we are not complacent. We know that we have to change the level of our services to the customers and we are working quite hard on that direction.”

PillPack is a “small company”, he said, and Amazon’s purchase is a “declaration of intent…but the pharmacy world is much more complex than just delivering certain pills”.

“The role of the physical pharmacies will continue to be very, very important in future.”

Walgreen Boots Alliance’s co-chief operating officer Alex Gourlay added that their company offers the same service as PillPack “plus many others...locally through our physical pharmacies”.

“We are confident we can compete, more than confident honestly, and of course we are building out services around this in our local community,” Mr Gourlay said.

C+D deputy editor Lilian Anekwe appeared on BBC Radio 4's World at One programme today to discuss what Amazon’s acquisition means for community pharmacy in the UK. Listen from 28.45 here.

Read C+D’s feature on what the expansion of online ordering of medicines means for UK community pharmacies.

In March, C+D spent a week exploring the world of online pharmacies. Read all the coverage here.

20 Comments
Question: 
Are you worried by Amazon's acquisition?

Ravi Patel, Community pharmacist

Chill out.

Amazon is brilliant at bringing you a product you want, at a low price and within a good time frame. They wouldn’t be ‘solving a problem’ in the UK. NHS prescription items are free or £8.80; there is no competition for out-pricing between pharmacies for this. Therefore you rely on service to ‘outdo’ the competition, but Amazon cannot deliver any quicker than most community pharmacies, most of which have a local daily delivery. Re service, I can't see Amazon constantly chasing up a pending prescription with more ease than a pharmacy in closer proximity to the actual surgery.

You can’t compare the US market - with their over-inflated cost of prescriptions and medicines in general. Amazon entering the game in the US will certainly unsettle things, with current large operators making obscene profits (you only have to compare the cost of the same drug in another country).

In the UK, a better business opportunity for Amazon (using principles closer to their current ethos) could be the entering into and unsettling the pharma-wholesale game, not NHS-led community pharmacy. I’m sure that would shake things up.

Anyway, I’m sure a negative-Nancy will soon be over to advise why I’m wrong to be positive about our profession and that the world is coming to an end tomorrow, so I’ll leave it there.

Peter Sainsburys, Community pharmacist

Maybe not Amazon in this case, but as sure as a bear defecates in the woods, an online player is coming soon to the UK. If you run a nice little independent where everything works like clockwork, you've got nothing to worry about. I am sure you have a lot of great customers who love coming to see you and have a chat etc. 

But for the big multiples. Read some reviews online about how much customers HATE going in to them. There is a massive opportunity for a well organised online company to come in and scoop up those customers.

And I am pretty sure we are talking about millions who would rather have their script delivered than go to their local Boots which is 20 minutes away on the bus, only to be told that they have run out of phenoxymethylpenicillin and their leflunomide is MCS. Because they have been forced to reduce stock holdings by their idiot area manager.

I've been there before myself. I had a script for antibiotics, stupidly went in to this big pharmacy in town, and was sat on the chair for an hour. Good riddance to bad customer service.

CAPT FX, Locum pharmacist

I like your common sense logic, man. Thumbs up.

CAPT FX, Locum pharmacist

I think this is wonderful news and the kind of wake up call Community Pharmacy needs. Over the years Community Pharmacy has become complacent even to the stage of thinking that Technicians in the Profession can front the Profession as the "Professionals" whilst sidelining Pharmacists. We have lagged behind where technology is concerned. We were paid to upgrade computer hardware and software when EPS1 and 2 were rolled out and we declared this as profit. Now we are operating 1990 Computer hardware like the ubreakable Dell bouncing balls and we are not even worried about efficiency.

I concur with the popular opinion that Pharmacy should be downgraded from being called a Profession. We do not even take ourselves seriously as a Profession , so how do you expect anyone else to. Amazon will come in and set the pace ( whichever it will be) and we will follow like we have always done due to lack of an effective leadership Radar. Remuneration for Pharmacists has gone down in real terms in the last 18 years and this is reflective of how the Profession is viewed, yet the workload and returns from the profession has actually gone up in real terms. Forget about the people who mourn about funding at every turn. This profession remains lucrative. Our weakness is that we have among us untrained and unqualified operatives who have run out of creative ideas and give this impression that we need new funding all the time. We have people called Managers without genuine management qualifications leading us and almost all of them are airheads. 

Do we think that by having these impresarios amongst us, we will increase our acceptability factor. Hell no. So if Amazon comes in and exposes us for the dinosaurs we are, I will be the first one to welcome them with open hands. You never know this might jerk us for this stupefying slumber. 

Come on Amazon, we await your arrival

Barry Pharmacist, Community pharmacist

Your logic is bereft. You say "this profession remains lucrative". The truth is exactly the opposite and the reason is simple. Supply and demand, too many pharmacists and techs. I expect it may take around 4 to 5 years but pharmacies will start to close or consolidate - fancy word for close in significant numbers. Unless the staff working in those pharmacies can find additional skills they will be out of a job. Lucrative my ****!

Imran Achar, Community pharmacist

He means lucrative for the people who own the pharmacies, not the suckers who work in them!

Adam Hall, Community pharmacist

If this happens here and patients use it enough to decimate traditional pharmacies, patients will get the service they deserve - excessive delays in seeing someone due to increased demands on GPs, back to the 1930's when you got a small supply of urgent meds from the doctors bag and massive increase in costs to NHS due to lack of ability to self-treat. Patient selfishness will ultimately be the death of Pharmacy!

Another Pharmacist, Hospital pharmacist

Amazon won’t enter the U.K.! The market is too small. The global sum as was is a finite pie - when amazon enters a market it takes the market. Jezza Hunt would look at the books and say oh the global sum I’d say £8bn and amazon do it for 6.5bn hmmm let’s just decrease the global sum to 6.6 to make sure they can keep going. Tell me why amazon would do that? It’s not like in the UK they can really linksell. As someone said above, they can charge insurance firms in the US for premium services that may affect adherence and thus premiums and so drive value to amazon. Here? Just shoving some pills in a box with a defined market cap and someone in charge who can decrease the cap as and when they want. Amazon don’t care about entering the NHS. And p2u is too tiny for them to be interested. Amazon would be better off buying a tiny online pharmacy contract on an industrial estate and kit it out from scratch than labour the reputation of p2u and it’s finances. Chill your beans everyone...community pharmacy is in its last 2 decades but not because  OF amazon but because of the consumerisation of healthcare!

A.S. Singh, Community pharmacist

At last someone with intelligence. You can't capitalise on govt funds. Try explaning that to your banker buddies down the pub who thinks online is the way forward in the UK!

Another Pharmacist, Hospital pharmacist

Anyone fancy pills with prime lol

Ben Merriman, Community pharmacist

P2U have run at a loss for years.  They're now doing something like 300k items a month and STILL needed a £40m cash injection recently.

OK, for a second, let's forget about the cost and appointment free advice given to over 1m people each and every day in a community pharmacy and the subsequent stress placed upon the NHS, especially the extra 1m additional consultations in A&E and general practice.  Assuming such a system did work, how would urgent medicines be obtained?  The pharmacies that did manage to remain open after being hammered financially wouldn't keep 90% of the stock they do now as it wouldn't be used.  It wouldn't shock me if they only ended up stocking the cheapest generics and acute items.  Why keep a box of Victoza in the fridge just in case it might possibly maybe used?

Peter Sainsburys, Community pharmacist

Not sure who would be worse to work for. Amazon, or Lloyds/Boots et al.

Better to get a new career.

A LOCUM, Community pharmacist

yet another stake through the heart , what next ?

Beta Blocker, Primary care pharmacist

Forming an orderly queue at the job centre?

A.S. Singh, Community pharmacist

Just because business works in America does not mean it will work here.

Why have they not made a swift move on loss making P2U? The corporate online model doesn't generate profits as the margin is far too low.

Take into account making £1.34 per item then trying to despach it within reasonable time will not generate enough. Take into account CDs and cold storage and people not in, this will generate further loss.

America's online model works as you can charge $90 to insurance for a packet of Istin

 

I sound rather anti-capitalist but you can't deny that bricks and mortar pharmacies, particularly independents provide value for money for the NHS

Delectable Skeptic, Community pharmacist

I certainly don't deny it...but the government does (hence the cuts).

Barry Pharmacist, Community pharmacist

Am I worried? Yes I'm horrified. Horrified that a profession and the careers of thousands of pharmacists, techs and pharmacy staff are about to be decimated. 

Read somewhere recently that patients nowadays don't want a conversation. They want their prescription filling. End of. No chit-chat required - there's a google for that!

Yes those pharmacies that wish to survive will have to adapt and change as patients expectations change and it will have to be a low-cost / no-frills / low cost-base EPS + supply to door model.

The cuts are only just the beginning and pharmacist wages and contractor income will go in one direction only. That's not being pessimistic it's being realistic. If you can re-train into another profession that cannot be replaced by a large scale (robotic) process then do it quick. 

Clarke Kent, Community pharmacist

Glad to see you’re still about Barry. Best regards OP

Barry Pharmacist, Community pharmacist

Thanks OP - keep cracking on!

My log-in went AWOL. 

Beta Blocker, Primary care pharmacist

Amazon have the technology to make large scale dispensing work. Pharmacy companies in the UK have been talking about 'off-site dispensing' for years but have done nothing about it with the 'black horse' wasting millions on trialling it and failing.

Could be the potential nail in the coffin if they can get it right.

Get a Prime subscription and you'll get you meds delivered late afternoon if you order in the next 2hrs and 11mins? lol

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