The retail behemoth has already transformed the way the world shops. Now Amazon’s moves to enter the health care industry have led two major US companies to make one of the biggest deals of the year, signaling major changes to come in the way Americans buy drugs and otherwise manage their health.
It’s Amazon’s world-we just live in it.
The pharmacy chain CVS Health agreed today (Dec. 3) to buy Aetna, one of the biggest health insurance companies in the US, for roughly $69 billion. It’s an acquisition that could create a new model for the healthcare industry, with CVS likely to start offering primary-care services and medical follow-ups directly from its drugstores and walk-in clinics.
The deal is a direct consequence of Amazon’s penchant for disruption. Analysts say CVS snapped up Aetna to stay competitive with Amazon, which has made several moves this year that have pharmaceutical companies atremble. In May, CNBC reported that the company was looking to hire a general manager to develop a strategy for getting into the pharmaceutical business. Then word spread that Amazon had acquired pharmacy licenses in a dozen states. The company said it did so to sell medical supplies, but the move positions Amazon to sell drugs down the line, should it decide it wants to. And just last week, reports circulated that Amazon had held preliminary discussions with generic drugmakers Mylan and Sandoz.
It’s unclear whether Amazon is interested in selling drugs to consumers or acting as a drug wholesaler. Either way, the company’s recent actions have made the pharmacy industry nervous.
“CVS would never admit it, but this sort of pivot is Amazon’s doing,” Trip Miller, managing partner at Gullane Capital Partners, a minor shareholder in Amazon, told The Street. “What they’re doing now is definitely based on Amazon’s interest.”
The fact that CVS snapped up Aetna without a clear sense of Amazon’s plans a testament to the tech giant’s track record of shaking up industries ranging from books to clothes, TV, and groceries. Industry players know when Amazon eyes a new business, those who wait too long to react will wind up sitting ducks.