"Important Disruptor" Why Amazon is Expanding into Telemedicine [Next.Jjin]

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] "Amazon will be a 'major disruptor' in the healthcare sector."

The global retail giant Amazon has begun accelerating its expansion into the healthcare business. Last month, it expanded its telemedicine service, Amazon Care, to be available nationwide across the United States. What started as a pilot program primarily for employees has now officially launched as a full-scale business. This comes more than four years after acquiring the online pharmacy startup PillPack for $750 million (approximately 920 billion KRW) in 2018.

Andy Jassy, who succeeded Amazon founder Jeff Bezos as CEO in July last year, has identified Amazon Care as the company's new growth engine. According to Business Insider on the 21st (local time), Jassy introduced the potential benefits of Amazon Care at an all-hands meeting last November. The service connects patients and doctors via text or video calls, sends prescriptions by mail in some regions, and even dispatches nurses when necessary.

Andy Jassy, CEO of Amazon
Photo by Reuters

Jassy said that on-demand telemedicine could significantly improve the current healthcare situation, where patients face long wait times to see doctors and then have to wait again to receive medication. He predicted that in ten years, looking back at today's hospital experience, people would think it was "crazy." He stated, "What was once considered normal will no longer be so," forecasting that Amazon Care and telemedicine will completely change the game.

Amazon Care Moving in Three Directions

The reason Amazon, which dominates the retail industry, is actively entering healthcare is because it highly values the market's growth potential. According to market research firm GIA, the global digital healthcare industry is expected to grow from $152.4 billion in 2020 to $508.8 billion by 2027.

While it may seem like a new growth engine discovered due to the COVID-19 pandemic, Amazon's interest in healthcare actually began before the pandemic, in 2018. The acquisition of PillPack, an online pharmacy that delivers prescription drugs to homes, was the starting point. The market has predicted that Amazon's entry will cause a seismic shift in the U.S. pharmaceutical market, which has traditionally been dominated by large hospitals, healthcare systems, and major drug distributors with strong ties. Since then, Amazon has formed new partnerships and accelerated service development.

Amazon Care example scene (Source=Amazon Care homepage)

Amazon is building its healthcare business around three pillars: primary care, online pharmacy, and health diagnostics. For example, if a child is sick, parents can first receive medical advice via video call through Amazon Care, then receive self-test kits through Amazon Diagnostics, and finally get follow-up treatment through Amazon Pharmacy. Business Insider reported, "Ultimately, Amazon's long-term goal is to integrate these three pillars into one, but currently, each business unit is developing its own area separately."

Still in Early Stages... Growing Interest as Domestic Companies Also Enter

However, Amazon's healthcare business is still in its early stages. Amazon Care is just one part of the healthcare division Amazon aims to grow, focusing on primary care. Amazon Care offers relatively simple medical consultations for colds, minor injuries, vaccinations, and contraceptives. It plans to gradually expand services to include mental health issues like depression and chronic diseases such as diabetes that require ongoing management. Although expansion into online pharmacy and health diagnostics is being explored, the market currently views these areas as having a long way to go.

Following Amazon, domestic companies such as Naver, Kakao, as well as Lotte, CJ, and Shinsegae, are also announcing their intentions to enter the healthcare market. Naver plans to open an in-house hospital equipped with artificial intelligence (AI) technology in its second headquarters building, scheduled for completion this year, while Kakao is establishing an in-house healthcare division. This suggests they intend to pilot their services internally first, similar to Amazon.

As Amazon, which dominates global retail, opens a new world of telemedicine for all of us who have experienced the COVID-19 era, it will be worth watching whether it can create convenience in healthcare and innovation in health management.

Editor's Note[Next.Jjin] means 'looking ahead to the real next of business' and is a section that delivers overseas news related to future businesses such as metaverse, artificial intelligence (AI), and robotics, as well as startups of major companies. We will uncover and explain not only the big issues at the forefront but also small yet important hidden issues in an easy-to-understand manner.

This content was produced with the assistance of AI translation services.