Companies like Hims or Ro that prescribe and ship medications to your door could see a slight benefit as getting drugs online goes mainstream, but ultimately could have to compete directly with Amazon.
Analysts and experts credit Amazon with ushering in the widespread adoption of e-commerce shopping and selling habits with its Prime two-day shipping. Amazon Pharmacy could create the same seismic shifts in mail-order prescriptions that initially benefit the existing companies in the space, but ultimately leave those companies competing directly with the behemoth.
Direct-to-consumer pharmacies, for example, could benefit as new consumers learn to order prescriptions online for the first time through Amazon. In a way, it proves their business model is a good one, and that widespread adoption is possible, making the private companies more enticing to potential investors. However, customers could have a more established purchasing relationship with Amazon, given the ubiquity of Prime memberships and Prime benefits, BMO’s Borsch said.
“That said, the ability to order scripts from the same online retailer that delivers extensive amounts of general merchandise and food could potentially drive greater adoption of mail over time (i.e., the online equivalent of adding a pharmacy to a grocery store),” SVB Leerink’s Tanal, Davis, and Zhuo said.
Those that stand to benefit the most are those with established footholds and growing customer bases, according to Forrester’s Trzcinski. Companies like Hims and Ro, which have branched out from prescription delivery to offer additional telemedicine services, could continue to operate successfully, albeit with fewer customers.
“It would have been great to see Amazon remove middlemen to drive even lower prices for patients rather than exacerbating some of the largest problems of the current system. But overall, more competition is good for patients,” Ro CEO and cofounder Zachariah Reitano told Business Insider.
“We’re excited at Ro to continue building our vertically integrated healthcare platform that seamlessly connects national telehealth and online pharmacy services to offer patients the highest quality and most affordable healthcare, without PBMs taking their cut and driving up for the prices for patients,” he said.
Trzcinski said she expected these upstarts to lose some market share, but not much.
“Ro, Hims, Hers, etc. have established relationships with these services not only for pharmacy needs but also for virtual care and primary care needs,” she said. “We will continue to see subscription services being successful in 2021.”
A spokesperson for Hims and Hers said that it’s a multi-specialty telehealth platform where patients can access information and doctors as part of a broader, connected care service, and that seeing other companies try to modernize healthcare is encouraging.
“While convenient home delivery is an example of the benefits our customers enjoy, it’s only one part of the holistic healthcare system we’re working to build at Hims & Hers,” the spokesperson said. “From mental health to primary care to dermatology and more, we’re committed to creating a better healthcare experience for everyone.”