Amazon has dropped a plan to start selling drugs to hospitals, according to a report by CNBC. Reports of Amazon’s interest in expanding Amazon Business to healthcare supplies surfaced in February following reports that the company is considering expanding into several other healthcare vertials.
According to the CNBC report, which is based on conversations with anonymous sources close to Amazon’s decision making, the company dropped its plans for two reasons.
One is simply that it is extremely difficult to break into the healthcare supply space. The healthcare market is deeply entrenched, more than most other industries, and Amazon struggled to sway health systems from their traditional purchasing processes.
Potential clients were also turned off by Amazon’s lack of high-risk devices, like pacemakers. If a hospital system were to contract with Amazon, it likely wouldn’t be able to buy products Amazon doesn’t offer from other supplies.
The second reason is that Amazon’s current supply infrastructure isn’t designed to handle the strict regulations around pharmaceutical materials. The company doesn’t have dedicated cold warehouses, for example, making it difficult and costly to implement a cold-chain delivery system.
The news doesn’t rule out the possibility that Amazon is still considering a direct-to-consumer service for prescription drugs, which would not be held back by those shortcomings. The company could also try expanding deeper into hospital sales again later as its Amazon Business sector grows and scales.
Amazon Business already offers a limited amount of medical supplies as well as office and other supplies for hospitals, but it does not carry many of the specialized supplies that hospitals need.
Amazon is working on other healthcare initiatives, including its new healthcare venture in partnership with JPMorgan Chase and Berkshire Hathaway and a secretive internal health innovation group called 1492.