Amazon's three-sided attack on the healthcare market

The background

It's no secret that the biggest tech giants—Google, Apple, Microsoft, and Amazon—are all keen to break into the healthcare market. Yet each one is pursuing a different strategy:

• Apple is centering on health data collection via the Watch.
• Microsoft's approach also looks fairly straightforward, with a focus on the healthcare cloud business.
• Google, meanwhile, recently made headlines with the dissolution of its own health division. It has a less specific focus, offering more of a bouquet of health solutions. 

Amazon's healthcare moves

At first glance, Amazon's activities in the healthcare market appear messy. The purchase of an online pharmacy, the development of a fitness wristband, the operation of a health program for employees, and an accelerator for healthcare startups are just a few examples from recent years. 

A closer look reveals that Amazon aims to enter the healthcare market on three levels: consumer, employee, and provider.

To achieve this, Amazon is using a number of strategies that have already helped the company in other markets.

To date, Amazon's biggest bet in the consumer market is building a pharmacy. To make this big, Amazon is relying on the all-purpose subscription service Prime, its most important strategic instrument in the end customer market. Prime members get their medications delivered for free. 

Amazon is also targeting employers. Yet in the U.S., the world's largest healthcare market, they face a major problem. Nearly 90% of business leaders say that healthcare costs will be unaffordable in the next 5-10 years. As one of the largest employers in the U.S., Amazon has developed the Amazon Care health program for its employees—and they are now opening up this offering to other employers. The approach of building up an infrastructure and then offering it to other companies is a frequent pattern in Amazon B2B business models such as cloud or logistics. Currently, the company is still partnering with healthcare providers for Amazon Care, but at some point this could change (especially given Jeff Bezos's mantra "Your margin is my opportunity").

Last but not least, Amazon is also targeting  providers with its cloud service AWS. In the wake of the digitization of hospitals, this market is growing immensely. Amazon is currently lagging behind Microsoft here, but the giant is trying to catch up—with a marketplace strategy that has already made the company the world's largest retailer. Later this month, Amazon will unveil the 10 startups that form the first cohort in its AWS healthcare incubator program, a four-week intensive course designed to help prepare established but relatively small health tech companies for listing on AWS. If Amazon is successful here, the company could become a gatekeeper for the entire medical technology sector. 

Our perspective

It is clear that this market is not going to be easy for Amazon to win. And yes, many of the tech giant’s activities in the healthcare market have amounted to nothing. But if they are successful, the impact on the market—and on the companies—is gigantic. So everyone in the MedTech ecosystem should at least consider what Amazon's strategy could mean for them.