Amazon (NASDAQ:AMZN) is focusing on becoming a major supplier of medical equipment to both hospital systems and outpatient health care clinics, the Wall Street Journal reported on Tuesday.
The e-commerce behemoth has already obtained wholesale distribution licenses in several states, which many initially viewed as a foray into pharmaceutical sales, but would also be necessary to sell medical equipment.
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Amazon already sells some medical supplies, like EKG monitors and wearable pain relief technology, on its Amazon Business marketplace. The Journal reports that the company could move into more specialized equipment, such as hip implants. As previously reported by FOX Business, Amazon also has a massive customer review network that could eventually inform customers’ decisions on medical equipment.
Shares of health care distributors and medical supply companies dropped on Tuesday, following the report. In midday trading, the world’s largest supplier of dental equipment and supplies, Henry Schein (NASDAQ:HSIC), fell nearly 10%, McKesson Corp. (NYSE:MCK) dropped more than 2%, while another dental parts supplier, Cardinal Health (NYSE:CAH), was down nearly 4%. Amazon shares were 1.4% higher.
Amazon has been igniting fears throughout the health care sector for months, as it is well-positioned to be a major player in the high-margin industry. At a time when the sector is shifting to a more patient-centered model, the e-commerce giant, revered for its customer service, can leverage not only its innovative technologies, but also its massive delivery network to develop innovative solutions.
Former chief customer experience officer at CIGNA (NYSE:CI) Ingrid Lindberg told FOX Business last month that Amazon had enough buying power to “shut down a hospital system,” and had the potential to transform the industry to a “full co-op model.” Amazon can also disrupt supply chains, which could have a number of effects on everything from health plans to drug prices.
Last month, Amazon, JPMorgan (NYSE:JPM) and Berkshire Hathaway (NYSE:BRKA) announced a joint health care venture aimed at offering lower cost health care options for their employees. While details remain scant, experts told FOX Business the trio could revolutionize the industry by operating as a benefit corporation, thereby changing the incentive structure to focus less on profits and more on patients.
Meanwhile, Walgreens (NASDAQ:WBA) is reportedly looking to buy a larger share of AmeriSourceBergen (NYSE:ABC), which is a pharmaceuticals distributor that does business with hospital systems. Last year, CVS (NYSE:CVS) announced a $69 billion deal to acquire health insurance giant Aetna (NYSE:AET), a move seen as a way to potentially consolidate and streamline services for patients, while improving transparency.