Alexa can I have metformin with my Tide
The big news today seems to be Amazon entering the pharmacy business in a big way, a move which really should surprise no one as Amazon didn’t exactly hide what they were doing. Walgreens, CVS and Rite Aid all knew this was coming, were taking steps to deal with it and now have to face the music because it’s here. Again why anyone is shocked at this news blows our minds but then again there isn’t much that shocks us anymore.
Thanks to COVID patients were already becoming comfortable with having their meds shipped to their door rather than making a trip to their local pharmacy. This trend was already in place before COVID but like so many adjustments COVID pushed mail order delivery to the forefront and likely will be one the changes that is long lasting after COVID goes away. There will always be a sub-segment of patients who will want to visit the pharmacy, but it won’t be long before the majority of patients choose home delivery.
To us the real fight will come when these giants Amazon, Walgreens and CVS begin to fight it out in the patient coaching arena. Walgreens and CVS have already entered this arena knowing the importance of the patient with diabetes to their franchises. Patients with diabetes make more trips to the pharmacy and spend more money at the pharmacy than your average Joe or Jane. Walgreens and CVS also have moved into the in-store clinic business allowing them to perform standard diabetic blood work such as HbA1c tests, another boost to their revenue.
Yep right about know you’re thinking wait Walgreens and CVS aren’t the only companies in the diabetes coaching arena Teladoc/Livongo play here as does Onduo as does OneDrop as does UnitedHealthcare as does …. And while some may not remember it Amazon did make a dive into the diabetes pool which unfortunately for them was more like a bellyflop but guess what Amazon has the resources to buy their way back in.
See this is what big companies do when they start thinking since they are good at one thing they of course will be good at all things. We saw this with Apple and their ill-fated attempt to develop a non-invasive CGM. We are watching this right now at Google/Verily as Onduo struggles. When things go bad rather than admit they made a mistake rather than admit they are not good at all things rather than suffer the embarrassment they buy their way out of the problem because they have the resources to do it.
Thankfully for Amazon it’s a target rich environment when it comes to possible bolt on acquisitions and unlike Teladoc they will not be stupid and overvalue a company as they did when merging with Livongo. Seriously with how this market is developing this Teladoc/Livongo merger is looking more and more like one of the dumbest moves of all time and that my friends is saying something. Please explain again why Livongo is worth $18.5 billion, but let’s not digress.
Possible targets depends on how deep of a dive Amazon wants to make. Do they just want coaching, or do they want to add devices to their diabetes offerings? Perhaps they want both and will add wait for it …. LifeScan. Now let’s make something clear here no we do not get a commission when Platinum sells LifeScan although we would happily accept one if they are nice enough to offer. (We are not holding our breath) LifeScan has all the toys – BGM and soon CGM – they have coaching Noom, Cecelia Health and WellDoc and they have nearly 20 MILLION real live patients. Heck Amazon could add in one of the many connected pen companies and let LifeScan develop an Amazon version of Tyler.
Folks we really hate to be captain obvious but when it comes to this space sometimes we have to be. This game is all about patients and the company with the most patients wins the game. It does not matter if the company is filling prescriptions, selling test strips or helping patients better manage their diabetes. We’ve said it before and will say it again because its true scale is critical in this game and Amazon knows this. Scale drives efficiencies which in this ultra-competitive environment translate into profits.
Amazon also has the scale where it could offer its Prime members (and there are millions of them) coaching for FREE. Yep fill your scripts with us, buy your devices from us and we’ll throw in coaching for free. And Amazon really doesn’t have to be greedy as they can easily set it up so Alexa can accept data from other competing devices. Listen Alexa might be a little snarky, but she isn’t stupid, and you just know that Alexa will be hub for all this.
Yep we can see it now….
Alexa: David I noticed your insulin prescription is ready to refilled shall I do that for you?
David: Sure that would be great.
Alexa: I also noticed that since the merger was consummated Teladoc shares seem to be falling more than rising.
David: You are correct
Alexa: Do you think this is happening because investors are finally waking up to the fact that Teladoc vastly overpaid for Livongo and this just might be on the dumber COVID driven deals ever?
David: That is a distinct possibility
Alexa: Yep as Momma Kliff says there is no cure for stupid, and by the way should I throw in some Tide when I refill your insulin prescription.