Amazon’s latest revelations showcase how it wants to own a sector worth trillions. But we have the technology to innovate in the pharmaceutical space before Amazon comes and does it for us, writes Nnamdi Oranye.
Amazon’s disruption in the retail and logistics space is unprecedented and in need of no introduction. However, in its typical style, while everyone has been focusing on what we perceive to be its core business, it has quietly been thinking of swallowing a completely different industry – in this case, pharmaceuticals.
I have the great privilege of being invited to conferences and think-tanks all over the world, and towards the latter end of 2016 I started noticing Amazon making certain moves that made me reiterate several times and in several places that it will be moving into this space. I was met with some scepticism. After returning from the Forum on Public-Private Partnerships for Global Health and Safety in Washington D.C. a few weeks ago, where I raised the point again, I opened up my news sources the day after landing back in South Africa to find CNBC had just confirmed what I suspected all along. Amazon had announced that it will be hiring a general manager to pave its path for entering into the pharmaceutical space. The report revealed that, apparently, entering into this space had been in Amazon’s discussions for a number of years. That means you can believe it has a serious plan it place.
This all makes perfect sense and to be honest we shouldn’t really be surprised anymore. Silicon Valley wants to connect everything, and Amazon certainly has a track record of wanting to own just about everything. One of the reasons why Silicon Valley has gone this way, in my opinion, is it has assimilated a vision of connecting industries and innovations together. Since the early days as just a bunch of professors and students at Stanford with a vision, Silicon Valley has nurtured this sort of thinking – finding ways to connect their innovations to existing industries. That’s what made the original “outfit in a garage”, Hewlett Packard, so successful. And today they continue to do the same.
Here’s why Amazon moving into this space makes a lot of sense. It has been relentless in trying to solve the ‘last mile of logistics’ problem. With drone technology, it can literally deliver to pretty much anywhere in the world. Why wouldn’t it look to deliver pharmaceuticals as well? It has already been in this market in some ways, selling equipment and medical supplies, and interestingly offering cloud services to the biotech and pharmaceutical industry.
An example of Amazon’s vision comes from rural Africa, actually. Here we have an obvious challenge with the “last mile” problem — the movement of goods from the supply depot to the consumer’s home, or wherever the consumer may be. Amazon has been exploring drone technology for a long time, and the truth is so have we, but in unexpected places. For some time, UNICEF has been piloting a project in Malawi, with the aim of delivering medical supplies and picking up blood samples. This has obvious tremendous benefit to rural communities. Through the use of a smartphone, health workers can call a drone to drop off or collect supplies – and with a simple swipe of the screen ensure location services are on, so it can use their GPS location. When the drone arrives, they just tell the drone where to go on the phone, and off it goes. It can carry up to one kilogram of goods. In Tanzania and Ghana, the drones are also being used to carry off birth registration forms from rural areas to the nearest Home Affairs.
I find it interesting that a humanitarian organisation that focuses on developmental assistance to children and mothers is developing and piloting this project – and is actually looking for commercial investors to get involved. Pharmaceuticals, in my opinion, should be among the first to get involved. Home-grown companies involved in that supply chain should be getting in there now, as far as I’m concerned. There is no need to reinvent or come up with technology – everything requires is there already. But, it seems to me, Amazon will beat them to the punch.
Amazon is already selling certain kinds of health equipment and medicine already. While it is true that the distribution of medicine comes with legitimate red tape and regulations that would all be new for Amazon, I am sure they will find a way. I can already imagine legitimate systems that would work – say, an app a doctor or health worker can download via a medical aid such as Discovery Health. Instead of writing you a prescription, the doctor just accesses the app, taps on the medicine he is prescribing, and the transaction goes through your health insurance at the same time as an order goes to Amazon. No need to go to a pharmacy. No need to ask the doctor to write another prescription if you lose the original – or need more medicine (he can obviously create a recurring prescription, or could put a future prescription on standby, or just create another prescription if you need it, and run it all through the app). Or if you don’t have health insurance, he could put the prescription through to Amazon who asks for your Amazon account details, and then send you a confirmation you just have to tap to purchase. Amazon’s ‘one-click’ buying system, and its ability to make payment almost invisible, will make this all seem a pleasure for us as consumers. Whatever the case, your medicine could be on your doorstep by the time you get home; or it could just get delivered to wherever you are, if you turn location services on and let its drone track your GPS signal. So if you’re away on a business trip or at a holiday home, or live out in a rural village, Amazon will find you and deliver to you your medicine.
Think about how such a simple system could work – using existing technology. It’s only the legalities standing in the way. Steve Kraus, a health tech investor with Bessemer Venture Partners, and expert in the field, is confident that Amazon could break open the pharmaceutical space. In his view, reports CNBC, every major technology company should have a play in health care, an estimated $3 trillion sector. The news of Amazon’s foray into this industry saw pharmacy stocks in other companies drop by the next day, but as Kraus says, it’s not just pharmaceuticals who should be worried. In the future, Amazon could work directly with manufacturers, become a distributor, negotiate discounts, and have such big buying power that most of us will just rather buy there as it will be so much cheaper. “In Amazon style,” Kraus said to CNBC, “it will want to own the consumer’s mind and wallet.”
In my opinion, this is how our innovators ought to be thinking. How do we own the consumer’s mind and wallet? How do we think without borders? We might not be able to compete with Amazon and Silicon Valley companies head-on, and in fact, if Amazon brings the kind of solution I’ve highlighted above to Africa, it will benefit us greatly. Having said that, however, we need to make sure we have the right framework in place so that Amazon’s role on our continent in pharmaceuticals sees us benefit economically as well as from a health point of view. Otherwise, it is just monopolising. It will cannibalise whole industries, supply chains, and expertise before we even realise it.
UNICEF’s example shows we can do this. We just need to invest, move quicker, get the right innovators involved, and think how we can connect it all together. Amazon has a few years to work out the red tape in its own context in the States and other places, but we can work out our own red tape here in Africa before they come. In fact, maybe we could even help them and then have a stake in it all – if we could just get a move on.
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent. Sign up here.