How Amazon Plans To Use Its E-Commerce Dominance To Transform Healthcare

Amazon could use its expertise to disrupt everything from the pharmaceutical supply chain to Medicare management. We break down the healthcare areas best suited for an Amazon entrance.
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Amazon company Healthcare health manage pharmacy
Amazon could use its expertise to disrupt everything from the pharmaceutical supply chain to Medicare management. We break down the healthcare areas best suited for an Amazon entrance.
About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
Amazon company Healthcare health manage pharmacy
I
Amazon In Healthcare: 
The E-Commerce 
Giant’s Strategy For  
A $3 Trillion Market
II
Amazon could use its expertise to disrupt 
everything from the pharmaceutical supply 
chain to medicare management. We break 
down the healthcare areas best suited for  
an Amazon entrance.
Amazon is looking to dominate more than just online retail.
The e-commerce behemoth is serious about entering 
healthcare, bringing with it a non-traditional business model, 
infrastructure in logistics & computing, and customer love.
Many existing health giants are scrambling to compete, while 
others are looking for ways to Amazon-proof themselves.
But this isn’t Amazon’s first attempt at transforming the space.
Between 1999-2000, the company began investing money into 
Drugstore.com with plans to expand its e-commerce business 
into the pharmacy space. It eventually ran into the existing 
web of middlemen, regulators, and more, which brought its 
ambitions to a halt.
Now, Amazon is trying again. Earlier this year, it announced a 
joint healthcare venture with JPMorgan Chase and Berkshire 
Hathaway. Before the collaboration, the company acquired 
online pharmacy PillPack for nearly $1B.
But it’s not the only tech company expanding into healthcare.
Many are advancing in the space by playing to their strengths: 
Apple’s patient-centric vision prioritizes consumers, while 
III
Google continues to apply AI to everything from medical 
devices to lifestyle management solutions. Microsoft is 
building health data management on top of its cloud platform 
Azure.growth in Q2’18, jumping 12% YoY.
In our Healthcare 2025 
research briefing, we 
asked which tech giant 
would have the biggest 
impact on healthcare. 
Even before announcing 
any concrete plans, 
Amazon came in  
second place — just 
behind Google.
But as the e-commerce giant moves into the healthcare sector, 
many questions arise:
• 
What strategies does the company plan to use to enter new 
target verticals, especially those with established leaders in 
the space?
• 
Which companies are most at-risk for an Amazon entrance? 
What business models will become obsolete if Amazon 
chooses to enter the space?
• 
Will Amazon’s advantages — which have worked well in 
areas such as retail — translate across healthcare, or is the 
company out of its element?
• 
Is the timing right? What factors today will enable Amazon 
to succeed in healthcare?
• 
Using CB Insights data, we dig into how Amazon is 
pushing into healthcare, focusing on how the company is 
leveraging its current strategy to move into different areas 
across the space.
IV
Amazon’s advantage, philosophy, and strategy
•  Amazon’s healthcare edge
•  The Amazon approach
Amazon the pharmacy
• The pharmacy supply chain and PillPack
• Post-PillPack: Cash pay patients, pharmacy benefits,  
and FBA for drug manufacturers?
Amazon, claims management, and health benefits
•  Attacking claims management
•  From claims manager to benefits manager
Amazon Mediacare/Medicate management
•  Why Medicare/Medicaid?
•  Prime for groceries and home needs
•  Alexa can help with home care
•  Clinics coming soon?
Amazon and providers
•  The backwards integration strategy
•  Alexa and the medical record
•  Amazon the B2B (and B2C) supplier
Amazon, the healthcare cloud, and the lab
•  The healthcare cloud
•  AWS and the lab startup
Conclusion
1
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Table of 
Contents
V
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VII
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1
Amazon’s advantage,  
philosophy, and strategy
AMAZON’S HEALTHCARE EDGE
As Amazon enters healthcare for the second time, it brings several 
new strengths to the table.
Its current scale and reach are larger than ever before. The company 
has a direct distribution advantage to over 300M active customers, 
100M Prime Members, and approximately 5M sellers on the site, 
which could prove useful should it ever develop health solutions for 
small businesses.
By teaming up with JPMorgan and Berkshire Hathway, Amazon now 
has an additional pool of more than 1.2M employees — diverse in 
socioeconomic status, geography, and age, among other factors —  
to test its products on before releasing them to the public.
This could be helpful when searching for solutions that work for 
both specific use cases (e.g. chronic disease management) and 
population demands (e.g. pharmaceutical delivery).
1
Amazon’s ecosystem has also given it more cash to deploy, which 
is why it can afford to pursue low-profit initiatives. As stated in the 
Amazon-JPM-Berkshire partnership announcement, the companies 
want to build an independent healthcare company “free from 
profit-making incentives and constraints.”
2
This is doable for Amazon, which can make money by growing  
its core businesses like AWS and Prime, and enter into 
healthcare willing to eschew profit as its other businesses 
become more valuable.
Existing health giants will find it difficult to compete with a 
company whose strategy is not dependent on making a profit  
in healthcare. 
But Amazon has used this strategy for decades.
It has reinvested its revenue into massive infrastructure  
build-outs in the logistics and data center spaces, which will  
be a significant advantage as it enters healthcare.
Amazon Web Services (AWS), for example, can help handle  
the enormous data loads and analysis required in the 
healthcare space.
Amazon’s fulfillment centers, supply chain, and acquisition of 
Whole Foods has put it within range to distribute healthcare 
goods and services quickly.
The last critical advantage Amazon brings to the table is its brand.
Customer experience has been an afterthought in almost every 
part of healthcare, and is reflected in the poor NPS scores 
(related to customer satisfaction) across the board.
Amazon will likely leverage its obsessive focus on consumer 
experience to persuade customers to switch to its offerings.  
The question becomes whether Amazon can bring its consumer- 
first brand into healthcare faster than existing healthcare 
companies can improve.
3
THE AMAZON APPROACH
As Amazon enters new spaces, it follows a strategic playbook:
First, Amazon introduces a customer-friendly product with a 
user experience and customer experience superior to that of its 
competition. This allows the company to build economies of 
scale, network effects, and leverage for negotiating with other 
parties (e.g. suppliers).
Then, it invests in upfront fixed costs that allow it to function 
better and provide an outsourced version of services to its 
customers. We’ve seen this with Fulfilled By Amazon (FBA) and 
Amazon Web Services (AWS), which allow companies to use 
traditionally expensive services (warehouses, data centers, etc.) 
on a rent-to-own basis.
4
By attracting enough users to a platform and offering its own 
outsourced services, Amazon can then standardize suppliers’ 
offerings on its platform. This allows it to create transparent  
and competitive markets for buyers and suppliers.
Hiring Atul Gawande to lead its joint healthcare venture with  
JPM and Berkshire suggests a continuation of this playbook.
Gawande is focused on using standardization as a means of 
scaling up healthcare, especially for relatively commoditized 
goods and services.
Lack of standardization and focus on consumer experience 
has resulted in an incredibly fragmented, opaque market in 
healthcare, which makes the following particularly vulnerable  
to Amazon’s entrance:
• 
Middlemen that are value extractors and  
have large profit margins
• 
Companies that focus on formatting or  
coordinating information
• 
Areas where customer experience has been  
an afterthought
• 
Companies that have relied on opaque  
pricing as a business model
We’ll dive into the healthcare areas that Amazon has the ability 
to transform using its strengths in the e-commerce space.
5
Amazon the pharmacy
THE PHARMACY SUPPLY CHAIN AND PILLPACK
The pharmaceutical supply chain in the US is convoluted, filled with 
middlemen and confusing business models.
For example, more than three entities are involved in bringing a drug 
from manufacturer to patient, and each party takes a percentage of 
the profit along the way.
2
Amazon has the opportunity to simplify the supply chain and 
improve the experience/cost matters for patients, payers, and 
manufacturers.
The company has made significant headway into the pharmaceutical 
distribution space with its ~$1B acquisition of mail-order pharmacy 
PillPack. With this purchase, Amazon gained a $100M revenue run-
rate business, a built out pharmacy supply, and pharmacy licenses in 
all 50 states.
6
PillPack is a good fit for Amazon. The company is loved by 
its customers, claiming an NPS score of 80 compared to the 
pharmacy average of 26. Customer demand also helped the 
company reestablish its partnership with pharmacy benefits 
giant Express Scripts after a public falling out. In an email to  
its customers, PillPack stated:
“Late last week, PillPack and Express 
Scripts reached an agreement that will 
allow PillPack to continue to serve you 
as an Express Scripts’ customer. This 
means your service with PillPack will 
not be impacted — we are happy to 
remain your pharmacy. We absolutely 
could not have done this without you. 
Thank you for your stories, letters, and 
constant encouragement throughout 
this period. Your voice is an important 
reminder of why PillPack exists — 
we’re here to help you stay healthy.”
This focus on customer experience works well with  
Amazon’s ethos.
Additionally, PillPack’s platform for prescription management 
known as pharmacyOS shares similarities to Amazon’s  
order management and fulfillment services Fulfillment by  
Amazon (FBA).
PillPack will handle medication dispensing, monitoring, and 
support via pharmacyOS. It also offers these services to 
payers, manufacturers, and new companies in the form of a 
pharmacy delivery API to plug into. This could integrate well 
with Amazon’s existing distribution model. 
7
POST-PILLPACK: CASH PAY PATIENTS, 
PHARMACY BENEFITS, AND FBA FOR DRUG 
MANUFACTURERS?
More than 250M cash pay prescriptions were filled in 2017. 
Amazon could capitalize on cash payments by offering  
cheaper prices to patients who pay cash for their medications 
through PillPack.
This is a good place 
to test the product, 
especially because cash 
pay prices vary greatly by 
pharmacy. In some cases, 
the cash price might even 
be cheaper than what’s 
offered through a health 
insurer, which could give 
insured patients a reason 
to check Amazon first. 
Beyond cash-paying 
patients, Amazon would 
need to invest in more 
costly parts of the 
pharmacy supply chain.
A logical next step would be to complement PillPack’s mail order 
pharmacy with a way to fulfill same-day prescriptions. Amazon 
could do this by setting up a retail pharmacy and/or pharmacy 
distribution node from Whole Foods, or partner with independent 
pharmacies in areas where its presence isn’t as strong.
Once Amazon has the pharmacy delivery system set up for  
the end patient, it can offer  pharmacy benefits to payers that 
have traditionally been served by pharmaceutical benefits 
managers (PBMs).
8
These benefits have generally included developing a pharmacy 
network for patients, negotiating drug rates on behalf of small 
health plans and self-insured employers, monitoring anomalies 
in prescription fulfillment (e.g. poor medication adherence),  
and more.
Employers are looking for alternatives to the existing PBM model. 
A National Pharmaceutical Council survey of 88 large employers 
found that only 30% understood their contract with their PBM, 
and nearly 70% would welcome an alternative to a rebate-driven 
business model.
Cigna’s potential acquisition of Express Scripts means small 
health plans that compete with Cigna might also be willing to 
look at PBM alternatives. Amazon can offer the same functions 
traditionally serviced by PBMs to both of these groups, and can 
offer those services at near 0% margin since it doesn’t need to 
make money on that business line alone.
But to be successful in this venture, it would make sense for 
Amazon to work alongside drug manufacturers to negotiate 
prices. It can also offer a service to them.
By 2023, every entity in the pharma supply chain will have to be 
a part of an interoperable tracking system, and every individual 
unit (i.e. a pill bottle) will need to be traceable from start to finish, 
as a result of the Drug Supply Chain Security Act (DSCSA).
9
Amazon has already filed for wholesale pharmacy licenses. 
Combined with the licenses it received from the PillPack 
acquisition, it only needs a manufacturing license to be able  
to transport drugs from end-to-end.
This would allow Amazon to handle products directly from a 
manufacturer, and relabel or split them up into different units  
as necessary. UPS already seems to be going down this route 
with its own manufacturing license.
With all the licenses and logistics pieces in place, Amazon 
could effectively operate an outsourced fulfillment system for 
drug companies similar to FBA, and handle all of the tracking 
requirements that the DSCSA demands.
One major link missing is a cold chain — or temperature-controlled 
logistics solution — which Amazon would need in order to 
transport any drugs that have specific environmental needs.
Amazon can start with easy-to-transport goods and  
eventually move into this area once it’s made its inroads  
with drug manufacturers.
10
Amazon, claims management, 
and health benefits
ATTACKING CLAIMS MANAGEMENT
Only offering pharmacy benefits to employers would provide a 
solution to just one of the healthcare problems they face.
To be more effective, Amazon could become a platform for health 
benefits managements as well — which would mean it would need to 
delve into the world of claims management and billing.
The current system is made up of multiple steps, manual data entry/
cleaning, and third party middlemen. The process is also slow — 
laws are in place to prevent claims processing and reimbursement 
from taking more than 30-45 days.
Claims management powers the payments back-end of the entire 
healthcare system.
New insurance solutions like Oscar and Collective Health saw the 
claims process as outdated and inefficient. As a result, many of the 
new tech-enabled carriers have invested significant resources into 
building their own claims management systems and infrastructure 
as a starting point.
3
11
“When we started Collective Health, we 
thought we would partner with a TPA 
[Third Party Administrator] to handle 
the ‘boring’ part around claims adjudi-
cation — which is a small, but important 
part of what we do. We went around the 
country to meet with dozens of TPAs, but 
we quickly realized the technology at the 
core of these businesses wasn’t capable 
of powering the transformation in the 
healthcare experience for members and 
employers we were creating.”
– Rajaie Batniji
CO-FOUNDER OF COLLECTIVE HEALTH
Amazon could potentially offer its own solution to this problem  
for payers.
The company has been working on an internal project called Hera, 
which involves taking data from electronic medical records (EMRs) 
to identify incorrect codes or misdiagnoses.
While there are obvious use cases here for population health 
management, this could also be a way for Amazon to start taking 
on some of the claims management functions, such as detecting 
inaccuracies in submission.
The project is said to have been in development for 3+ years, and  
is being pitched to commercial health plans.
12
FROM CLAIMS MANAGER TO BENEFITS 
MANAGER
Claims management software could be a white-label solution, 
and it also presents a lucrative opportunity for a benefits 
management solution for employers.
If Amazon can standardize and structure the payments and 
administration back-end of claims, that technology can power 
a benefits marketplace where service providers like pharmacies, 
wellness companies, PCPs, etc. can outsource the claims 
process to Amazon.
Amazon could then provide a platform to employers or small 
health plans, creating a distribution avenue for other health  
services. This creates an incentive for both sides of the 
marketplace to join with Amazon, utilizing back-end services  
as well as a front-end platform.
Amazon can also offer self-insured employers a common  
product usually purchased in conjunction with benefits  
managers: stop-loss insurance. This is a type of insurance 
product that self-insured employers tend to take to prevent 
against truly catastrophic scenarios.
Berkshire’s specialty insurance subsidiary started offering this 
product in 2016, and Amazon could utilize that. This is similar  
to Collective Health, which is partnering with Sun Life Financial 
to offer stop-loss insurance.
13
Amazon and Medicare/ 
Medicaid management
WHY MEDICARE/MEDICAID?
With several patient touch points across different settings  
(home, grocery store, online, etc.), Amazon could become a 
lifestyle manager for the Medicaid and Medicare populations.
There are 52M+ Medicare beneficiaries, 71M+ Medicaid 
beneficiaries, and 10M+ dual eligibles (people who have both).
Spending for Medicare and Medicaid topped $1.3T in 2017,  
much of which was concentrated in the sickest 10% of patients.
Many patients in this category have chronic diseases or mental 
health issues that require day-to-day lifestyle management. 
These are groups of the population where Amazon has the most 
room to grow its Prime Membership.
Penetration in income levels below $68K per year is  
significantly lower than other brackets. Amazon also has 
far fewer Prime members above 55, especially compared to 
competitors like Walmart.
4
14
Amazon would be entering at a particularly good time because 
the Centers for Medicare & Medicaid Services (CMS) has drafted 
proposals to expand coverage for Medicare.
The agency is looking closely at primary care, and looking 
to expand its definition to include social determinants like 
transportation, diet, home services, etc. It’s also proposing 
new reimbursement rules to cover telemedicine-only visits for 
Medicare beneficiaries. 
Amazon could leverage its position to take advantage of these 
changing Medicare rules and bring more people to Prime by 
providing attractive incentives.
The company has begun exploring the idea. VP of special proj-
ects Babak Parviz specifically highlighted this as an interest and 
took a cross country bus tour to do research. Atul Gawande has 
also written about treatment of the elderly, end of life care, and 
over utilization of healthcare as a whole in the elderly population.
Amazon was reportedly in talks with AARP earlier this year to 
figure out products and solutions for the company’s members. 
15
PRIME FOR GROCERIES AND HOME NEEDS
Amazon now offers Medicaid beneficiaries a discounted Prime 
membership, though it doesn’t yet extend to Amazon Fresh or 
Prime Pantry discounts. This could change in the future — and 
we might even see the ability to use SNAP (supplemental 
nutrition benefits) on the site directly.
16
The ability to cover food and groceries through Amazon could 
actually boost its meal kit business.
Offering disease-specific meal kits would be a huge benefit, 
especially for people in locations where access to fresh produce 
might be difficult.
Tailored meal kits for dual eligibles can reduce adverse health 
events, according to a recent study by Health Affairs. If Amazon 
wants to differentiate its meal kit offering, catering it to health 
needs for Medicaid and Medicare populations would be one 
possible tactic.
17
ALEXA CAN HELP WITH HOME CARE
Amazon can apply similar tactics to the smart home, which every 
tech giant is fiercely competing to own. Amazon may have larger 
market share, but its competitors are catching up.
One way it can take advantage of its head start and differentiate 
itself is by making its smart home technology medically useful.
Amazon’s Echo — its voice-controlled speaker with video 
capabilities — is ideal for monitoring purposes, especially at 
home; but in order to handle medically relevant data, it must be 
HIPAA compliant. 
The company posted a job opening for a HIPAA Compliance Lead 
as part of the Alexa Information group earlier this year, but the 
post has since been removed.
With HIPAA compliance, 
the company can go in 
several directions.
The Echo could be 
used to monitor 
adherence and give 
notifications about 
medications. Amazon 
also has patents for 
monitoring blood flow 
and heart rate through 
the camera, and could 
expand to fall detection 
or gait monitoring. 
18
The Echo could also be the hub for services like telemedicine, 
digital therapeutics companies, coaches, and more to help 
manage Medicaid/Medicare members in their homes. 
Amazon is already looking into developing an ecosystem for 
third party healthcare applications for Alexa.
It funded the Alexa Diabetes Challenge. The Alexa app platform 
has lightweight healthcare apps from institutions like the Mayo 
Clinic and Libertana to answer medical Q&A, send alerts in 
emergencies, and help communicate with caregivers.
Eventually, Amazon could handle the back-end processes of 
HIPAA compliance and voice technology while providing the 
distribution and platform for companies through Alexa and  
the Echo. 
19
CLINICS COMING SOON?
Amazon could also bring healthcare to the physical world and 
establish its own clinics.
The company recently hired Martin Levine, former medical  
director for Iora Health in Seattle. Iora focuses on creating clinics 
and primary care services specifically for Medicare beneficiaries.
A quick way for Amazon to distribute clinics would be to establish 
them in Whole Foods, where it already has a retail footprint.  
Whole Foods CEO John Mackey talked about this to Bloomberg:
“[Whole Foods CEO, John Mackey’s] 
second idea is even more grandiose: a 
Whole Foods medical clinic. He says he 
was inspired by Rosen Care, an employer 
health-care program run by Rosen 
Hotels & Resorts in Orlando, which offers 
employees an on-site company-owned 
medical facility. The clinic has a staff 
of 38 health-care practitioners serving 
5,300 employees and places an emphasis 
on nutrition and preventive medicine, 
which company founder Harris Rosen 
says has reduced his per-employee 
health-care costs to about half the 
national average. Mackey met Rosen at 
a health-care conference last summer 
in Las Vegas, then traveled to Florida to 
tour the clinic. He’s considering rolling 
out Whole Foods clinics to employees—
and even, perhaps, to customers.” 
20
Amazon could test and tweak the clinic concept within Whole 
Foods stores before establishing other clinics in higher 
Medicare/Medicaid density areas. This would look similar to 
companies like Cityblock Health or Oak Street Health.
21
Amazon and providers
THE BACKWARDS INTEGRATION STRATEGY
Amazon is also examining ways it can be useful to existing 
physicians, hospitals, and providers.
In the last few decades, healthcare has hired more people 
for administrative jobs, many of which involve coordinating 
information between different parties and data entry/cleaning.
5
Some point to regulations that require extensive tracking  
and noting of services rendered as the catalyst for this  
administrative increase.
Instead of investing in modern technology systems as a solution, 
many institutions in healthcare prefer to hire more people since 
the upfront cost is lower, the implementation is faster, and it’s 
easier to adapt their workforce if regulatory requirements change.
Amazon has the opportunity to reduce the burden for users  
and build a new back-end for providers. Instead of attempting  
to disrupt the existing processes, it might make more sense  
for Amazon to pursue a backwards integration strategy,  
outlined below.
22
By offering a more intuitive layer on top of the existing system/
process, Amazon can aggregate more users to its user interface 
and slowly replace the very manual back-end processes over time.
ALEXA AND THE MEDICAL RECORD
Amazon is reportedly looking into ways data can be pushed into 
and pulled from EMRs.
Voice is an increasingly popular interface, and could be 
particularly useful in healthcare, as there are lots of hands-free 
scenarios.
Hospitals are already exploring the use of voice applications 
today.
Premier Health, which has five hospitals and two major health 
centers, spent $1.6M to implement voice recognition software 
that integrated with Epic, a developer of an EMR system. In the 
first year, it estimated that doctors’ clicking fatigue had reduced 
and saved them 90 minutes a day. First-year savings for Premier 
Health were ~$1.3M thanks to more efficient workflow.
There are several Alexa experiments happening in hospitals 
around the country, including Northwell, Mass General, and 
Boston’s Children’s Hospital.
23
However, because Alexa is not yet HIPAA-compliant, the  
tasks completed with the software are generally limited to 
non-identifiable uses, such as checklists for surgeons, disease 
and drug information for patients, and hospital information.
If Alexa does become HIPAA-compliant, the use cases could 
expand much further.
Most doctors find the EMR process inefficient and time-consuming, 
as it requires medical professionals to manually take down 
information. Alexa could integrate into EMRs and become a 
passive note taker during visits.
Over time, Alexa could help shift Amazon from a middleware that 
populates an EMR system into an EMR itself.
24
Several startups are entering the voice space with this strategy 
in mind.
Products like Dragon Medical have been around for some time, 
while new companies like Suki, Notable, and Saykara have raised 
more funding recently and could be potential acquisition targets.
25
 AMAZON THE B2B (AND B2C) SUPPLIER
Like the pharmacy, the supply chain is currently convoluted and 
filled with middlemen. Manufacturers deal with distributors, who 
deal with group purchasing organizations (GPOs) that negotiate 
on behalf of hospitals to bring the costs of supplies and technol-
ogy down (though sometimes hospitals negotiate directly).
After labor, the supply chain is hospitals’ second-largest expense, 
and it’s expected to grow in the near future.
Amazon already partially services this area: its B2B unit has a 
healthcare division that mostly deals with low-risk commodity 
products (one reason being that they don’t yet have a cold chain 
operation in place). 
Because Amazon doesn’t offer everything yet, hospitals can 
use existing distributors that can handle all of their needs and 
already have a process in place. Many hospitals have stakes in 
these GPOs, which further lessens their incentive to switch to a 
new system.
26
Amazon is going to have trouble immediately delivering cost 
savings to its customers. New York Presbyterian CEO Steven 
Corwin mentioned in a recent interview that the company was 
unable to deliver better pricing to the hospital.
But the metrics of success are changing. Chris Holt, who leads 
Amazon’s B2B supply division, spoke to HealthcareDive about 
reducing labor costs, creating a better interface, and building 
tech to integrate backwards into existing systems and processes.
Amazon is selling increased efficiency and backwards 
integration to get more users onto the system, which can attract 
more suppliers that might have better deals, which can then help 
Amazon build out its marketplace functionality.
Over time, the company would be able to replace more of the 
back-end ordering processes and potentially get better deals 
than existing GPOs.
Amazon could also focus on the consumer side of medical 
supplies along with its pharmacy strategy. The company could 
handle delivery and communication between doctors and 
patients post-diagnosis.
27
It recently announced a partnership with Xealth — which is 
already integrated into several EMRs and hospitals — to allow 
physicians to order medical supplies on behalf of their patients. 
Xealth also lets doctors prescribe digital goods like diabetes 
management programs and relevant content or regimens for 
specific diseases.
28
Amazon, the healthcare  
cloud, and the lab
THE HEALTHCARE CLOUD
Amazon’s existing AWS infrastructure is critical to the success 
of many of its healthcare initiatives. With more tech giants trying 
to expand their cloud platforms, this has become a competitive 
space.
Each of the tech giants sees healthcare as a high growth area for 
cloud sales due to the vast amount of data being produced, and 
the need for high performance computing to make sense of it.
6
Amazon offers several AWS solutions for existing healthcare 
companies already, especially in security and compliance.
This has been an especially hot topic, as 2017 saw large scale 
hacks of identifiable datasets (which included Social Security 
numbers, among other personally identifiable information), and 
several hospitals were the target of ransomware attacks.
29
With data safety being an ongoing concern for cloud migration, 
these attacks demonstrate the flaws in on-premise storage that 
could be a catalyzing moment for healthcare giants.
Amazon can capture more of the healthcare cloud market by 
offering specific solutions for the different entities in the space. 
Several of the initiatives described above would likely be pow-
ered by AWS, including claims management, patient monitoring, 
electronic medical records, and supply chain management 
software.
AWS is focusing heavily on is genomics, which is becoming 
relevant to payers, providers, researchers, and everyone in 
between. Thanks to the falling cost of sequencing and the 
increasing amount of screening and usage in clinical settings 
(e.g. tumor profiling), the demand for computing power and 
storage to analyze these datasets has grown.
30
One way Amazon is doubling down on this space is through 
participating in GRAIL‘s $900M+ Series B financing.
GRAIL is attempting to detect cancer earlier by monitoring 
circulating tumor DNA in the blood stream. The company gives 
Amazon a potential customer that produces a lot of genomic 
data and complex analysis tools, and a case study to possibly 
acquire more customers.
31
AWS AND THE LAB STARTUP
Amazon to expand its footprint in the lab via AWS. It already 
offers several AWS solutions for pharma and biotech companies, 
and could expand the services — especially to earlier stage labs 
and biotech companies.
Amazon has allowed small companies to outsource the massive 
upfront costs associated with running data centers by allowing 
companies to rent their usage without having to buy.
Many labs and small biotech companies face large upfront 
equipment and lab costs. As companies scale, significant 
amounts of their budget go to outsourced services as well.
Amazon could take these costs upon itself and act as a back- 
end lab.
This is comparable to how some companies like Transcriptic 
and Emerald operate for cell models. Companies like Vium are 
creating the building blocks to do this for mouse models.
AWS for labs could allow companies to send in the samples,  
run assays, and then receive analyzed and raw data (powered  
by AWS). This would allow companies to use equipment only  
as needed, especially at the early stages when capital is scarce.
32
Among the benefits, Amazon could also develop relationships 
with companies early on and offer more services as they scale 
up. This could be its marketplace for AWS services, or it could 
expand to a marketplace for other outsourced research services 
similar to Science Exchange. By doing this, Amazon could make 
it much easier for small labs to get running, identify customers 
for its services as it scales up, and become the AWS for biology, 
chemistry, etc.
AWS allowed many early-stage tech companies to take off — 
Amazon can capture similar value if it helps small labs to start 
and grow the same way.
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Conclusion
Amazon’s potential foray into healthcare has already  
caused players in the space to scramble and reevaluate  
their core competencies.
While Amazon has barely scratched healthcare’s surface, it  
has the potential to upend the space with its e-commerce 
expertise. Without the need to make money in healthcare, the 
high margin and convoluted parts of the healthcare business  
are ripe for disruption.
Amazon’s approach allows other companies to outsource parts 
of their businesses that are messy and outside their main focus. 
This can happen on multiple fronts, impacting:
• 
Payers — Amazon can handle the claims and marketplace  
so companies can focus on offering their services.
• 
Providers — Amazon can handle documentation into the 
EMR or coordinating buying and transporting supplies.
• 
Pharma/Biotech — Amazon can run the actual experiments 
so researchers can focus on experiment design and 
analysis; or Amazon can handle the packaging, tracking, and 
transportation for larger drug manufacturers.
As healthcare becomes a deeper quagmire of middlemen and 
profit extraction, Amazon is particularly well-positioned to 
change the space.
Despite various obstacles, including market leaders, established 
processes, and general risk-aversion of buyers to new players, 
its entrance will either change how the system is designed or 
force existing players to become more competitive.
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