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We’ve Learned Not to Bet Against Amazon (AMZN), Says Andrew Murphy on Healthcare Market Footsteps

Could Amazon have "golden ticket" on its hands to disrupt the $3.3 trillion domestic healthcare market with a revamped Alexa? Loup Ventures' Andrew Murphy weighs in.


Amazon.com, Inc. (NASDAQ:AMZN) is ready to add another market to reign as king under its empire: healthcare. According to CNBC, the e-commerce king has a new health and wellness team in the works within its Alexa segment to revamp Alexa as a tool that can excel for healthcare. Meanwhile, along with Berkshire Hathaway, J.P. Morgan, and Amazon have revealed the intent to cultivate a joint healthcare company designed to lower costs while bettering care for their collective 1.2 million employees.

Andrew Murphy at venture capital firm Loup Ventures chimes in, noting: “The $3.3T U.S. healthcare industry is notoriously slow to innovate We think Amazon will change healthcare on three fronts: 1) Logistics: Help reshape the $453B Pharmacy Benefit Management industry; 2) AI: Alexa will help both patients and providers with everything from in-home care to allowing providers more time with patients instead of paperwork; 3) Cloud: AWS will continue to allow Amazon to partner with the world’s leading patient data networks.”

The buzz circling the new Alexa healthcare team led Murphy to muse about the company’s opportunity to break into the healthcare arena, with the analyst calling the endeavor “Dr. Alexa.” Especially as the whole healthcare industry realizes artificial intelligence will become an integral part of the whole picture- from operations to improving patients’ quality of life, Murphy envisions a future where “an Alexa near every hospital bed could offer patients” compelling “safety, information, connectivity, and entertainment.”

This won’t mark Amazon’s first footsteps into the healthcare arena, as Murphy muses back to a 2014 partnership with Cardinal Health, which used Amazon’s e-commerce power to translate to medical supply sales to hospitals and clinics alike. For now, the company is stalling its intent to evolve as a pharmaceutical wholesale- at least for the time being, writes the analyst, who notes it proved challenging for Amazon to win approval from leading hospitals. These key hospitals were hesitant of changing the traditional purchasing process.

First, the analyst sees logistical expertise weighing in Amazon’s corner, considering rocketing drug prices and demand has boiled down to some kickback among consumers in the U.S. Second, Alexa has the potential to meaningfully scale back massive “busywork” doctors despite all while firing up in-home telehealth adoption, thanks to Alexa’s artificial intelligence, points out Murphy. Less time spent on dull assignments translating to a boost in time spent with patients speaks well to the simplicity of using Alexa in the healthcare market. Third, the company’s $5.4 billion Amazon Web Services business is raring to offer electronic health record systems with key tools to generate patient data-geared services, Murphy cheers. Likewise, with the Whole Foods deal now part of Amazon’s empire, the analyst pinpoints strong standing in a future where “food as medicine” could play a crucial role.

Murphy argues that he has grown wise to not ante up against Amazon when it eyes its next feat. After all, this is an empire that has not made it a secret of its desire to become the best ‘customer-centric’ player in the globe. The analyst sees this as a jumping-off point for what appears to be limitless opportunity for growth for Amazon, just as he praises the company’s exceptional knack to unearth gains in new arenas.

That said, king of e-commerce or not, Amazon’s “entry into the healthcare market will likely prove to be one of their toughest tests to date. They face an extremely complex and concentrated industry and the regulatory quagmire that comes with it. Amazon has its work cut out in convincing the healthcare system that it belongs at the table, but it’s made sensible first steps and we’ve learned not to bet against them,” concludes Murphy.

TipRanks indicates the e-commerce king has won a strong bullish backing on Wall Street. Out of 36 analysts polled in the last 3 months, 35 rate a Buy on AMZN stock while 1 plays it safe with a Hold rating. With a healthy return potential of 15%, the stock’s consensus target price towers at $1,849.66.