Amazon's exploratory pharmacy team has ballooned to more than 30 people, says research firm

  • Leerink interviewed a member of Amazon's senior executive team.
  • That person said that the team focused on exploring opportunities in the pharmacy space has grown to 30 or even 40 people.
  • But don't expend cheaper drugs anytime soon.
Jeff Bezos
Paul Morigi | Getty Images
Jeff Bezos

A new report from the financial research firm Leerink, which has been closely covering Amazon's moves in health care, says Amazon is expanding the team that's exploring a move into the pharmacy business.

Researchers at Leerink interviewed an anonymous former senior Amazon employee, who described an exploratory team at Amazon that was once 7 to 8 people, and is now 30 to 40.

The goal appears to be to ensure its customers stay loyal and that all their needs, including health and medical, are serviced on Amazon.com.

Amazon's entry into the pharmaceutical business seems inevitable to many in the health sector, particularly in light of the $3 billion market opportunity, and Leerink thinks it's a matter of "when," not "if."

"Ultimately, Amazon is looking to bolster its Prime membership program, which by signing up for a subscription provides customers with benefits including free shipping, expedited delivery, and other perks," the report states.

"Amazon saw the inclusion of pharmaceutical drugs as a natural add-on to its existing product offerings."

Amazon CEO Jeff Bezos has eyed the pharmacy business for years, dating back to an investment in the startup Drugstore.com in the 1990s. That business was eventually acquired by Walgreens, and later shuttered.

"The specialist indicated that Amazon's decision to enter pharmacy has been in the works for some time," the report reads.

As CNBC has reported, Amazon has been busy in the last year meeting with folks across the industry, including generic drug makers, to figure out how it can break into the space.

The consumables team, led by Eric French, initially kicked off the research process. That team also includes the company's groceries product. In May, the company started interviewing for a pharmacy general manager to lead the team, and it has been looking to recruit health experts for months -- most recently, a health privacy lead. Amazonheld exploratory talks in November with generic-drug makers like Sandoz and Mylan.

Amazon's latest high-profile health care hire is Martin Levine, a doctor who specializes in new models of patient care.

Matching prices, not beating them

Some have speculated that Amazon could be a key player in bringing down drug prices.

But Leerink's analysts said the former member of Bezos' senior executive team suggested that Amazon will aim to match the lowest prices on the market, rather than beating them.

The note also says that Amazon will probably sell drugs directly to consumers, and build a platform open to all suppliers, similar to its Marketplace model. That could further spur price competition among drug makers.

Overall, Amazon's move into the pharmacy business may seem like a foregone conclusion, but don't expect it to happen tomorrow. Some drug supply chain experts say that Amazon has lower-hanging fruit to explore first in the health care space, like selling cash-pay generic drugs and medical supplies.

"Its first and best opportunity remains in the cash-pay market for generic prescriptions," said Adam Fein, president of Pembroke Consulting.