Amazon continues its push into the pharmacy business, and has appointed a 14-year vet to run it

Key Points
  • Amazon veteran Nader Kabbani is in charge of the company's new pharmacy initiative, CNBC has learned.
  • The entire leadership team from PillPack, which Amazon bought for more than $800 million last year, reports to him, according to an internal document.
  • Amazon has multiple initiatives in the $3.5 trillion health-care market.
Jeff Bezos
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Amazon has tapped 14-year company veteran Nader Kabbani to run its new pharmacy business, including the team that came in through last year's acquisition of PillPack, CNBC has learned.

Kabbani, who helped build Amazon's Kindle self-publishing platform and has served as vice president in the logistics and Flex businesses, is now "vice president of consumables, special projects," according to an internal document that was viewed by CNBC.

The entire team at PillPack, which Amazon bought for more than $800 million in June 2018, reports directly to Kabbani, the document says. That includes CEO TJ Parker, product chief Elliot Cohen and technology head Alan Gao.

Amazon declined to comment.

The pharmacy business has huge potential for Amazon. In the U.S., more than 4 billion prescriptions are ordered annually, and spending is expected to top $600 billion in the next few years, much of that covered by insurers and Medicare and Medicaid. With PillPack, Amazon is poised to take a slice of the growing home delivery market, though it could also potentially incorporate retail pharmacy offerings at Whole Foods locations, after buying the upscale grocery chain for more than $13 billion in 2017.

Kabbani's appointment shows Amazon is putting one of its most ambitious new projects in the hands of a trusted company executive with plenty of experience in supply chain and logistics, but no background in pharmaceuticals or health care. He was in charge of Amazon Flex, the company's program that hires individuals to make deliveries on a flexible schedule, as well as other aspects of Amazon's last-mile delivery strategy. His LinkedIn page has him listed as the vice president of Flex since March 2017.

The pharmacy and distribution industries have been watching Amazon's every move.

Following the announced acquisition of PillPack, shares of drug distributors and pharmacies plummeted, with Walgreens Boots Alliance plunging 9.9 percent and McKesson dropping 6.1 percent. CVS Health, Cardinal Health, AmerisourceBergen and Rite Aid also fell on concern that Amazon would eat into their markets. Pharmacy is a notoriously challenging sector, given the dominance of brick-and-mortar incumbents and the middlemen that negotiate drug prices and manage their distribution.

PillPack packet
Source: PillPack

Shortly into his new role, Kabbani was the point person for the purchase of PillPack, according to three people familiar with the matter who asked not to be named because the discussions were private. Walmart had been in talks with PillPack for months before that deal.

The PillPack purchase represented one of Amazon's most public moves into the $3.5 trillion health-care industry. The company has been looking at the pharmacy space for years and started hiring a team in 2017.

"No matter how complicated health care may be behind the scenes, consumers see pharmacy as just another e-commerce category," said Jonathan Schwartz, CEO of CareZone, an internet pharmacy start-up. "They want modern digital experiences. Traditional providers ought to be rethinking their approach to customer retention."

Since the acquisition, the PillPack team has remained fairly quiet, other than filing for some new pharmacy licenses. Amazon hasn't announced plans for PillPack and has done little by way of adding new health products to its marketplace. It already sells over-the-counter pills, at-home DNA tests, and medical supplies like gauze and bandages.

Kabbani is best known for his work on the Kindle e-reader, which he worked on from 2007 to 2013. He helped create the Kindle Direct Publishing platform, enabling authors to self-publish digital and printed books. He's also a classical concert pianist and board member at the Seattle Symphony.

Kabbani reports to Sunny Jain, a former Procter & Gamble managing director who is now Amazon's vice president of consumables, a group focused on consumer packaged goods.

WATCH: Amazon's potential impact on the pharmaceutical industry

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Amazon's potential impact on the pharmaceutical industry