Source: PaxForex Premium Analytics Portal, Fundamental Insight
From books to e-commerce to cloud hosting, Amazon has achieved unprecedented success in many areas. This has made it a giant with a market value of $1.5 trillion and likely revenues of more than $500 million this year.
Amazon has always sought to continually push its boundaries. Not surprisingly, the company has gone beyond online retailing to build brick-and-mortar stores: Whole Foods, Amazon Go and Amazon Fresh.
But these efforts pale in comparison to another opportunity in Amazon's crosshairs. Here's the next $4.3 trillion market Amazon hopes to conquer.
Healthcare. It makes up nearly one-fifth of the U.S. economy. Total health care spending in the U.S. reached nearly $4.3 trillion last year. And Amazon has made three big moves in this huge market.
First, the company built its online pharmacy business. Amazon's acquisition of PillPack in 2018 was a key step in that direction. The deal gave Amazon a home-delivery pharmacy in all 50 states and strong ties to the largest pharmacy benefit managers. Today, Amazon Pharmacy allows customers to save money on a wide range of prescription drugs.
Second, Amazon has expanded into telemedicine. In 2019, the company launched Amazon Care. Initially, it offered telemedicine services only to Amazon employees in the Seattle area. In 2021, however, Amazon Care began offering its services to other organizations across the U.S.
Third, the e-commerce and cloud computing giant intends to become a national provider of primary care beyond telemedicine. Amazon Care offers in-person visits in some locations. However, Amazon announced in July 2022 that it plans to acquire One Medical for $3.9 billion. One Medical supports virtual medical visits but also operates physician offices in 19 major metropolitan areas and several more on the way.
So far, of course, Amazon Pharmacy isn't much of a threat to the big pharmacy retailers. Amazon Care remains a fledgling telemedicine service. One Medical had net revenues of $623 million last year, a pittance for Amazon.
Nevertheless, they are all important parts of Amazon's overall health care strategy. There are others.
Amazon also sells Halo, a fitness tracker. It integrates health-related features into its Alexa virtual assistant. STS Lab subsidiary Holdco makes home diagnostic tests. Amazon Web Services (AWS) partners with numerous health care organizations, including drug manufacturers and medical technology companies. WorkingWell is a program that helps improve health and wellness and reduce workplace injuries for Amazon employees (for now).
It might seem like Amazon is reaching into almost every area of health care. That's an exaggeration at this point, but it's still early days. The company has not clearly articulated its ultimate goal in health care. It has, however, given a few hints.
Amazon's four guiding principles are customer obsession, passion for invention, operational excellence, and long-term thinking. The company's history of starting small in other markets, building momentum, and then dominating is likely to be repeated in health care. It seems likely that Amazon will seek to integrate all of its current healthcare products and services in ways that reduce costs for patients and payers.
Amazon is clearly more than just a leading e-commerce company. However, despite its many initiatives, it may never become a well-known healthcare company.
But Amazon doesn't have to become a leader in health care like e-commerce or cloud hosting to succeed. The sheer scale of opportunities in healthcare allows smaller players to win.
Also, the $4.3 trillion figure doesn't reflect the whole picture. The federal government predicts that U.S. health care spending will reach $6.8 trillion by 2030. And Amazon has a big opportunity in health care outside the U.S. as well.
Amazon just might conquer the health care market. But the best news for the company is that it can achieve victory without resorting to conquest.
As long as the price is above 124.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 132.37
- Take Profit 1: 145.00
- Take Profit 2: 150.00
Alternative scenario:
If the level of 124.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 124.00
- Take Profit 1: 116.00
- Take Profit 2: 106.00
