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How Amazon Is Disrupting the Healthcare Industry

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Amazon to go big on hospital supplies

According to a report by the Wall Street Journal, Amazon (AMZN) is planning to transform its Medical Products segment into a major supplier to American hospitals. The e-commerce giant already has a medical supplies offering.

Currently, hospitals sign contracts that allow them to purchase supplies from manufacturers or distributors. After this news, healthcare suppliers and service companies saw their stock prices fall. 

Distributors saw a decline in stock prices on February 13, 2018. Owens & Minor (OMI) fell 4.8% on the day, and Cardinal Health (CAH) declined 3.4%. Amazon stock rose 2.0% on the day.

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Amazon has been disrupting industries

This move comes at a time when Amazon (AMZN) is aggressively expanding into several businesses and affecting the stock prices of those industries.

Amazon has been making ripples in the healthcare industry (XLV) since last year. In October 2017, the tech giant was given wholesale distribution licenses for medical equipment in many states. This is essential for the company to sell medical devices to licensed professionals.

In January 2018, the company announced a partnership with Berkshire Hathaway and JPMorgan Chase (JPM) to cut health costs for their employees. This partnership would be a not-for-profit venture. This move also affected healthcare stocks, as the graph above shows.

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