Amazon and Walmart are readying for war over a growing chunk of the US population

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  • Over the past few months, the long-standing rivalry between Walmart and Amazon has gotten intense, and one demographic in particular appears to be the battleground: the over-65 crowd. 
  • In June, Amazon acquired pharmacy startup PillPack, beating out Walmart for the deal. Walmart for its part has been partnering with Humana, a health insurer that's focused on Medicare plans. 
  • The same crowd is clearly a focus for Amazon. PillPack's expertise is great for patients with multiple prescriptions, which tends to be the elderly population. Babak Parviz, a vice president at Amazon, said in February that the elderly was something "we deeply care about." 

The US population is aging. By 2050, the number of people over the age of 65 is expected to be double what it was in 2012.

An aging population means we'll see an increase in health concerns and chronic conditions like heart disease, neurodegenerative diseases, and cancer that can be costly to manage. It also offers a business opportunity for those companies best placed to meet the healthcare needs of this growing population.

Rivals Amazon and Walmart both seem to have the elderly on their radar, with Amazon's move into the pharmacy business with its acquisition of PillPack, and Walmart's partnerships with a health insurer focused on Medicare plans. 

Indeed, the two had both been interested in buying PillPack. Walmart had offered $700 million for PillPack, but dragged its feet over regulatory concerns, according to CNBCAmazon stepped in and offered a reported bid of just under $1 billion.

It appears the stage is being set for a battle between Walmart and Amazon for America's elderly. 

Shoring up resources for an aging population

Back in March,multiple news outlets reported that Walmart had held early-stage talks with Humana focused primarily on new partnerships, though an acquisition had been brought up.

While you probably think of Walmart as a giant retail business, it's also one of the largest pharmacy chains in the US, behind only Walgreens and CVS. It's also long had a focus on affordable prescriptions as well, offering some generic medications for $4.

That was followed by reports that Walmart may be interested in PillPack, a pharmacy startup that mails prescriptions that are packaged together based on when they need to be taken.

Walmart's historically had an interest in the Medicare population. For example, Humana and Walmart have a cobranded Medicare drug plan and an initiative that provides healthy-food credits.

Should Walmart and Humana link up on more partnerships, Walmart would become more embedded with Humana's Medicare business, which is the health insurer's main focus.

Amazon's interest in the aging population

While the elderly weren't explicitly cited as the reason for Amazon's acquisition of PillPack, the startup's expertise managing multiple prescriptions could come in handy as Amazon looks to serve that demographic. 

PillPack works with Part D and Medicare Advantage plans to provide prescriptions to members. This can be beneficial to the commercial health plans that can get better reimbursements from Medicare based on making sure members don't lapse in picking up their prescriptions.

People over 55 aren't among the biggest users of Amazon Prime, who are often the ones that use the most healthcare. 

"We note too that the older demographic still under-indexes toward Prime membership...which speaks to the opportunity for Pharma to help Amazon further penetrate the ~80 million 55+ population in the United States," Morgan Stanley analysts wrote in a note in November speculating on Amazon's entry into healthcare.

Since then, Amazon's ambitions in healthcare have become clearer. The tech giant is teaming up with JPMorgan and Berkshire Hathaway on a nonprofit healthcare initiative, and it already sells over-the-counter medication, including an exclusive line called Basic Care.

And within healthcare, the aging population has been one of the few healthcare topics Amazon executives have addressed. In February, Babak Parviz, a vice president at Amazon, said at Klick Health's Muse event in New York that the elderly was something "we deeply care about." 

"We have looked at the older population in the context of health obviously, but we know that this group has a lot of issues, a lot of unmet need, some of them relate to health, but their health and the broader issues that they face are all interrelated," Parviz said. 

SEE ALSO: Walmart's talks with an insurance giant could be part of an assault on Amazon Prime

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Contributer : Tech Insider https://ift.tt/2Gx3Ezu
Amazon and Walmart are readying for war over a growing chunk of the US population Amazon and Walmart are readying for war over a growing chunk of the US population Reviewed by mimisabreena on Wednesday, July 04, 2018 Rating: 5

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