Analysts on Monday said Amazon is a “potential gold mine” for pharmaceutical companies and the company’s stock price could double to $500 a share in the next year.
But that isn’t necessarily a bad thing, said Neil Zacks, president of Zacks & Associates in New York.
“Amazon could very well be a real gold mine for pharma, because it has an abundance of data,” Zacks said.
“They’re not only the largest online retailer in the world, they have a huge customer base and they’re willing to pay for a lot.
They’ve got the ability to drive the prices of their products down and to drive their margins down.
They could be one of the most important players in this market.”
The company has made significant investments in the development of its drug pipeline, including $500 million in research and development for EpiPen, the emergency-care line.
Amazon has also invested heavily in the manufacture of its own medicines.
The company has raised $2.7 billion in funding so far, and it is expected to add $1 billion more in the coming months.
But while the company is a potential gold mine, there is a lot more work to do.
“There are a lot hurdles to overcome, including, of course, their ability to keep up with the pace of innovation that they’re seeing with all of their new technology,” said Dr. Jonathan Matson, chief medical officer at Pfizer.
“That will be a major challenge.”
Matson said the company could still see growth for years to come.
“The bottom line is we’re optimistic that we can see that growth continue,” he said.
But, “there’s a lot that still needs to be figured out.”
“I think the first big challenge is understanding the new and emerging market of medical-device sales,” said David McBride, president and CEO of Sanofi, a global pharmaceuticals company.
“I think it will be an important growth driver in the near term.
But in the long term, I think we need to be looking at the long-term challenges in order to stay competitive.”
McBride added that the growth in the U.S. market is more limited than in other countries.
He noted that the U and the U Kingdom saw a lot less growth than other countries, and that is likely to continue.
“In the U S, there was some slowdown in sales, but in other parts of the world we’ve seen some really positive growth,” he noted.
“If you look at other countries that are in the same space, there’s not really a huge difference in how the business is doing and the pace is going,” McBride said.
In other words, it’s difficult to say how Amazon can sustain growth and remain competitive in the medical-tech space in the short term.
“I don’t think we can forecast in the foreseeable future that the medical device industry will grow any faster than the pharmaceutical industry,” he added.
“It’s not just the technology, but also the marketing, the sales, the distribution, the training and all of the other things that are going to play into the growth of the medical market in the future.”