What Amazon's potential move into at-home medical tests could mean for the market

At the start of the pandemic last year, Amazon began building out its own in-house COVID-19 testing capacity for its employees. The company pulled together a cross-functional team to include research scientists, engineers, procurement specialists, and operators, according to Amazon.

That same team may now lead the online retail giant's next foray into healthcare—at-home medical tests and the launch of a third-party marketplace for general home diagnostics services, Insider reported Monday.

Sources told Insider's Eugene Kim that Amazon could offer testing kits for COVID-19 as well as for infections that lead to respiratory illnesses and sexually transmitted diseases, and its long-term goal is to expand into areas such as clinical genomics.

The company is in talks to launch its own COVID-19 testing kit in June, potentially around the start of its Prime Day annual shopping event, according to the report.

It's a potential move that wouldn't surprise many industry analysts.

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Taking a look at Amazon's investments over the last few years, including its acquisition of PillPack and launch of Amazon Pharmacy, the focus on employer health, investments in home diagnostics due to the pandemic, and the announcement and expansion of Amazon Care, home testing and diagnostic lab services seems a likely area for Amazon to expand its healthcare ambitions, analysts say.

"Labs are a particularly good fit for the core strengths of Amazon. Distribution and supply chain, scale and cost advantage, and digital customer and patient engagement all pointed at reducing friction and likely ultimately improving use and access frequency," Nathan Ray, a director in the healthcare and life sciences practice at business and technology consulting firm West Monroe, told Fierce Healthcare.

Amazon also made a major move into the health wearables market with the launch of the Amazon Halo fitness tracker last year.

There is the potential for the tech giant to create synergies with its different healthcare plays, Michael Abrams, a managing partner at consulting firm Numerof & Associates, told Fierce Healthcare.

"The Halo device can monitor the vitals of someone with a chronic disease, Alexa can then remind them that it's time to make an appointment they can do a virtual visit and also get a test kit in the mail for lab testing. It's all very synergistic," he said.

Abrams added, "They are taking steps that are synergistic. Amazon Care is synergistic with Amazon Pharmacy and both of them would be synergistic with a diagnostics line of business as well."

A worker inside Amazon's in-house lab (Amazon)

A potential expansion into health diagnostics would represent the next phase of growth for Amazon's in-house COVID-19 testing lab as the threat of the COVID-19 pandemic diminishes. Business Insider reported that the company previously said it had spent "hundreds of millions of dollars" in building the lab.

"When Amazon puts a lot of money into something that has potential in the healthcare marketplace, they try it out with their employees and, if it works well, they take it public," Abrams said, noting the expansion of Amazon Care to other companies as an employee benefit.

Beyond COVID-19 testing, Amazon's potential move into diagnostics is most interesting in the broader employer space, Ray said.

"There is the potential to help employers receive better population-level information on their entire workforce including those that do not frequently engage with the health system. It could also be an interesting marketplace for new diagnostic test providers and even for your own physician to more easily and regularly order testing," he said.

This week, Amazon rolled out a new employee wellness program called WorkingWell, aimed at preventing injuries, providing wellness services, and offering quality healthcare for employees while at work and at home. By the end of 2021, WorkingWell will expand further to cover all of Amazon’s operations network in the U.S. with the aim of cutting recordable incident rates by 50 percent by 2025, the company announced in a press release.

RELATED: Competing with Apple and Fitbit, Amazon launches health wearable that tracks activity, body fat, emotions

A move into home diagnostics would put Amazon in direct competition with testing giants LabCorp and Quest as well as other at-home testing kit startups. Retailers such as Kroger, Walmart and Albertsons launched their own home-testing services for general consumers over the past year, Business Insider reported.

"I think we're on the verge of an explosion in at-home diagnostics, considering the new technologies out there," said Abrams.

He speculated that if Amazon jumped into the diagnostics space the company would take the same merchandising approach as with its other products by offering third-party lines and launching its own line of diagnostics.

"Existing players in the space might have to sell through Amazon’s platform and hoping that they don’t choose to come out with their own brand of at-home diagnostics. That’s a tough fight to win as it will drive margins down," he said.