Microsoft and Walgreens join forces to take on Amazon and transform healthcare

The companies aim to improve health outcomes and lower overall costs

Microsoft and Walgreens join forces to take on Amazon and transform healthcare

Amazon is recognized as the e-commerce giant, a huge player in cloud computing and an aspiring one in the pharmacy business. Across those industries, Amazon is scaring everyone, forcing them to partner up to defend themselves.

Amazon, the new player in the health care business
Last year, Amazon bought online pharmacy PillPack. It also announced a partnership with Warren Buffett’s Berkshire Hathaway and banking giant JPMorgan Chase to create a brand new health care company that they proudly announced would be “free from profit-making incentives and constraints.”

Experts expect more deals like this in the future since nobody in Silicon Valley will want to let Amazon get a big head start on health care.
In effect, Microsoft and Walgreens have recently announced that they will be teaming up to help improve health care, for a seven-year agreement that includes exploring digital health opportunities within stores and developing software for managing patient engagement.

More exactly, Walgreens plans to migrate most of its IT infrastructure over to Microsoft’s Azure cloud services. Microsoft is also providing Microsoft 365, a package of Windows 10 and Microsoft Office, to the 380,000 employees working at Walgreens stores around the world.

The two companies said the partnership will help Walgreens gain personalized data about their customers’ health, which will allow pharmacists to improve the solutions that they hand out (from customized nutrition to overall wellness solutions).

Microsoft CEO Satya Nadella said the Walgreens partnership will help it work on some of the trickiest issues in health care.

“Improving health outcomes while lowering the cost of care is a complex challenge that requires broad collaboration and strong partnership between the health care and tech industries,” Nadella said.

Walgreens Boots CEO Stefano Pessina hinted at how the deal could help make the health care experience in general more efficient, from going to a doctor to getting insurers to pay for prescription drugs.

The Microsoft-Walgreens alliance also comes at a time of rapid change in the overall health care industry as drug makers seek new growth opportunities and health care providers team up to try and manage costs.

What’s in it for Microsoft?
And what’s in it for Microsoft?

Health care is a massive market that can’t be ignored. Yet it’s insulated and tightly regulated. Microsoft and Alphabet have both been hiring industry experts and advisers, such as former Cleveland Clinic CEO Toby Cosgrove to help them get their cloud technology into the right hands.

Partnerships are also critical. Gaining adoption at a large enterprise like Walgreens gives cloud technology providers the credibility they need to go after other companies in the space and helps educate them about the market and the many players – pharmacists, patients, doctors and other groups.

Within health care, Microsoft and Alphabet both need to keep pace with Amazon Web Services, which has been building its business across the industry and has the most market share.

Financial terms weren’t disclosed. The pair have committed to a multiyear research and development investment to develop other health-care tools that could ultimately lower costs. The companies may establish joint innovation centers in some markets.

Besides being a win for Azure, the deal involves a commitment by Walgreens to use Microsoft 365 — a collection of software that includes Windows 10, Office cloud services and security and mobile-management software — for the drugstore’s more than 380,000 workers.