Microsoft-Walgreens deal highlights an emerging trend in healthcare sector

While the healthcare sector is witnessing a dramatic change in the way companies operate, marked by high-profile partnerships, the tech firms joining the industry are bringing in fresh innovation. The retail pharmacy segment recently saw the equations changing after Amazon (AMZN) acquired PillPack.

In what is seen as a reply to Amazon’s growing clout in healthcare, leading drugstore chain Walgreens Boots Alliance (WBA) is joining hands with Microsoft (MSFT) to create an ecosystem to digitize the main areas of healthcare delivery. The massive deal involves an array of Microsoft products, mainly Office 365, the Azure cloud division and AI-assisted technologies, which will serve customers at Walgreens stores across the world.

The deal involves an array of Microsoft products, mainly Office 365, the Azure cloud division and AI-assisted technologies

Under the multiyear deal, Walgreens will transfer the majority of its digital assets to Azure public cloud and sign up thousands of employees for the various app offerings of Microsoft. In the words of Microsoft CEO Satya Nadella, the deal will help “bring data from multiple sources together in order to establish new programs.”

Walgreens had earlier expressed concerns over the Amazon-PillPack deal. The company now plans to operate digital health corners at some of its stores in association with Microsoft, besides employing the software giant’s technology in the areas of research and development and management of patient engagement.

In a similar deal that is reflective of the consolidation-based business model being tested in retail pharmacy, marker leading drugstore chain CVS Health (CVS) acquired health insurance company Aetna last year. Also, the joint venture among Amazon, JPMorgan and Berkshire Hathaway, which aims to make healthcare affordable and accessible to Americans, is seen as a game changer for the healthcare industry.

Defying tech selloff, Microsoft races ahead of Apple in market cap

With more and more retail companies switching to cloud platforms, Microsoft is currently giving a tough completion to Amazon, which uses its cloud and e-commerce prowess effectively to stay ahead of rivals. The retail customers of Microsoft include Walmart (WMT) and Gap (GAP), while Amazon enjoys the patronage of healthcare firms like Bristol-Myers Squibb (BMS) and Celgene (CELG), as well as retail entities like Under Armour (UA) and Brooks Brothers.

Microsoft shares gained about 3% Tuesday following the historic deal was announced, continuing the uptrend seen since last month. Walgreen shares, meanwhile, traded lower during the day, paring a part of its recent gains.

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