Drug Chains Take a Hit from Amazon

Drug Chains Take a Hit from Amazon
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Amazon is already dominating the retail and online retail industries and is set to disrupt the grocery markets, as it acquired Whole Foods earlier this year. Now, speculations have surfaced that Amazon is working out a strategy to enter the pharmaceuticals industry. These speculations alone were enough to create havoc in the market.

Share prices of drug retailers Walgreens Boots Alliance Inc., CVS Health Corp. and Rite Aid Corp. dropped on Friday soon after the speculations made rounds. Walgreens shares closed down 4.9 percent to $73.20 in New York, and CVS shares also declined 4.9 percent to $76.92.

According to reports, Amazon is in discussions with mid-market pharmacy benefit managers and has been hiring talent to assess the drug retailing market for its entry.

Amazon Inc. is almost certain to enter the business of selling prescription drugs by 2019, said two analysts at Leerink Partners, posing a direct threat to the U.S.’s biggest brick-and-mortar drugstore chains.

Leerink analyst Ana Gupte wrote in a note to clients:

“We are convinced that Amazon will almost certainly enter the drug distribution value chain within two years, evolving into a more disruptive offering over time.”

On Friday, CNBC reported that the e-commerce giant would make a definite decision before Thanksgiving on whether to move into selling prescription drugs online or not.

“It’s a matter of when, not if,” said David Larsen, another Leerink analyst, said in a report to clients late Thursday. “We expect an announcement within the next 1-2 years.”

According to a Goldman Sachs analyst report from earlier this year, Amazon’s first order of business upon entering the pharmaceuticals industry “could be something as boring as delivering drugs to existing pharmacies first.”

Amazon declined to comment about prescription drug sales but offered this statement regarding a Bloomberg report on the same: “We are using the same carrier partners to offer this program that we’ve used for years, including UPS, USPS and FedEx.”


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Megha Shah
Megha Shah
A dreamer, traveler, aspiring entrepreneur and a bookworm beyond repair, Megha Shah is extremely fond of writing and has been doing so since she was a child. Apart from being a part-time writer, Megha is currently in college, pursuing B. Com. (Hons). Megha is an ardent follower of ‘Hardship, Hustle and Heart’ and firmly believes in the power of hard work and destiny!

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