Pharmacy stocks are getting Amazon'd as the consumer giant pushes into online prescriptions — and CVS and Walgreens are tanking
Reuters/Gary Cameron
- Amazon's launch of its own digital pharmacy on Tuesday sent rival pharmacy stocks reeling, with CVS, Walgreens, and Rite-Aid each falling more than 8%.
- Amazon first entered the pharmacy business in 2018 with its $753 million acquisition of PillPack, which signaled to investors that Amazon's interest in offering prescription medicines directly to consumers was growing.
- Now, the pharmacy section of Amazon's e-commerce website will offer discounts to paying Prime members, allow patients to pay with their health insurance, and display the price of the drug with and without insurance.
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Amazon's foray into the prescription-medicine space deepened on Tuesday after the e-commerce giant launched a digital pharmacy store as a section within its retail website.
Now, shoppers can buy their prescription medicines directly from Amazon's website, with the ability to pay with insurance or without. Amazon Prime members will receive discounts on certain medicines and two-day shipping, adding a few more perks to the list of Amazon Prime benefits.
The announcement resulted in a big hit to the share prices of competing pharmacies. Here's a rundown of the biggest stock moves:
- CVS Health: -8%
- Walgreen Boots Alliance: -10%
- Rite Aid: -12%
- GoodRx: -19%
This is hardly the first time a foray from Amazon into an industry has wiped out billions in market value from competing firms. Back in 2017, when the consumer conglomerate acquire Whole Foods, the entire grocery sector saw deep losses.
The move has been in the works for some time, first hinted by Amazon's state by state application approval process to sell prescription medicines, which began in 2017, and followed up by its 2018 acquisition of PillPack for $753 million.
"The Amazon Prime prescription savings benefit saves members up to 80% off generic and 40% off brand name medications when paying without insurance," Amazon said in a press release.
The digital pharmacy will also display the cost of medicines with or without insurance coverage, adding a new layer of transparency to the pharmaceutical industry that has largely been absent up until now.
"We work hard behind the scenes to handle complications seamlessly so anyone who needs a prescription can understand their options, place their order for the lowest available price, and have their medication delivered quickly," said TJ Parker, Vice President of Amazon Pharmacy.
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