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- Consumer behemoth Amazon caused upset among major drug retailers on Tuesday with the launch of a new online pharmacy
- The launch of Amazon Pharmacy builds on the acquisition of PillPack, which Amazon bought in 2018 for US$753 million (approximately A$1.03 billion)
- Amazon Pharmacy allows customers to order medication and prescription refills, many of which come with sizeable discounts for its Prime loyalty club members
- The news culminated in a bad day for many U.S.-based pharmaceutical competitors, including Walgreens Boots Alliance, CVS Health and Rite Aid
- COVID-19 has been a tremendous growth factor for Amazon, causing a share price climb of more than 87 per cent since March 12
Consumer behemoth Amazon caused upset among major drug retailers on Tuesday with the launch of a new online platform, Amazon Pharmacy.
The launch builds on Amazon’s acquisition of PillPack, which it bought for US$753 million (approximately A$1.03 billion) in 2018.
Amazon Pharmacy allows customers to order medication and prescription refills, which are then delivered in as little as a couple of days. It also enables customers to price-compare drugs, many of which are heavily discounted for members of its Prime loyalty club.
That said, the company won’t ship medications that have a high risk of abuse, such as opioids.
But the launch didn’t come from nowhere. Amazon has worked extensively over the last two years to secure more state licenses for shipping prescriptions across the United States, which had previously been an obstacle to its expansion into the drug supply chain.
TJ Parker, CEO of PillPack and Vice President of Amazon Pharmacy, said in a statement that the new retailer aimed to bring “customer obsession to an industry that can be inconvenient and confusing.”
While the launch offers Amazon access to yet another lucrative consumer segment, particularly with an ongoing pandemic and an exponential spike in online spending, it’s dealt a hefty blow to the more established players in the U.S. pharmaceutical industry.
“Amazon’s launch of an online pharmacy is a meaningful threat to brick and mortar pharmacies. These retail pharmacies must now offer more than just easy access to a prescription,” said Craig Garthwaite, a professor at Northwestern University’s Kellogg School of Management.
Nasdaq-listed Walgreens Boots Alliance fell more than 9 per cent over the course of trading yesterday, while NYSE-listed CVS Health and Rite Aid fell 8.74 and 15.62 per cent, respectively.
However, it’s not only direct competitors that are feeling the pinch. By delivering half of its packages itself, Amazon has been putting increasing pressure on pure-play shipping companies, to the point where a delivery truck stamped with the Amazon logo is equally as common on U.S. streets as a UPS-branded one.
COVID-19 has been a tremendous growth factor for Amazon, causing a share price climb of more than 87 per cent since March 12.
That said, the launch of Amazon Pharmacy failed to have much of an impact on its Nasdaq-listed shares, which ended the day just 0.29 per cent in the green.
