- Amazon’s launch of its own digital pharmacy on Tuesday sent rival pharmacy stocks reeling, with CVS, Walgreens, and Rite Aid falling more than 8%.
- Amazon entered the pharmacy business in 2018 with its $753 million acquisition of PillPack, signaling to investors a growing interest in offering prescription medicines directly to consumers.
- Amazon said on Tuesday that it would offer discounts on prescription medications to Prime members, allow people to pay with their health insurance, and display the prices of drugs with and without insurance.
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Amazon’s foray into the prescription-medicine space deepened on Tuesday as the e-commerce giant launched a digital pharmacy within its website.
Amazon said shoppers could buy their prescription medicines directly from Amazon’s website, paying with insurance or without. It said Prime members would receive two-day shipping and discounts on certain medicines, 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 Amazon’s foray into an industry has wiped out billions in market value from competing firms. In 2017, when the consumer conglomerate acquired Whole Foods, the entire grocery sector saw deep losses.
The pharmacy move has been in the works for some time, hinted at by Amazon's state-by-state application process to sell prescription medicines that began in 2017 and by its acquisition of PillPack for $753 million in 2018.
Amazon said in a press release that the "Prime prescription savings benefit saves members up to 80% off generic and 40% off brand name medications when paying without insurance."
Amazon also said the digital pharmacy would also display the cost of medicines with and without insurance coverage, adding some more transparency to the pharmaceutical industry.
"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, the vice president of Amazon Pharmacy.