Amazon Pharmacy Is Here

Amazon Aims to Bring Transparency to the Pharmacy Industry

Yesterday, Amazon (AMZN) launched a new part of its website called Amazon Pharmacy, where customers can buy medications and pay for them with or without insurance. The lack of transparency in the pharmacy industry can sometimes be frustrating for customers, and Amazon hopes to cast some light. For every drug it sells, Amazon will show the price when using insurance and when not using insurance.

Analysts have been anticipating Amazon’s move into the healthcare industry for some time. The industry is worth about $4 trillion in the US alone. In 2018, the ecommerce giant acquired PillPack, an online pharmacy, for $753 million. However, Amazon has taken longer than many expected to integrate PillPack into its operations. Now, it seems the wait is over.

Competitors’ Shares Fall

Amazon Pharmacy’s debut sent shock waves across the pharmacy industry. Shares of the two largest pharmacy chains in the US, CVS (CVS) and Walgreens (WBA), fell 8.6% and 12%, respectively, on the news. Shares of GoodRx (GDRX), an online pharmacy startup that aims to bring more transparency to the industry, slid 17%.

Amazon’s new business may also impact its brick-and-mortar competitors, like Walmart (WMT) and Target (TGT). These companies have been giving customers the opportunity to shop and fill prescriptions for years.

A Unique Moment

As COVID-19 cases reach all-time highs in the US, an increasing number of customers are receiving medications through the mail to reduce their risk of exposure to the virus. Analysts in the pharmacy industry say it tends to be difficult to make consumers switch pharmacy brands because this can involve calls to doctors, insurance complications, and other hassles that might outweigh the convenience of a new pharmacy.

However, Amazon is in a unique position at the moment. Many people have grown accustomed to the convenience of ordering other products on the site, and may be willing to put in the effort to switch their prescriptions to Amazon Pharmacy.

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