Drugstore Stocks Plunge on New Amazon Fears

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Drugstore Stocks Plunge on New Amazon Fears PART 1 OF 2

Walgreens, Rite Aid, CVS Tumble on the Amazon Scare

Amazon might soon sell prescription drugs online

Amazon.com (AMZN) erased billions of dollars from the market cap of major retailers in June 2017 after the company acquired Whole Foods Market and made a surprise entry in the grocery space.

Only three months later, Amazon is making waves yet again. This time the company is believed to be eying the prescription drug distribution business. While the news has not yet been confirmed by Amazon, the nightmare for the country’s leading drug store operators has already begun.

Walgreens, Rite Aid, CVS Tumble on the Amazon Scare

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Walgreens Boots Alliance (WBA), CVS Health (CVS), and Rite Aid (RAD) stocks fell 4.87%, 4.92%, and 5.77%, respectively, on October 6, after CNBC reported Amazon’s potential strategy of entering the prescription drug market—a move that could be made clear by Thanksgiving 2017. Amazon’s stock price only rose 0.89% on the news.

Reading the hints

It’s believed that Amazon has consulted several specialists over the past couple of years to build a strategy around its potential entry into the $560-billion-per-year US prescription drug market. According to CNBC, the company has been hiring the best talent from the industry to come up with its internal pharmacy team and has appointed Mark Lyons to build an internal pharmacy benefits manager for Amazon employees.

Notably, the Japan Times reported in April that Amazon had expanded its Prime Now delivery service in Japan to include drug and cosmetic sales. Amazon typically tests its new product lines in foreign markets before launching them in the US.

Analyst firm Leerink Partners also recently reported that Amazon was in talks with some mid-market pharmacy benefit managers to pursue a mail-order pharmacy.

Continue to the next part of this series (below) for more.


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