Amazon launches online pharmacy in new contest with drug retail

Platform Industry: Amazon branding on screen has launched an online pharmacy for delivering prescription drugs in the United States, increasing competition with medication retailers like Walgreens, CVS Health and Walmart.

Called Amazon Pharmacy, the new store lets clients price-compare as they buy drugs on the company’s site or app. Shoppers can toggle at checkout between their co-pay and a non-insurance option, heavily discounted for members of its loyalty bar Prime.

The movement builds on the web retailer’s 2018 acquisition of PillPack, which Amazon stated will stay different for customers needing pre-sorted doses of multiple drugs.

Shares of drugstore chains, drug wholesalers and grocers dropped in day trading. Amazon’s shares were up almost 1%.

Over the past two years, Amazon has worked tirelessly to secure more state licenses for transport prescriptions across the country, which had been an obstacle to its expansion into the drug supply chain, based on analyst notes by Jefferies Equity Research.

The business founded as an online bookseller has disrupted industries such as retail, computing and potentially pharmaceuticals, drawing criticism of its size and power from labour groups and lawmakers on the way.

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TJ Parker, PillPack’s CEO and vice president of Amazon Pharmacy, said in a declaration that the merchant planned to attract “customer obsession to an industry that can be inconvenient and confusing.”

The company faces entrenched competition from Walgreens Boots Alliance Inc, CVS Health Corp, Walmart Inc, Rite Aid Corp , Kroger Co and many others. Take-up of online ordering of drugs has been low, according to market research from JD Power.

“Amazon’s launch of an online pharmacy is a meaningful threat to brick and mortar pharmacies,” Northwestern University’s Kellogg School of Management professor Craig Garthwaite said.

“These retail pharmacies must now offer more than just easy access to a prescription.”

Shares of Walgreens Boots Alliance, Rite Aid and CVS tumbled between 8% and 15%, while those of medication distributors McKesson Corp , Cardinal Health Inc and AmerisourceBergen Corp were down 3% to 7%.

Amazon injects a brand new look and texture into a place that has been dominated by a few large mail order pharmacies such as CVS, Cigna Corp and UnitedHealth’s Optum, analysts from brokerage Evercore ISI said in a note.

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“New entrants to the highly competitive pharmacy market come as no surprise to us,” CVS Health said in a statement. “While pharmacy is a core component of our business, CVS Health is so much more than your corner drug store.”

Walgreens said in a statement it already provides a complete and developing range of drugstore, health and wellness solutions to its clients and patients, and offers free same-day and next-day delivery options.

Should Prime members prefer buying in person, Amazon stated its reductions on non-insurance purchases apply at greater than 50,000 brick-and-mortar pharmacies – including those run by rivals. Inside Rx, a subsidiary of Cigna’s Evernorth, administers that advantage, Amazon said.

Still, the pandemic may help bring medication orders on the web. E-commerce has soared this year as authorities told people to stay home to stave off diseases of COVID-19, and Prime members – over 150 million globally – may be amenable to purchasing medication online today that it’s from Amazon.

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The company said Prime subscribers get up to 80 percent off generic as well as 40% off brand medication when they pay without insurance, in addition to expedited shipping.

Amazon’s online pharmacy isn’t yet available in Illinois, Minnesota, Louisiana, Kentucky, and Hawaii, a spokeswoman said.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Jeffrey Dastin in San Francisco, Caroline Humer in New York, Manojna Maddipatla and Ankur Banerjee in Bengaluru. Editing by Lincoln Feast, Sriraj Kalluvila and Shailesh Kuber.

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