Amazon is Considering Moving into the Pharmacy Business

Here's Why Amazon's Next Big Market May Be in the Pharmacy BusinessHere’s Why Amazon’s Next Big Market May Be in the Pharmacy Business, Much to the dismay of Walgreens

Move over, Apple and Alphabet. Wall Street thinks Amazon (AMZN) will be the one to lead Silicon Valley’s looming disruption of the healthcare industry.  

A new report from Wells Fargo shows that consumers are clamoring for the Seattle-based tech behemoth to enter the prescription pharmaceuticals business. The firm conducted a nationwide survey and found that five in 10 U.S. adults would probably use Amazon Pharmacy if the company pursued it.
“We believe the results show very positive support of the concept of Amazon Pharmacy, which we believe could translate into fast adoption,” said Wells Fargo analyst David Maris in a note to clients.
Apple and Google have both dedicated significant resources to entering the health care market, such as Apple’s CareKit apps for managing medical conditions and Alphabet’s Life Sciences unit, which focuses on diabetes research.
Rumors have been building that Amazon may also venture into the pharmacy business. Last month, CNBC reported that Amazon is hiring a general manager to lead its push into the health care market, after holding at least one annual meeting to discuss its plans in this area. Amazon recently expanded its Prime Now service in Japan to include drug and cosmetic sales and has also formed a Professional Health Care Program to regulate the sale of medical supplies and equipment in the U.S.
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Amazon is no stranger to disruption, having revolutionized the e-commerce, cloud computing, logistics and artificial intelligence markets, among others, since its inception in 1994. Wells Fargo said Amazon could have the same effect on the pharmaceutical industry by providing downward pressure on prescription drug pricing. On top of that, the firm added that Amazon’s low prices, same day or next day delivery and free shipping would likely spur competition among distributors and pharmacies. 
Amazon would be following in the footsteps of Costco (COST) ,  Target (TGT) and Walmart (WMT) , who all started dabbling in pharmaceuticals to drive further top line growth, said Maxim Group analyst Tom Forte. Amazon’s Prime Now shipping service, as well as its growing number of physical stores, would help Amazon expand into pharmacies, Forte added. 
Cutting out the bricks and mortar expenses of pharmaceutical distribution could be a “big benefit” that persuades major drug companies to work with Amazon, Wells Fargo said. In this scenario, drugstrore chains like Walgreens (WBA) , CVS (CVS) and Rite Aid (RAD) could all take a hit. 
Source: TheStreet
By: Annie Palmer
Photo Credit: Courtesy of Fuld + Company Blog

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