Amazon Pharmacy Adds a Powerful Competitor to Drug Retail

By Thomas Price Wednesday, November 18, 2020

Of the many companies equipped to handle shutdowns and economic turmoil that have come with the COVID-19 pandemic, Amazon stands at the top of the list. With physical locations for everything from retail to movie theaters being completely closed or working under capacity limits, more and more people have been turning to the online juggernaut for their basic needs and purchases. Even for stores such as pharmacies, many people have been finding new methods to refill their prescriptions to avoid taking on the risk of the coronavirus infection by going in person. Amazon has recently seen this new demand and created Amazon Pharmacy to fill it. Considering their already impressive customer base and popularity, Amazon’s new service could make major waves in the retail drug industry.

What Is Amazon Pharmacy?

Amazon Pharmacy is at its core a drug delivery service offering serious discounts and fast shipping times. Their new service’s debut was not necessarily unexpected after acquiring the online pharmacy PillPack just over two years ago for a lavish $753 million. PillPack provided the infrastructure and customer base, which will serve as the foundation for Amazon Pharmacy moving forward.

Amazon Pharmacy will be available for all Amazon customers almost immediately; however, there will be significant benefits for Amazon Prime users with no added cost to their subscription to Prime. The main piece of information for this will be the free two-day shipping on all medications, a Prime feature for regular purchases as well. Amazon Pharmacy is currently ready for use in all US states except Hawaii, Illinois, Kentucky, Louisiana, and Minnesota, where current regulations have prevented Amazon’s online store from being available without further technical changes and updates. The company will not be selling or delivering Schedule II drugs or medications, which is where most opioids are categorized.

Amazon’s entrance into the retail, pharmaceutical services market makes tremendous sense both at a time when online shopping is at its peak due to the COVID-19 pandemic and fiscally. The prescription drug market is an extremely lucrative one, with sales in 2020 projected to top $360 billion before the end of the year.

Considering the already 150 million-plus Amazon Prime users, the portion of those users who already need some kind of prescription medication will be tremendous. More so than this, for the millions of Americans who do require prescription medication and are not Amazon Prime members, this will undoubtedly be an extremely tempting incentive to sign up. Even those Prime customers who do not wish to have their medication delivered will now be eligible for discounts on some of their prescriptions at several different brick and mortar pharmacies, including CVS, Walgreens, Rite Aid, Walmart, and Costco. Amazon Pharmacy’s debut has sent ripples through the pharmaceutical world, including some strong stock market reactions.

How the Market Reacted

For nearly every major pharmacy chain in the United States, the news of Amazon’s participation in their field resulted in drops in stock share prices. For CVS, the company saw their share prices plummet 8%. Walgreens was subject to a similar decline of around 9% for their own stock prices. On the other hand, Rite Aid took on significantly larger losses, with their shares collapsing 16%. Between CVS and Walgreens alone, over $10 billion worth of market value was lost in a single day. Rite Aid’s market cap, which is already significantly smaller than their two major competitors, dipped by $100 million, shrinking their overall value to less than $600 million. The losses in stock prices were also felt by GoodRx, a prescription coupon company, who saw their own shares diminish by 20%. For Amazon, this will most likely turn into another lucrative venture.

Final Conclusions

Amazon has rarely failed heavily in recent years, with almost every major expansion of the company’s scope working out extremely well. Amazon Pharmacy looks to be no different, especially considering the timeliness of the launch. During the COVID-19 pandemic, having an alternative to taking on the risk of picking up prescriptions in person may be the final tipping point to buying an Amazon Prime subscription. Even without a significant uptick in new customers, Amazon’s core customer base will almost certainly take advantage of the new service, especially those already subscribed to Amazon Prime.

About the Author

Headshot for author Thomas Price

Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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