Analyst have been speculating recently that Amazon’s next big move would be pharmaceuticals. An analyst report from Leerink, a boutique investment firm specialized in the health care business, said that Amazon will certainly enter the prescription drug distribution sector in the coming years. Following the report stock prices for Walgreens and CVS, the major market share holders in prescription drug dispensing, fell by nearly 5%. The drop continued into Monday as both fell an additional 3%. If Amazon did choose to enter this sector, it would prove to be a considerable threat to its competitors. This has been seen before, most recently with Amazon’s acquisition of Whole Foods. Amazon has made great strides so far in the short time since it entered the grocery business, and this could be the same for pharmaceuticals.
However, unlike the other sectors Amazon has entered, the pharmaceuticals sector is much harder to get a foothold in. There are a lot of regulations that Amazon will need to be compliant with in order to enter the business. It is not just about dispensing out drugs, it’s also about know how to dispense drugs and when not to. The one thing that CVS and Walgreens do have is dedicated pharmacist that can speak to customers and advise them when they go into a pharmacy. That human touch may be necessary, especially when businesses are dealing with personal health. However, we should not underestimate Amazon as well. Amazon started as a business selling books online, and now it has become much bigger than just an online book store. Amazon definitely has the potential to enter the pharmaceutical business and be profitable, now the question is will they choose to?
Leave a Comment