Amazon Hastens Retail Pharma’s Last Stand

From Seeking Alpha:

Amazon’s interest in the $450 billion US pharmaceutical market is long-standing. The company already sells over-the-counter medicines like aspirin and antihistamines, to go along with its copious offerings of supplements and vitamins on its worldwide platform. It already has licensing to sell pharmaceuticals in 12 states (Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon, Tennessee, with an application pending in Maine). And now with the purchase of the closely held, online, Manchester New Hampshire-based PillPack that will clear in the latter part of the year, Amazon with the stroke of a pen has the necessary licensing to sell pharmaceuticals in 49-states. Investors were certainly quick to notice and the reaction hit markets with tsunami force. With the 28th of June announcement, brick and mortar stalwarts of the pharmaceutical retail world like Walgreens Boots Alliance, CVS Health  and Rite Aid  collectively shed about $11 billion in market value.

Amazon’s renown logistical efficiencies and willingness to sacrifice short-term margins for long-term market share were at the fore of the market move. Most prescriptions in the US are still filled in person and the delivery of scripts remains highly fragmented. If Amazon did nothing else but centralize the distribution of pharmaceuticals, this alone could likely apply enough downward price pressure on the cost of drugs to deliver real savings to US consumers. Centralizing and organizing existing data is the most likely front of significant cost savings and returns for both the end user and company alike. It could provide augmented negotiating clout to force better pricing deals on drug manufacturers. Even if mere convenience becomes the watchword of the makeover, laying the groundwork for cost reductions in the delivery of pharmaceuticals to those in medical need is a worthy endeavor for a country that spends almost 18% of its total annual output on healthcare. While the ordering, dispensing and delivery of pharmaceuticals to consumers is heavily regulated by myriad agencies at almost every level of government, the logistics of the operation plays to Amazon’s well-honed strengths.

Link to the rest at Seeking Alpha