Yesterday, Amazon announced that it will be entering into the Pharmaceuticals industry with “Amazon Pharmacy”, offering Prime members in the U.S. to order prescription medication for home delivery (for free).
Amazon’s push into pharmaceuticals may pick at the dominance of Walgreens, CVS, and Walmart. CVS and Walgreens fell 9% and 12% respectively at the announcement of the venture.
However, its important to note that Amazon will not deliver Schedule II controlled medications. The dips in the shares of CVS and Walgreens are definitely overblown. 88% of physicians prescribe controlled substances. Looking at this report, it looks like millions of Americans are prescribed at least one controlled substance. They’re not going to switch over for some of their meds. They’ll fill everything at the same time, which means they’re much more likely to go brick and mortar (i.e. in-person, physical pharmacy)
Looking more specifically at the Amazon Pharmacy, doctors can send prescriptions directly to Amazon Pharmacy, or patients can request a transfer from an existing retailer, like CVS or Walgreens. Amazon says it has tools to verify that a physician legitimately ordered each prescription, and to tamp down on potential fraud.
The announcement seems very well-timed, as their nation gets hammered by a second wave of COVD-19, Americans are increasingly relying on getting their medicines via mail to avoid possible exposure to the coronavirus. That shift could be permanent, as more people than ever before are learning about new ways of receiving medication.
With the potential of COVID-19 sticking around for the near future, even long after vaccines are released, people will likely continue to look to reduce visits to in-person stores, especially if they’re unwell.
Currently, Amazon does not operate any physical pharmacies, however, this could change with their current ownership of Whole Foods. Amazon could eventually add Pharmacies to Whole Foods and it chain of Amazon Fresh stores.
Works Cited:
https://www.cnbc.com/2020/11/17/amazon-pharmacy-free-prescription-delivery-for-prime-members.html