Amazon Breaking Into Pharmacy Market: Truth Or Speculation?

Jun 23, 17 Amazon Breaking Into Pharmacy Market: Truth Or Speculation?

Pharmacy Interior

As of 2015, there were 397,430 pharmacy technicians working in the United States, with that number expected to rise well into 2020. And a large number of those positions might be impacted by recent events.

Amazon, the Internet, retail, and book giant, has recently started taking its business offline with its intent to purchase Whole Foods. Now, many people are wondering if the company plans to break into the pharmacy marketplace, too, a prospect that has already caused a stir among investors.

The expected price for the Whole Foods transaction is $13.7 billion, and it looks like the deal has been all but finalized.

While Whole Foods is known as a grocery store, pharmacy stocks took a massive hit after the announcement, with CVS seeing the largest swing.

CVA, which owns both pharmacies and a pharmacy benefit manager, took a roughly 5% hit after the announcement of the Amazon-Whole Foods deal.

The prescription drug industry has been anticipating Amazon entering their sphere of business for months, which explains why the Whole Foods sale sent jitters through the stock market. Even though rumors first spread in May that Amazon wanted to enter the pharmacy industry, Whole Foods doesn’t actually operate pharmacies. Instead, it offers vitamins and supplements, so the Internet retail titan might not have an immediate impact on the industry.

As a result, some experts think the stock market is overreacting, and not everyone is convinced that this is a threat to the traditional pharmaceutical retail market. Mizuho analyst, Ann Hynes, is one of these individuals.

“It is important to note, recent investor fears of AMZN entering the pharmacy market are driven by unsubstantiated and unconfirmed press reports that AMZN is deciding whether or not the company should enter the pharmacy market, not by AMZN itself,” Hynes said to Market Watch.

Another analyst, UBS’s Michael Cherny, agreed with this sentiment, questioning whether purchasing Whole Foods could bolster an Amazon pharmacy entry at all.

“Whole Foods sells vitamins and other wellness products, but it doesn’t have expertise in pharmacy.”

Cherny’s suggestion is that there is no possible link between the Whole Foods Deal and Amazon’s entry into the pharmacy market. Likewise, Hynes suggests that given the company’s track record of pilot programs for the grocery market, it was more of an attempt to strengthen its footings there.

“The company talked consistently about entering the grocery industry for more than a decade.”

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