- Amazon introduced Tuesday a new pharmacy initiative called Amazon Pharmacy.
- Shares of legacy retail pharmacies were lower by around 8% on the news.
- However, the news shouldn't have caught close observers off guard.
Shares of Walgreens Boots Alliance Inc (NASDAQ: WBA) lost more than 8% Tuesday morning after Amazon.com Inc. (NASDAQ: AMZN) announced two new offerings that would directly rival the legacy retail pharmacy company.
Amazon introduced in a Tuesday morning press release Amazon Pharmacy, a new store that lets customers complete their entire pharmacy transaction. The store is accessible through the core Amazon App or via Amazon’s website.
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Customers will be able to manage their existing prescriptions, choose payment options, and manage their insurance information. The offering gives Prime customers unlimited two-day delivery options for no extra charge.
The second offering is exclusive to Prime members and consists of savings on medications at Amazon Pharmacy when paying for a product without insurance. The company said it strives to offer consumers up to 80% off generic medications and 40% off brand name medications when paying without insurance.
Amazon customers will also be able to interact with pharmacists 24/7 to answer questions about their medications through the phone.
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Not a surprising move
Investors, analysts, and experts had been predicting for a few years that Amazon will make a major push into the pharmacy space. There were plenty of signs throughout the years, especially Amazon’s 2018 acquisition of an online pharmacy PillPack for $753 million.
Most recently, the e-commerce trademarked the name Amazon Pharmacy in early 2020. As such, Tuesday’s announcement confirmed the years of speculation and investors appear to be trading off the news and concluding it represents a major headwind for Walgreens and other names.
Amazon: ‘make members’ lives easier’
Amazon said in its press release the goal of its new service is to “make members’ lives easier” by offering a more convenient alternative to physical pharmacies. The combination of “incredible savings, seamless shopping experience, and fast, free delivery” directly addresses issues related to affordable medication.
“As more and more people look to complete everyday errands from home, pharmacy is an important and needed addition to the Amazon online store,” commented Doug Herrington, Senior Vice President of North American Consumer at Amazon.
Shares of CVS Health Corp (NYSE: CVS), a rival to Walgreens, was lower by 7% Tuesday morning.
But shares of Goodrx Holdings Inc (NASDAQ: GDRX) were down nearly 20% Tuesday morning and hit a new 52-week low. While not a pharmacy that would directly rival Amazon’s new service, the company helps users find prescription drugs at a discount and its stock was the most impacted by the news.