Amazon (AMZN) Sends Shock Waves Through Drug Industry – Investopedia

Amazon (AMZN) Sends Shock Waves Through Drug Industry – Investopedia

Drug store stocks got slammed in Tuesday’s session after Amazon.com, Inc. (AMZN) announced the launch of an online pharmacy, dropping shares of new rivals between 9% and 20%. The move signals an overnight paradigm shift for the industry, potentially placing a numbers of franchises at risk. It will also affect supermarkets, super-stores, and other businesses that rely on pharmacies to increase foot traffic.

Key Takeaways

  • Drug store and drug distribution stocks sold off after Amazon launched an online pharmacy.
  • Additional downside is likely in coming sessions.
  • Amazon’s entry will put pressure on drug prices and industry profits.
  • Competitors are likely to respond with free delivery services.

On the flip side, it’s obviously good news for consumers, with Amazon’s huge footprint holding down drug prices. That recognition triggered a sympathetic exodus from drug distribution stocks, with Cardinal Health, Inc. (CAH), McKesson Corporation (MCK), and AmerisourceBergen Corporation (ABC) taking sizable hits. However, this impact is less certain because prices have been under a microscope since 2015, when industry scandals triggered public anger and Congressional investigations.

Amazon’s service allows customers to choose co-pays and has a non-insurance option, with heavy discounts for Prime members.
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