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Amazon continues to grow; the company enters into the online pharmaceutical industry

Photo: Kyle Walsh | CNBC | Amazon

E-commerce, technology, product development, digital streaming, cloud computing, artificial intelligence, supply chain, grocery stores, and now pharmaceuticals. Jeff Bezos does it again. It was announced this week that Amazon was going to enter the $300 billion dollar market with the creation of "Amazon Pharmacy".

This move was highly anticipated and has been brewing since last year. In June of 2019,

Amazon announced that it was buying PillPack for over $750 million dollars. PillPack provides consumers everything they need for their pharmaceutical needs. The company delivers most medications to consumers that they would normally get at their local drugstores. They also provide automatic refills and 24/7 customer support.

With your Amazon Prime account, you will enter your health information, compare the costs of the prescriptions, and have them delivered right to your door. The company will accept nearly most forms of insurance, but you don't even need to have insurance if you don't have it. Customers can also use flexible spending accounts or health savings accounts to buy prescriptions on the service.

With the ongoing uncertainty of the pandemic and the want for contactless interactions and convenience, this move will threaten the overall dominance of the traditional companies in the industry, including CVS, Walgreens, and Walmart. This will also hurt local pharmacies and brick-and-motors.

Why this is important?

For Amazon stock owners, the news was well timed. As mentioned above, consumers would rather receive their needs via the mail to avoid any possible exposure to COVID-19. This could become more of a permanent shift, even with a vaccine insight, because Americans are wanting more convenience in their everyday lives. Doctors can send prescriptions directly to Amazon Pharmacy, or patients can request a transfer from an existing retailer, like CVS or Walgreens.

Amazon will aim to provide consumers the most affordable, convenient, and reliable method of obtaining their everyday prescription needs. According to their press release, Amazon Prime members will have access to an additional pharmacy perk called the “prescription savings benefit,” which offers a discount of up to 80% on generic medications and up to 40% on brand-name prescriptions.

Impact on the Stock Market

Per Google Finance

Amazon only had a slight increase throughout the week, and more of a spike when the news was announced. The expectation is that once Q4 passes, the numbers will dramatically go up. Their new competitors, specifically in the pharmaceutical industry, took significant hits.

Amazon Pharmacy is up and running, and this entity in their business model will definitely shake things up in the United States. No word yet if there will be physical stores, similar to Whole Foods, but you never know with Amazon. The rich keep getting richer.


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