Should Drug Stores Worry about Amazon.com, Inc.’s Possible Entry into Pharmacy (NASDAQ:AMZN)

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Amazon.com, Inc. (NASDAQ:AMZN) is planning to enter into the multibillion-dollar pharmacy market. The e-commerce giant is reportedly considering different options and is hiring experienced people from the pharmacy space. According to a healthy investor, Amazon’s entry into the pharmacy could create problems for the pharma companies.

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Over the last few years, Amazon has “held at least one annual meeting” at its headquarters to “discuss whether it should enter the pharmacy business,” CNBC reported, citing two people familiar with the technology giant’s plans.

Amazon might be interested in selling prescription drugs online and it is a lucrative market.

Last month, a report from Japan Times revealed that the online retailer expanded its Prime Now delivery service to include drug and cosmetic sales. The company is now selling drugs to patients with approval from a pharmacist.

According to CNBC, more than 4 billion prescriptions are ordered every year in the U.S. In 2015, total spending on prescription drugs was $300 billion.

Stephen Buck, co-founder of GoodRx, believes that “Amazon would introduce a lot of transparency to what drugs really cost.” According to Buck, there are great opportunities for the online retailer in the prescriptions marker and it could be “a $25 billion to $50 billion market opportunity” for the company.

However, Buck also believes that there would be challenges for Amazon.com, Inc. (NASDAQ:AMZN) in a regulated market. “Prescription transfer laws and e-prescribing make it a little more difficult than putting something in a cart and checking out,” he was quoted as saying by CNBC.

Amazon Hiring Healthcare Experts

Citing an unnamed source, CNBC reported that Amazon is hiring professionals including a new general manager from the health industry.

The e-commerce giant recently posted a job for a “PHC [Primary Home Care] Licensing Program Manager” who will lead its “Professional Healthcare Program.”

According to the job description, the selected person will be responsible for preparing state license applications and maintaining “documents and databases for state board of pharmacy licensing requirements.”

Problems for Pharma Companies

Steve Kraus, a health investor and partner at Bessemer Venture Partners, believes that Amazon’s foray into the pharmacy space could create problems for the pharma companies as well as on-demand drug delivery startups.

Kraus told CNBC that pharmacies might face some competition, including the big players and the “mom and pop” stores.

“Look at what Amazon has done to malls,” Kraus said. “In the future, when people say they’re going to a Walgreens or CVS, they might instead choose to go to Amazon.com.”

Based on reports from multiple sources, we think that Amazon is serious about entering the pharmacy business. The online retailer could announce its plans sometime this year.

Meanwhile, shares of Amazon.com, Inc. (NASDAQ:AMZN) closed down 2.23% on Wednesday. The company’s stock, however, is up around 26% so far this year.

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