Amazon's Pharmacy Rollout Sinks Drugstore Stocks CVS, Walgreens

Amazon.com officially opens the virtual doors of Amazon Pharmacy, a digital pharmacy that lets Amazon Prime members order and fill prescriptions online.
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Amazon.com  (AMZN) - Get Report officially opened the virtual doors of Amazon Pharmacy, a new full-service digital pharmacy that lets Amazon Prime members order and fill their prescriptions online and have them delivered directly to their front doors.

The offering puts Amazon in direct competition with pharmacy giants CVS Health  (CVS) - Get Report and Walgreens Boots Alliance  (WBA) - Get Report, and helps it compete with Walmart  (WMT) - Get Report, Target  (TGT) - Get Report and other big-box stores that already sell prescription drugs.

Walgreens Boots, CVS Health and Rite Aid  (RAD) - Get Report all traded lower in premarket trading on Tuesday after Amazon’s announcement. Shares of Walgreens Boots were down 8.7% at $40.26, while shares of CVS were down 7.95% at $67.63. Rite Aid stock was down 12.79% at $11.28.

The new offering comes more than two years after Seattle-based Amazon's $753 million acquisition of PillPack, an online pharmacy known for organizing pills into packets that also delivers drugs directly to consumers’ homes. 

Previously, U.S. Amazon customers were redirected to PillPack for orders.

Shoppers can pay using their health insurance. Prime members who don’t use their insurance are eligible for discounts on generic and brand-name drugs on Amazon’s site or at about 50,000 participating pharmacies, Amazon said.

Amazon’s push comes as consumers continue to shun physical stores and order items online, a trend the coronavirus pandemic continues to reinforce. However, while the pandemic has made Amazon’s move timely, it is not a new endeavor for the e-commerce giant.

Amazon officially moved into the U.S. drug space in 2018 when it acquired PillPack, and has been dabbling in introducing prescription medications to its marketplace in Japan with the support of local partners.

Amazon this past January filed to trademark “Amazon Pharmacy” in Canada, according to the Canadian Intellectual Property Office website, signaling a potential move into selling prescription drugs outside the U.S. Similar trademark filings have also been made in the U.K. and Australia.

Shares of Amazon.com were up 1.3% at $3,171.85 in trading on Tuesday.