Pharmacy and health care investors should brace themselves — Amazon.com, Inc AMZN 0.33% is coming. In a pair of new research notes out this week, analysts at Leerink said it’s not a matter of if Amazon will make a move into the prescription drug business, it’s a matter of when and how.
On Thursday, analyst David Larsen said he expects Amazon to officially announce its move into the pharmacy business within two years’ time (see Larsen’s track record here). With roughly 75 million Prime subscribers and nearly unlimited resources, Larsen said Amazon will likely make a huge impact.
“We are incrementally more cautious on the PBM and retail space given the threat of a new entrant,” Larsen wrote.
On Friday, analyst Ana Gupte said Amazon’s technology and infrastructure are also huge advantages when it comes to gaining pharmacy market share (see Gupte’s track record here).
“AMZN is a meaningful competitive threat to existing players in the drug value chain with its best-in-class mail order fulfillment platform and easy-to-use one stop shopping Retail Pharmacy experience,” Gupte said.
For investors, Gupte said pharmacy retailers that are most threatened by Amazon include Walgreens Boots Alliance Inc WBA 2.09%, CVS Health Corp CVS 2.85% and Wal-Mart Stores Inc WMT 0.69%.
The potential impact on Express Scripts Holding Company ESRX 1.15% is much less clear. Gupte said Amazon could be a positive or a negative for Express depending on the approach it decides to take. If Amazon decides to take the Whole Foods route to enter the PBM market, Express is the most likely target for a buyout. If not, it could be…
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