Amazon launches “extremely disruptive” pharmacy service sending rivals’ shares plummeting

Amazon has launched a new online pharmacy service offering up to 80 per cent discounts for Prime subscribers in a major threat to traditional pharmacies.

As the US continues to endure a major healthcare crisis Amazon has launched Amazon Pharmacy, offering Prime subscribers without health insurance huge discounts on both generic and branded drugs.

Amazon’s launch into the $4 trillion US pharmaceuticals space has already had a dramatic affect on the market, seeing shares in the country’s leading retailers fall significantly.

Walgreens Boots Alliance, Rite Aid and CVS Health, the US’ largest pharmacy operator, all saw shares drop by at least nine per cent following the announcement.

“It’s extremely disruptive,” Jefferies analyst Brent Thill said, adding that Amazon has correctly identified another “ginormous market” ripe for disruption where the “processes are absolutely awful for consumers”.

Amazon Pharmacy will launch this week across 45 US states, offering free two-day home delivery or collection from over 50,000 physical partner pharmacies.

More importantly, Amazon will offer generic drugs to Prime members paying without insurance at discounts of 80 per cent, alongside discounts of 40 per cent on branded drugs.

Customers can also add their insurance information, manage prescriptions and speak to pharmacists over the phone for advice 24/7.

The online retail giant has had its sights set on the market for some time, having purchased mail-order pharmacy PillPack for $750 million in 2018, followed by the launch of its own branded drugs last year.

While Amazon Pharmacy is only available in the US for now, its likely the service will be rolled out internationally soon as Amazon tries to cash in on the online pharmacy market, set to be worth $131 billion worldwide by 2025.

“As more and more people look to complete everyday errands from home, pharmacy is an important and needed addition to the Amazon online store,” Amazon’s senior vice president of North American Consumer Doug Herrington said.

“PillPack has provided exceptional pharmacy service for individuals with chronic health conditions for over six years. Now, we’re expanding our pharmacy offering to Amazon.com, which will help more customers save time, save money, simplify their lives, and feel healthier.”

READ MORE: Amazon files for ‘Amazon Pharmacy’ trademark in the UK

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