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Amazon’s effort to sell prescription drugs gets boost with Whole Foods

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Morgan Stanley analysts wrote in a report on Friday that Whole Foods “creates an entry point to drug delivery” and provides the necessary real estate. Pharmacy stocks CVS and Walgreens each fell at least 4 percent on Friday.

Amazon is looking to hire a general manager for its pharmacy business and is mulling the right approach to cracking the complex and regulated market. It recently started selling prescription drugs on its Japanese site, a possible indicator of its broader ambitions.

There are challenges specific to selling pharmaceuticals in physical stores.

Amazon would have to deal with complicated third-party payer networks like health insurers, said Adam Fein, president of Pembroke Consulting. And there are already 65,000 pharmacy locations in the U.S., which are all competing to lower their prices.

“The generic drug market isn’t all that profitable,” he said.

That said, Fein wouldn’t be surprised if Amazon made the leap. The company has “a legacy of a lot of experimentation and testing,” he said.

Whole Foods chairwoman Gabrielle Sulzberger is also on the board of Israeli drug maker Teva Pharmaceuticals, which specializes in generics. It’s unclear whether Sulzberger will play a role in the company’s future.

Fein said that Amazon could eventually do well by targeting consumers willing to pay cash for generic drugs through discount coupons, either because they don’t have insurance or could access a cheaper price that way.



Source : CNBC

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