Amazon likely to gain 'major ground' on CVS, Walgreens and other chains, analysts say

Amazon delivery box
Amazon's launch of an online pharmacy put retail chains like CVS and Walgreens on notice to improve their customer experience, some analysts said. (Ascannio/Shutterstock.com)(Ascannio / Shutterstock.com)

It may not take long for Amazon to catch up to retail pharmacy chains like CVS and Walgreens with the rollout of its own online pharmacy network, some experts say.

Amazon on Tuesday finally launched Amazon Pharmacy, the long-anticipated online storefront that will enable customers to purchase prescription drugs online and have them shipped to their homes.

One expert said Amazon's convenience will help the retailer gain “major ground” on retail pharmacy chains like CVS, Rite Aid and Walgreens.

“Americans are turning to cheaper and more innovative healthcare alternatives to receive the services they need,” said Arpit Jain, vice president of delivery, health and medtech at consulting firm Nerdery, in a email to Fierce Healthcare.

Jain said Amazon’s move means that competitors need to focus on “experience and simplicity (alongside building the technology muscle, of course) for their customers in every interaction and transaction.”

But it could take longer for Amazon to become a major player in the pharmacy space, according to Moody’s lead Amazon analyst Charlie O’Shea.

He pointed to Amazon’s foray into food deliveries, where the online retailer took on “deeply-embedded competitors with voluminous store networks that are currently being heavily leveraged to support drive-thru pick-up and home delivery.”

However, Amazon has time on its hands as it can absorb any major costs with growing its pharmacy segment, O’Shea added.

Amazon also will have some new competition in the online pharmacy as UnitedHealthcare and Walmart have made forays into the space. 

Wall Street does have some misgivings about the impact on incumbent national retail pharmacy brands.

The stocks for Walgreens went down by 9% at the close of trading Tuesday, and CVS fell by 8%. Rite Aid stocks fell the hardest as the chain suffered a 16% decline.

The rollout wasn’t exactly a major surprise. It comes a little more than two years after Amazon bought online pharmacy PillPack.

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Amazon Pharmacy is intended to enable consumers to get prescriptions filled via their desktop or mobile app.

Amazon Prime members can also get free two-day delivery of any prescriptions. The company is giving Prime members access to drug savings when they pay without their insurance.

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

By linking pharmacy benefits through Prime, Amazon can potentially attract new members and broaden its overall reach, Moody’s O’Shea said.