Amazon Enters Online Pharmacy Market... "Opening a $300 Billion New Market"

Amazon Announces 'Amazon Pharmacy' Service

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Amazon, the world's largest e-commerce company, is entering the online pharmaceutical distribution industry. This move aims to capture the increased demand for medicine delivery amid ongoing lockdown measures due to the COVID-19 pandemic. Amazon's entry is expected to pose a threat to existing offline pharmacy chains.

According to the Wall Street Journal (WSJ) on the 17th (local time), Amazon announced the launch of its "Amazon Pharmacy" service. Amazon Pharmacy will be available to Prime membership customers aged 18 and over in 45 of the 50 U.S. states, excluding Illinois, Kentucky, Louisiana, Minnesota, and Hawaii. Prime members will not be charged additional shipping fees.

However, the service will only sell general prescription drugs and will not handle narcotic painkillers or psychotropic drugs.

Doctors can send prescriptions directly, and patients can also transfer prescriptions from existing pharmacy chains such as CVS or Walgreens.

Amazon stated, "Our goal is to make prescription drugs as easy to purchase as any other product."

Amazon Pharmacy plans aggressive marketing, including offering generic drugs at up to 80% discounts for Prime members without personal insurance. The company also announced that well-known brand-name drugs will be sold at up to 40% off market prices. The service will later expand to the five excluded states, including Hawaii.

Amazon has been exploring entry into the online pharmacy market for several years. In 2018, Amazon acquired PillPack, an online pharmaceutical sales and delivery startup, for $1 billion (approximately 1.1 trillion KRW), thereby obtaining qualifications for online pharmaceutical distribution. PillPack delivers medications prepared according to pre-written prescriptions to patients who need to take drugs regularly due to chronic illnesses.

Foreign media have praised Amazon's "Amazon Pharmacy" announcement as a timely and appropriate service. CNBC commented, "At a time when more people want to receive their medications by mail due to COVID-19, Amazon has launched a perfectly fitting service."

This new business venture is expected to further increase Amazon's profitability. Investment bank Morgan Stanley analyzed, "Given that pharmaceuticals are smaller in volume compared to other goods and tend to be purchased repeatedly, this business will enhance Amazon's logistics profitability," adding, "Amazon's entry into the pharmaceutical industry has opened a new market worth over $300 billion."

However, this development is expected to be unfavorable for existing pharmacy chains such as Walgreens and CVS. On the day of the announcement, CVS's stock price fell by 8.6%, and Walgreens Boots Alliance, the holding company of Walgreens, saw its stock price drop by 9.6%.

This content was produced with the assistance of AI translation services.