Morgan Stanley published a new report this week that outlines Amazon’s likely push to selling prescription drugs by 2019, a move that would be a major threat to the biggest brick-and-mortar drugstore chains in the U.S.
The report speculates that Amazon may open “virtual retail pharmacies,” while leveraging its Prime Now network for millions of customers to buy their prescriptions online.
“Amazon could use a lighter brick and mortar footprint to drive pricing down,” the report says.
Becoming a pharmacy wouldn’t be a huge challenge for Amazon because “employers are already inquiring about Amazon’s potential role,” which means that pharmacy benefits managers would likely welcome Amazon’s entry into the field.
The company could also build relationships with manufacturers of inexpensive generic drugs, as well as makers of branded drugs.
If Amazon is successful in doing so, Morgan Stanley expects that rebates and other discounts currently exclusive to companies including pharmacy benefits managers could pass directly back to consumers.
While this all may take a while, the report analysts say its durable with Amazon’s resources and scale.
Amazon is expected to make a final decision on entering the pharmacy industry within the next four to six weeks. It remains an open question for the company as the pharmacy market is huge and incredibly complex.
CVS, Rite Aid, and Walgreens are at themes risk if Amazon does decide to enter the field. However, Morgan Stanley suggested that some companies in the drug supply chain would be more insulated, including Diplomat, as Amazon may not be able to touch the specialty drug market.