Amazon, which has become a retail behemoth since its start as an online bookseller in 1994, is known for its willingness to forego profit, while slashing prices to win customers.
Walgreens' shares fell as much as 11 percent, overshadowing the company's better-than-expected quarterly results and a $10 billion buyback, amid a broad selloff among drug retailers and wholesalers after Amazon said it would buy online pharmacy PillPack. Recently, Walmart was reportedly eyeing PillPack and willing to pay close to $1 billion.
Shareholders suffered jitters after Amazon closed a deal with PillPack, which sells prescriptions in every USA state except Hawaii.
Amazon was vague in terms of what it plans to do with PillPack, other than supporting the startup's team as they "continue making it easy for people to save time, simplify their lives, and feel healthier", according to Amazon's worldwide consumer CEO Jeff Wilke.
Importantly for Amazon, PillPack already has mail-order pharmacy licenses in all 50 US states, which could enable Amazon to expand quickly into the broader mail-order pharmacy business.
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In premarket trading, shares of drugstore chains Walgreens, CVS and Rite Aid slid. "We're excited to see what we can do together on behalf of customers over time". Shares of Cardinal Health, AmerisourceBergen, McKesson, and Express Scripts all dropped more than 3% on the news. It also handles deliveries, refills, and adjustments to medications.
"When Amazon sneezes, everybody else catches a cold", said Joseph Feldman, an analyst with Telsey Advisory.
'At this juncture we are not anxious about Amazon's entrance into the prescription market, ' Cantor Fitzgerald analyst Steven Halper said in a note.
"PillPack is a wonderfully convenient service for getting prescription and non-prescription medications shipped to your door and doled out in packets with labeling that tells you when to take them", we wrote at the time.