Oct. 14 (UPI) — A report that online retail giant Amazon is eyeing an entry into the prescription drug sales market sent shares tumbling for brick-and-mortar drug store chains Walgreens and CVS.
Amazon has been rumored to be considering a move into the drug store business for months, though a report released by the healthcare analysts Leerink earlier this month said it’s highly likely Amazon will open a prescription drug delivery business sometime in the next two years.
Representatives from Amazon declined to comment on the Leerink report. CNBC previously reported the company is expected to make a decision on whether to pursue a prescription drug sales strategy before Thanksgiving.
Though Amazon has a lucrative history of disrupting other sectors of the U.S. economy including electronics, housewares, media and groceries, a move into the lucrative $560 billion per year prescription drug industry would be more difficult, experts said. Drug sales are highly regulated by the Food and Drug Administration, making it likely Amazon would have to partner with an existing provider rather than start its own business from scratch.
Still, Leerink analysts said Amazon could provide a “meaningful competitive threat to existing players” in prescription drug sales.
It would not be the first time Amazon dipped its toes into the healthcare marketplace. In 1999, when Amazon was a relative infant in the retail sector, the company purchased the online drug sales site drugstore.com. After failing to garner a significant share of the market, Amazon eventually sold drugstore.com to Walgreens in 2011. Walgreens finally shut down the site last year, saying it preferred to focus on its core business model.
Stocks for Walgreens and CVS each fell by 3 percent in trading on Friday after the Leerink report was released.