Pharmacy Stocks Slammed On Signs They May Be Next To Get "Amazon'd"

Pharma stocks tumbled to their lows of the session Thursday afternoon after a double whammy of Trump declaring all out war on the opioid epidemic, but more importantly, the St. Louis Dispatch reporting that Amazon has been quietly acquiring pharmacy licenses in 12 states, suggesting Jeff Bezos is gearing up for a battle with the handful of massive pharmacy owners and benefit managers that dominate the US market.

While Reuters initially cited Trump's remark that the federal government might bring "major lawsuits" against "bad actors" like the pharmaceutical companies who market and sell opioids (a group of state attorneys general are already pursuing litigation that legal experts suspect could lead to a Big Tobacco-style settlement) as the catalyst for the selloff, the Amazon report emerged as the true trigger of for the "Bezos disruption"-driven plunge in shares of Walgreens Boots Alliance, CVS and several of their peers.

Meanwhile, Amazon shares ticked higher, ahead of the e-commerce behemoth's third quarter earnings report, expected after the bell.

Back to the original report, the St. Louis Post-Dispatch revealed taht Amazon has received approval for wholesale pharmacy licenses in at least 12 states, including Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon and Tennessee. An application is currently pending in the state of Maine. A spokesperson for Amazon refused to comment. The Post-Dispatch said it was alerted to the licenses by a drug supply chain researcher, Nicodemo Fiorentino, a New Jersey attorney who works for a health care consulting firm that provides regulatory and compliance advice to the pharmaceutical industry.

Ana Gupte, an analyst for Boston-based Leerink Partners, told the Dispatch that the news "strengthens our conviction on the likely entry into the drug supply chain. It is still not clear if (Amazon) will pursue a buy or partner with an existing PBM or build such capabilities from within."

The wholesale licenses received by Amazon would still preclude it from supplying drugs directly to consumers; to do that, it will need a retail license, although that may likely be next on the docket. In many cases, the licenses are tied to three Amazon facilities in Indiana that are located in the suburbs of Indianapolis. The addresses on the wholesale applications match the addresses of existing Indiana-based Amazon fulfillment centers.

And as Trump launches war on shady drug producers and distributors, Jeff Bezos is poised and ready to pounce, growing his immence consumer-facing online monopoly by gradually taking over yet another industry...

Comments

YUNOSELL Common_Law Thu, 10/26/2017 - 15:18 Permalink

If the consultant to the drug industry that informed the St-Louis Post-Dispatch was smart he would have sold the info first to the pharmacy companies so they could sell their stocks first while high, then they could buy back at a discount once the news was released and share prices went down. Ah, the American way!!!

In reply to by Common_Law

Grandad Grumps Thu, 10/26/2017 - 15:26 Permalink

The key is not the pharmacy licenses, but the agreements with the drug companies. There are only 3 companies that dominate the prescription drug trade and they are the only ones who one real cost... and they make a boatload by controlling information. I would invite Amazon to break this three company collusive monopoly.

NumNutt Thu, 10/26/2017 - 15:30 Permalink

I new this was comming as PfiZer and Amazon are building a large distribution center in the panhandle of West Virgina, just south of Martinsburg, exit 8 off interstate 81. Huge ass site.....

buzzsaw99 Thu, 10/26/2017 - 15:45 Permalink

this is no surprise.  the last time i went to a brick and mortar pharmacy it was shocking how little inventory they had in bandages.  very, very, limited selection too.  brick and mortar pharmacies can't possibly survive on midnight condom and advil sales.  once the baby boomers start putting in their monthly med orders with amazon it's over for b&m bitchez.

freedom1798 buzzsaw99 Thu, 10/26/2017 - 17:21 Permalink

You can already order a three month supply, but it comes by mail.  I feel uncomfortable doing it.  But Amazon would be more efficient.  I hate going to drug stores to pick up medications.  Fortunately mine has a drive-thru, but I  still have to wait even though I can see nobody is waiting in line in the store.  Fuck Walgreens and CVS.  All their shit is way over-priced.  They are on the way to dinosaur heaven.

In reply to by buzzsaw99

I Write Code Thu, 10/26/2017 - 15:51 Permalink

"Alexa, I have a headache, get me some oxycodone"... and ten minutes later a little tiny drone flies right into your house with its Amazon digital key, a laser scans your face, and the drone accurately drops one pill into your empty wiskey glass.

H H Henry P P … Thu, 10/26/2017 - 15:52 Permalink

holy hell Amazon is going to crater.  taking on way too many initiatives in such short time frame.  It will be even more humorous if we find out they've made accounting errors in their financial reports a la Enron.  If anything  the Government just gonna apply anti monopoly restrictions.

Full Court Lug… Thu, 10/26/2017 - 16:17 Permalink

Amazon is now a full-fledged destructive late-stage monopoly, drunkenly staggering from one industry to the next leaving wreckage in its wake. They lose money on retail, lose money on streaming, will probably lose money on groceries, and now they plan to lose money on pharma. The only place they make money is AWS, and that won't last forever. The market has given them a free pass for many years now but it's clear Bezos has no silver bullet beyond "sell each unit at a loss and make it up on volume". If you want to see something truly revolting, compare the latest LTM net income of Amazon and Wal-Mart, then look at their relative stock prices.

JoseyWalesTheOutlaw Thu, 10/26/2017 - 17:11 Permalink

The Donald doing work on Big Pharma......now if they want to move all those factories they have around the world back to the US then perhaps he can get them a better deal.  Jimmy and Joe are paying higher prices for drugs in the US while the same drug cost less any countries outside the US. F those countries. 

Pernicious Gol… Fri, 10/27/2017 - 00:01 Permalink

Amazon wants to be the only intermediary between the manufacturer and the person popping the pill. They want to become a monopsony and a monopoly. Once they get a few customers hooked on just a few very low priced drugs, the public clamor for the government to step in and help Amazon will become overwhelming. Not a few people have thought the FDA is already quite responsive to those making large campaign bribes to certain members of Congress.