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...