Amazon Investments

Amazon’s Move Into RX Seems Likely

Amazon has held preliminary talks with generic drug makers about the company’s potential entry into the pharmacy space.

According to news from CNBC, sources familiar with the matter said the conversations, including with generics giants Mylan and Sandoz, a unit of Novartis, have been high-level.

Healthcare investment bank Leerink confirmed in a note to investors on Thursday that Sandoz’ Peter Goldschmidt recently “met and discussed with Amazon its plans for getting into the U.S. healthcare market.” It was not clear, however, whether Amazon will enter as a drug wholesaler, meaning business-to-business, or sell generic medications as a retailer.

One of the sources said the conversations are about Amazon taking a role in drug purchasing, potentially disrupting a space now dominated by distributors McKesson, AmerisourceBergen and Cardinal Health. The same person went on to reveal that generics manufacturers are eager to establish a relationship with Amazon as part of their 2018 business plans.

But some in the industry have doubts Amazon will decide to compete in pharmacy. In fact, at the Forbes Healthcare Summit on Wednesday (Nov. 29), Walgreens Boots Alliance CEO Stefano Pessina suggested the regulatory hurdles may be too high.

“I believe that they will not come in an industry so complicated as our industry,” Pessina said. “I believe in the end, they will use their technology in a different way.”

In the meantime, Reuters reported that Express Scripts Holding views Amazon as a possible partner rather than a competitor.

“What (Amazon) will see is the magic isn’t in lower net prices to consumers,” Express Scripts CEO Tim Wentworth said. “It’s getting the right drug to consumers and helping them navigate the system.”

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