Is an Amazon Pharmacy on the Horizon? Not Likely, According to Analysts

Despite securing wholesale pharmacy licenses from multiple states across the US, e-commerce giant Amazon is unlikely to be selling prescription drugs anytime soon. Instead, analysts are predicting that Amazon will explore the smaller medical device and supply market first.

According to analysts from the investment firm Jefferies, Amazon was clear about their intentions in securing the licences in a letter sent to regulators in Tennessee and Indiana. At least for now, Amazon’s Indiana fulfillment center could be used to distribute medical equipment to hospitals and other healthcare centers.

“Applicant (Amazon) will not store or ship drugs,” wrote the company in the application.

The findings are welcome news to pharmaceutical industry executives who have been speculating about the impact of Amazon’s entry into the pharmaceutical distribution game since rumors first began. But some industry insiders say the hype was largely unnecessary.

“There has been a massive overreaction to the Amazon threat,” Adam Fein, president of Pembroke Consulting and a drug supply chain expert, told CNBC. “I would never underestimate Amazon. But I remain somewhat skeptical of Amazon’s ability and desire to fundamentally alter the drug channel (as) the incumbents will have many opportunities to defend their position, capture value from internet technologies, and streamline distribution.”

So while Amazon is likely capable of navigating the complex world of prescription drug distribution, it’s more a question of whether they want to enter that space at all. According to CNBC, Amazon is poised to make their decision on the matter in time for Thanksgiving.

“That said, we don’t think that [Amazon] would be unable to navigate the complex, mostly state-based regulatory environment that governs the distribution of prescription drugs if they chose to enter the space, but we believe there are other areas of healthcare that could and are being more easily disrupted than the Rx space,” said the Jeffries analysts in an investor note.

Regardless of whether Amazon decides to get into the retail pharmacy space, the Seattle, Washington-based company has laid the foundation to distribute medical products. Its applications for wholesale pharmacy licenses have been approved in at least 12 states, including Nevada, Arizona, North Dakota, Louisiana, Alabama, New Jersey, Michigan, Connecticut, Idaho, New Hampshire, Oregon and Tennessee.