E-commerce giant Amazon has started to sell a line of private label over-the-counter (OTC) drugs made by Irish pharmaceutical company Perrigo. The products, sold under the name Basic Care, have been sold by Amazon since August of 2017, according to a report by CNBC.
“We’re really excited to expand our selection of products for customers through the Basic Care line, which launched in August of 2017,” an Amazon spokesperson told Retail Dive. “The brand offers over-the-counter medicine for allergies, colds, digestion and more.”
The move has many in the pharmaceutical industry speculating about Amazon’s potential future as a provider of prescription drugs. In the last year, Amazon has also secured wholesale pharmacy licenses from around 12 US states, although it seems this was in preparation for them to start supplying medical equipment to hospitals.
A joint announcement from Amazon, JPMorgan and Berkshire Hathaway on solving healthcare challenges like lowering prescription drug costs, added more fuel to the fire. But while analysts are unsure whether Amazon could overcome some of the regulatory challenges inherent to selling prescription drugs, they agree that the online retailer has the potential to be a disruptive force in the pharmaceutical industry.
“It’s a very different world, and having Amazon jump in is not a good sign for existing brands, either branded or private label, because the way Amazon works is its ability to take on unprofitable ventures for a time to see how things go,” Matthew Oster, head of consumer health research at global market research firm Euromonitor International, told CNBC. “And the fact they have a near monopoly in e-commerce gives them a lot of scale that can allow them to undercut price. So that aspect should be concerning for whoever their competitors are in that space.”
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The Basic Care line of OTC products includes medications for pain relief, antacids, allergies and quit smoking aids, among others. In addition to the Amazon-exclusive Perrigo-made Basic Care line, the company also sells other private labels, including Kirkland and GoodSense, along with recognizable name brands like Tylenol and Advil.
“Amazon wants to be part of everyone’s daily expenditures,” Matt Sargent, senior vice president of retail for consulting firm Magid told Retail Dive. “Grocery is the current focus of their attention, but healthcare spending is another very large pocket of spending that Amazon has its eye on.”
While Amazon is able to offer lower prices on OTC drugs, there’s no guarantee that consumers will choose e-commerce over a brick and mortar pharmacy chain, particularly when they need a product fast.
“When you want to cure a migraine headache or do something and you go to your pantry and it’s not there, you run to the store and get it,” said former Perrigo CEO John Hendrickson who recently retired. “It’s sort of a ‘used as needed.’”
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