What Amazon's Entry into the Pharmacy Business means for Community Pharmacies

If the past is any indicator of Amazon’s impact when entering a new industry, independent pharmacies need to brace themselves for the huge disruption that Amazon Pharmacy will introduce to the healthcare space.

Amazon is poised to completely change the way consumers access their pharmacy care and the entire industry's supply chain in the near future

Amazon has recently revealed their plans to launch Amazon Pharmacy, a service that would allow customers to buy prescription drugs on Amazon with Prime members receiving unlimited, free two-day deliveries. The announcement alone sent shares of drugstore chains CVS Health, Walgreens Boots Alliance, and Rite Aid into a downward trend, indicating the kind of damage that Amazon’s official entry into the space will have on traditional brick-and-mortar pharmacy channels.

According to Medvantx:

  • With PillPack, Amazon has acquired pharmacy licenses in 49 states
  • 85% of Amazon Prime’s 100M members say they’d buy drugs from Amazon
  • Inefficiencies & rebates currently consume $94/brand drug
  • HHS Secretary Azar has threatened to eliminate rebates entirely
  • Amazon’s access to consumer data will redefine marketing & retail
  • The Prime algorithm could replace PBMs & retailers altogether

Image Source: Amazon

Amazon is likely to be disruptive….Amazon’s focus on price transparency, convenience, and a fully digital transaction with speedy delivery underscores how they are likely to differentiate the Amazon Pharmacy experience. 

– John Blackledge, Cowen Analyst

Here's Why Pharmacies Should Be Worried:

*Numbers reported by from a Cowen & Co.’s survey of 2,500 consumers


of consumers who regularly take prescription medication said they pick up prescriptions at their local pharmacies


of consumers reported that they receive their prescriptions by mail


of Amazon Prime members said they would consider having their prescriptions delivered by Amazon if the service was to became available


of consumers take prescription medication regularly for an ongoing condition

70 MIL

U.S. households currently have an Amazon Prime membership

BEWARE: The Amazon Effect

The “Amazon Effect” refers to the company’s impact on traditional brick-and-mortar channels in the past, such as their impact on the grocery market when it purchased Whole Foods Market Inc. back in 2017. Amazon’s convenience and speedy delivery times have led consumers to expect a nearly seamless shopping experience with immediate results. The pharmacy industry has already seen a decline in traditional retail stores and independent pharmacies and being replaced by the larger chain drug stores.

These big chain drug stores and major pharmacy retailers like CVS and Walgreens will likely not see an immediate impact from Amazon’s new pharmacy service, as these companies both maintain a strong market share in the U.S. and are expected to see significant in-store foot traffic due to distribution of the COVID-19 vaccine. However, this new competition from Amazon poses much greater, longer-term risks for legacy and independent pharmacies.

It’s important to note that Amazon Pharmacy will also be launching at a very opportune moment when the company is already benefiting from a drastic surge in online shopping activity amidst the pandemic.

Learn how myphysician360 can help your pharmacy overcome the Amazon Effect. Send us an email with the form below!

The risk of Amazon entering the pharmacy supply chain has weighed on drug retailers’ multiples since Amazon bought Whole Foods in 2017 and Pillpack in 2018. 

– Brian Nowak, Morgan Stanley Analyst

Study Reveals Patients Still Value Personal Interactions with their Local Pharmacist

According to Drug Topics, “Most Americans prefer their local pharmacists over prescription drug mail order services, according to results of a new national survey released by the National Community Pharmacists Association (NCPA).”

The results of this study, illustrated to the right, are contradictory to many assumptions made about which direction the pharmacy industry is headed. However, they provide a substantial glimmer of hope for traditional, brick-and-mortar pharmacies across the country by indicating that most patients still value personal interactions with their pharmacist over the ability to get medications shipped directly to their door. A key factor that plays into patients’ preference is trust in their local pharmacist to provide more than simply filling prescriptions. According to the survey, approximately half of respondents said they’ve consulted their pharmacist for other minor ailments, such as bee stings, cold sores, or diaper rash.

“For many Americans, the local pharmacist is the only accessible health care provider,” explained NCPA CEO B. Douglas Hoey, RPh, MBA. “And it’s now very common for pharmacists to provide a full range of health care services beyond filling prescriptions.” 


85% of adults who responded prefer getting their prescriptions from a local pharmacist instead of a mail order service


36% of respondents said that their pharmacist knows them better than a mail-order company


32% said their pharmacists answers their questions and provides counseling


15% reported concerns that their prescriptions may get lost in the mail, exposed to the elements, or stolen

So How Can Independent Pharmacies Prime Themselves for Amazon Pharmacy?

Despite this inevitable competition from Amazon, independent pharmacies and other legacy brick-and-mortar retailers still have the potential to maintain their customers and market share due to the number of services that must be done in person, including flu shots and vaccines. Also, because pharmacies were deemed essential during the pandemic, locations have been able to remain open and continue interacting with customers. While the in-person factor can sometimes be viewed as a disadvantage as consumers look more and more toward e-commerce, this is also what allows independent pharmacies to develop relationships with customers and, ultimately, what will keep their business going.

“Folks really go to the counters,” Soo Romanoff, an equity analyst at Morningstar, explained in an interview with S&P Global Market Intelligence. “Most of the prescriptions you have, unless they are mail-ordered, you want them immediately and even that one day of waiting for those pills is not really helpful.” 

It’s important for independent pharmacies to keep in mind that adapting current services or adding new ones will also play a huge role in the fight to stay afloat once Amazon Pharmacy officially enters the market. Services like prescription delivery and products like telemedicine at-home test kits provide the convenience that consumers are looking for while not adding much, if any, overhead on the pharmacy side.

Learn how myphysician360 can help your independent pharmacy stand out from the competition

Click the button below to learn how our telemedicine consults and at-home kits can help your pharmacy compete with large chain minute clinics and other players. If you have any questions, don’t hesitate to contact us here or directly send us an email at info@physician360.co!