Walgreens Drops 11% to Drive Drugstore Inventory Lower After Amazon Launch in Pharmacy

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A CVS Pharmacy store is seen in the Manhattan neighborhood of New York City, New York.Shannon Stapleton | Reuters

Drugstore stocks fell sharply on Tuesday after Amazon launched its new pharmacy offering, which includes online ordering and delivery of prescription drugs.Walgreens Boots Alliance, an average member of Dow Jones Industrial, fell more than 11% in pre-market trading. CVS Health shares lost more than 8%. Rite Aid shares fell 12.8%, while those of GoodRx were also down.

Amazon Pharmacy is available in 45 states and accepts most forms of insurance. Amazon Prime members can also get discounts on generic and brand-name drugs when paying without insurance, the company said.

Amazon has been building its drugstore offering for several years, most notably acquiring PillPack in 2018. Shares of the tech giant were up 2.4% in pre-market commerce after the announcement.

Amazon’s pressure comes from the fact that drugstore stocks have already underperformed the market as a whole in 2020. CVS shares are down 1% year-to-date, while Rite Aid has lost 16%.

The liquidation of drugstore stocks follows a long pattern of new Amazon companies, causing market leaders to underperform. When the company announced its agreement to buy Whole Foods in 2017, the shares of grocery stores like Kroger and Costco were hit hard.

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