Shares in the US Rite Aid pharmacy group rose by more than 5% this week after one analyst wrote that Amazon should buy it to start selling drugs
And two-thirds of Amazon Prime members would use the retail giant to buy drugs, he says.
Cowen analyst John Blackledge has written that a Rite Aid acquisition would “accelerate market share gains,” CNBC reports, if it launched pharmacies in Whole Foods and on its Prime and Prime Now services. Amazon acquired the Whole Foods chain earlier this year.
The Wall Street analyst says that any acquisition of Rite Aid would allow Amazon to obtain 19 state pharmacy licenses as well as an infrastructure that passes regulation.
CNBC reports that Mr Blackledge penned a longer report looking at why Amazon should enter the pharmacy business and sell prescription medicines.
“Our Cowen proprietary survey data suggests 67% of Amazon Prime members would purchase prescription drugs through Amazon if they were available,” he wrote.
“Depending on the pace Amazon would seek to enter the market, an acquisition such as Rite Aid could accelerate the pace and be a relatively low-risk acquisition given that it currently trades at an enterprise value of only about $5 billion.”
Amazon could generate about US$20 billion in 2019 with such a pharmacy business, Mr Blackledge says, and grab up to 10% market share of the US pharmacy business.
Meanwhile, Amazon’s launch in Australia is purported to take place as of tomorrow (23 November), according to Lifehacker.
Reporter Jackson Ryan wrote that he has sighted an email sent to select Amazon sellers advising of a “testing phase” involving a small number of customers from 2pm tomorrow, allowing Amazon to be live in Australia for the Black Friday retail event.