It’s never comfortable for a business when a massive, very well-capitalized rival comes for it. That was the dynamic driving down Walgreens Boots Alliance‘s (WBA -2.10%) share price on Tuesday. The pharmacy chain operator saw its stock wither by over 2%, a worse performance than the flatlining S&P 500 index on the day.
That monster freight train of competition thundering down the tracks is none other than Amazon (AMZN -1.23%). On Tuesday, the company best known for its retail operations rolled out RxPass, a new healthcare benefit from its Amazon Pharmacy unit, in the U.S.
In the press release trumpeting the service, Amazon said that RxPass holders would have access to affordable, commonly prescribed generic versions of top medications. All told, this selection covers over 80 common maladies, according to the company. RxPass costs $5 per month, and delivery is always free. Amazon added there are no hidden fees or markups in its pricing.
In the press release, Amazon quoted its vice president of Amazon Pharmacy, John Love, as saying that “Any customer who pays more than $10 a month for their eligible medications will see their prescription costs drop by 50% or more, plus they save time by skipping a trip to the pharmacy.”
Walgreens hasn’t yet made any official comment on RxPass, but it’s probably a wise move not to draw attention to the new service.
It certainly represents an intensifying competitive threat to the company’s business, which has always been centered on pharmacy operations. Then again, America’s population is graying and, as a result, will need more healthcare, so perhaps a rising tide will ultimately raise all boats.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.
Read the full article here