Walgreens drops 11% to lead drug store stocks lower after Amazon launches pharmacy business

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A CVS Pharmacy store is seen in the Manhattan borough of New York City, New York.

Shannon Stapleton | Reuters

Pharmacy stocks fell sharply on Tuesday after Amazon launched its new Pharmacy offering, which includes online ordering and delivery for prescription drugs.

Dow Jones Industrial average member Walgreens Boots Alliance dropped more than 11% in premarket trading. CVS Health shares lost over 8%. Shares of Rite Aid fell 12.8%, while GoodRx stock also declined.

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

Amazon has been building its pharmacy offerings for several years, including acquiring PillPack in 2018. Shares of the tech giant rose 2.4% in premarket trading following the announcement.

The pressure from Amazon comes as pharmacy stocks have already underperformed the broader market in 2020. Shares of CVS are down 1% year to date, while Rite Aid has lost 16%.

The sell-off for pharmacy stocks follows a long pattern of Amazon’s new ventures leading to underperformance among market leaders. When the company announced its deal to buy Whole Foods in 2017, grocery store stocks like Kroger and Costco were hit hard.

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