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The online retailer is finally making moves to expand PillPack, which it acquired this past summer, according to analysts at Jefferies, an investment banking firm.

Amazon is beginning to seek licenses for PillPack to operate in more states beyond those that PillPack had at the time of the acquisition, says Jefferies analysts, who have been tracking Amazon\u2019s efforts to gain additional licenses, which states issue to enable pharmacy organizations to sell drugs within their borders.

\u201cOur proprietary check of (Amazon\u2019s) moves in the pharmacy space indicates that the online retailer has finally made moves to expand PillPack, though the initial expansion phase appears focused on offering pharmacy services to Amazon employees in WA,\u201d Jefferies indicates in a briefing released this weekend.

However, gaining license approval is a slow process, and other pieces to facilitate growth in pharmacy services are not yet in place, says Brian Tanquilut, an equity analyst for Jefferies. \u201cGiven the licensing process and current lack of integration into the Amazon app, we still believe that the impact of Amazon's pharmacy entry will take a while to materialize for drug stores CVS and Walgreens-Boots Alliance.\u201d

Amazon has secured a license for Washington state, and it has two pending license applications in New Mexico and Indiana. In addition, Jefferies research has found new pharmacy technician, and packaging and shipping job postings linked to PillPack\u2019s Phoenix, Ariz., facility, \u201cleading us to believe that these new developments signal to believe that these new developments signal the beginning of Amazon\u2019s Rx expansion via PillPack.\u201d

The effort to expand into Washington might indicate an effort to build drug distribution services to support Amazon employees in the state, Tanquilut posits. \u201cThis move wouldn't be unusual for Amazon, as the company often pilots new product offerings (Amazon Locker, Amazon Go cashier-less stores) for its own employees and\/or in geographies with higher employee concentrations like Seattle prior to a national rollout,\u201d he adds.

While the moves may be indicative, Amazon still needs to significantly boost its drug distribution scale and integrate PillPack into its Prime member services, Jefferies analysts believe. PillPack now only has five mail-order Rx facilities, compared with 26 run by Caremark, Optum\u2019s 18 and 15 operated by Express Scripts.

\u201cWe don\u2019t believe Amazon is currently in the position to rollout a full-scale \u2018Prime Rx\u201d offering near-term \u2026 There\u2019s still a heavy lift required (in terms of building and acquiring additional distribution capacity) until PillPack can sufficiently service an extremely large membership base such as Prime,\u201d which it estimates to have 85 million members.\u201d

\u201cOur monthly proprietary webscrape of AMZN\u2019s HC-related private label products indicates that AMZN\u2019s Basic Care offering grew 19 percent M\/M, the largest sequential increase we\u2019ve seen since the brand was introduced. Additionally, both WBA & CVS\u2019s comparable products (vs. Basic Care & Solimo) continue to be significantly more expensive at the median.\u201d","saveContent":"Amazon is slowly expanding efforts to build online retail pharmacy operations in a growing number of states.

The online retailer is finally making moves to expand PillPack, which it acquired this past summer, according to analysts at Jefferies, an investment banking firm.

Amazon is beginning to seek licenses for PillPack to operate in more states beyond those that PillPack had at the time of the acquisition, says Jefferies analysts, who have been tracking Amazon\u2019s efforts to gain additional licenses, which states issue to enable pharmacy organizations to sell drugs within their borders.

\u201cOur proprietary check of (Amazon\u2019s) moves in the pharmacy space indicates that the online retailer has finally made moves to expand PillPack, though the initial expansion phase appears focused on offering pharmacy services to Amazon employees in WA,\u201d Jefferies indicates in a briefing released this weekend.

However, gaining license approval is a slow process, and other pieces to facilitate growth in pharmacy services are not yet in place, says Brian Tanquilut, an equity analyst for Jefferies. \u201cGiven the licensing process and current lack of integration into the Amazon app, we still believe that the impact of Amazon's pharmacy entry will take a while to materialize for drug stores CVS and Walgreens-Boots Alliance.\u201d

Amazon has secured a license for Washington state, and it has two pending license applications in New Mexico and Indiana. In addition, Jefferies research has found new pharmacy technician, and packaging and shipping job postings linked to PillPack\u2019s Phoenix, Ariz., facility, \u201cleading us to believe that these new developments signal to believe that these new developments signal the beginning of Amazon\u2019s Rx expansion via PillPack.\u201d

Amazon takes first steps to expand PillPack online drug presence

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