Online retailer Amazon is ready to shake up the drugstore market as the company announced it would acquire online pharmacy PillPack. ETFs with the heaviest Amazon exposure were mostly down in the early trading session.
As of 11:30am Eastern Time, Vanguard Consumer Discretionary ETF (NYSEArca: VCR) was down .03%, VanEck Vectors Retail ETF (NYSEArca: RTH) was down 1.13%, iShares Edge MSCI Mltfct Cnsmr Discr ETF (BATS: CNDF) was down 1.95%, and iShares US Consumer Services ETF (NYSEArca: IYC) was down 0.19%.
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Consumer Discret Sel Sect SPDR ETF (NYSEArca: XLY) was the sole ETF bucking the losing trend as it was up 0.11%.
Amazon’s announcement of its foray into the drugstore market didn’t bode well for competitors, such as Walgreens, CVS Health and Rite Aid–all three of their stock prices plunged following the news–Walgreens down 9.3%, CVS Health down 9.05% and Rite Aid down 10.41%.
The depressed prices by market competitors reflect the sentiment shared by Wall Street analysts who feel that Amazon’s entry into the marketplace will hurt market valuations for Walgreens, CVS Health and Rite Aid.
“We suspect Amazon’s official entry into the space will now place a cap on drug supply chain multiples regardless of whether or not Amazon is able to scale the PillPack business,” said RBC Capital Markets analyst George Hill. “While Amazon represents a significant new entrant in the space, we remind investors that Rxs are sticky and PillPack focuses on difficult to serve patients without access to adequate pharmacy services.”
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