Amazon Set to Hit $2 Billion in Pharmacy Sales

Amazon's pharmacy business is on track to generate $2 billion in revenue this year, driven by surging customer interest in its online medication services, according to Evercore's analysis.

In a recent survey conducted by Evercore, 45% of Amazon customers expressed being "extremely interested" or "very interested" in buying medications through the platform. This marks a significant jump from 34% last year and 14% in 2020, showcasing the largest year-over-year increase in purchase intent in the past 8 years.

The survey, which included 1,100 respondents, also revealed that 13% of Amazon customers have already purchased pharmaceutical products from Amazon, up from 9% last year.

Market Potential and Growth

Amazon's growing foothold in the pharmacy sector is placing pressure on traditional retail pharmacy chains. Evercore analyst Mark Mahaney highlighted that half of Prime membership households could eventually purchase medications through Amazon. This shift could unlock an additional $33 billion in revenue and $1.6 billion in operating income over the next 3 to 5 years.

Mahaney also pointed to Amazon's aggressive expansion of same-day delivery for pharmaceuticals, targeting coverage for nearly 50% of US consumers by the end of the year.

Competition in the Pharmacy Sector

Amazon's momentum in the $435 billion US prescription drug market is intensifying competition for traditional pharmacy retailers. Notably, Walgreens is reportedly in talks to sell itself to a private equity firm, signaling challenges for brick-and-mortar players in adapting to Amazon's dominance.

The Takeaway

With rising customer interest and a robust delivery network, Amazon is aiming to disrupt the pharmaceutical industry. The $2 billion revenue forecast for 2024 underscores Amazon's growing influence and its potential to reshape how Americans purchase prescription medications.