Sources said the Seattle, Washington-based company discussed its plans with generic drug giants, including Mylan N.V. (MYL) and Novartis AG (NVS)-owned Sandoz. The conversations were described as high-level and vague, although one source claimed that they revolved around Amazon’s ambition to start purchasing and supplying drugs.
Generic manufacturers are believed to be open to the idea of striking up a relationship with Amazon. Shares in Mylan were 2 percent higher in pre-market trading, indicating that investors, too, are encouraged by this possibility.
Speculation about Amazon’s next move was further corroborated by Leerink. In note distributed to investors on Thursday, the health care investment bank confirmed that Sandoz’s president and head of North America operations Peter Goldschmidt “met and discussed with Amazon its plans for getting into the U.S. healthcare market” at a recent biopharma event. The note didn’t state whether the company intends to become a drug wholesaler or sell generic medications as a retailer, but added that Sandoz doesn’t expect Amazon’s plans to have a "major impact" on its business.
If rumors that Amazon is set to distribute drugs are true, its biggest competitors will be McKesson Corp. (MCK), Cardinal Health Inc. (CAH) and AmerisourceBergen Corp. (ABC). All three companies have come under pressure in recent months from talk that Amazon, a renowned disruptor of various industries, is keen to steal business away from them.
In November, Amazon told regulators that the pharmacy licenses it recently obtained from Tennessee and Indiana will be used to sell medical devices and supplies, rather than prescription drugs. In response to that report, provided by Jefferies, Adam Fein, president of Pembroke Consulting and a drug supply chain expert, said he doesn't think Amazon poses a significant threat to other distributors. (See also: Amazon Will Not Store or Ship Drugs: Report.)
"There has been a massive overreaction to the Amazon threat," Fein said. "I would never underestimate Amazon. But I remain somewhat skeptical of Amazon's ability and desire to fundamentally alter the drug channel [as] the incumbents will have many opportunities to defend their position, capture value from internet technologies, and streamline distribution."
Meanwhile, Walgreens Boots Alliance Inc.'s (WBA) CEO Stefano Pessina said at the Forbes Healthcare Summit on Wednesday that Amazon might be put off by regulatory hurdles. "I believe that they will not come in an industry so complicated as our industry," Pessina said, according to CNBC. "I believe in the end they will use their technology in a different way."
CNBC added that bosses of leading drug manufacturers have been questioned about the prospect of working with Amazon on recent quarterly earnings conference calls. The responses are said to have been enthusiastic, even though formal discussions are not believed to have yet taken place. (See also: Evaluating Amazon's Chances in the Pharma Industry.)