By Josh Nathan-Kazis
Amazon.com's latest lurch into the healthcare industry, announced Thursday morning, poses an extraordinary threat to the many telehealth companies selling cheap generics to treat hair loss and erectile dysfunction.
Amazon's prices appear lower than those being offered by companies such as Hims & Hers Health and Ro, and are available to all members of its Prime subscription service.
Amazon's prices appear set to undercut the long list of competing telehealth companies that rely on aggressive marketing campaigns to sell low-cost generics online. Shares of Hims & Hers were down 14% after the announcement.
Amazon has made plenty of forays into the healthcare business, with mixed success. This time, however, its new competitors are far less formidable than the managed care companies and retail pharmacy chains Amazon has sought to challenge in the past.
Amazon will charge $16 a month for the generic hair loss pill finasteride. Hims advertises a $22-a-month price for the same medicine, while Ro, a privately-held competitor, charges $20 per month.
Neither Hims nor Ro responded to a request for comment.
Amazon is charging $19 a month for erectile dysfunction pills and $10 per month for an anti-aging skin cream. A telehealth visit with primary care provider Amazon One Medical to get the prescriptions costs as little as $29.
"We don't know how successful it will be, but also note that this is a serious competitive threat being introduced to the market," Leerink Partners analyst Michael Cherny wrote in a Thursday morning note.
The number of telehealth companies competing to sell cheap generics online has grown this year amid a weight-loss drug gold rush. Companies like Hims realized they could sell copycat versions of Novo Nordisk's GLP-1 medicine Wegovy made legally by compounding pharmacies.
The industry is now full of large and small players, none of them dominant, and few prepared to withstand competition from Amazon.
Amazon is not offering compounded GLP-1 drugs. The compounded GLP-1 drug market is controversial and could dry up quickly if the Food and Drug Administration determines that Novo's drug is no longer in shortage.
Amazon's new offering is based around Amazon One Medical, the primary care chain it bought for $3.9 billion in 2023. The company launched a pay-per-visit telehealth offering through One Medical earlier this year. Patients prescribed a generic treatment through the new program launched Thursday will buy the medicine through Amazon Pharmacy, a delivery prescription service Amazon opened in 2020.
Amazon has long eyed the healthcare sector, and has sparked periodic selloffs in healthcare stocks on fears that Amazon's scale would allow it to dominate parts of the industry.
In 2018, pharmacy stocks plunged when Amazon announced a deal to buy the online pharmacy PillPack. There were also worries over an Amazon program called Haven Healthcare, which Amazon ran in partnership with Berkshire Hathaway and JP Morgan Chase and briefly appeared to threaten the managed care sector. In 2022, fears that Amazon would buy the home health-services firm Signify Health put pressure on shares of large managed care companies. ( CVS Health eventually bought Signify for $8 billion.)
In taking on telehealth providers, Amazon appears to have chosen a much less formidable target. They may not survive the onslaught.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
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November 14, 2024 11:08 ET (16:08 GMT)
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