Following news of Amazon’s $13.7 billion acquisition of Whole Foods Friday morning, pharmaceutical stocks have suffered almost half as much market-cap damage in the aggregate as their grocery rivals.
But the stocks of pharmaceutical middlemen also took a serious hit, amounting to about $10 billion, according to UBS.
The market is currently dominated by a small number of pharmacy-benefit managers, which negotiate drug prices on behalf of health insurers and employers, along with drug wholesalers and distributors.
It’s possible that “Amazon could use the physical presence of the Whole Foods WFM, +29.75% stores to establish a physical pharmacy” UBS analyst Michael Cherny said.
Still, “pharmacy is clearly not something Whole Foods has expertise in (it does have vitamins and other wellness products,” he said, so Whole Foods likely won’t serve as a pathway for Amazon’s pharmacy strategy.
Drug wholesalers and distributors also had major stock slides. McKesson Corp. MCK, -2.45% stock dropped 2.7%, Amerisource Bergen Corp. ABC, -2.14% stock declined 1.9% and Cardinal Health Inc. CAH, -1.54% stock dropped 1.9%.
And Walgreens Boots Alliance Inc. WBA, -5.61% which operates pharmacies and sells grocery items, plummeted 5.2%.
Not all stocks in the space were affected. UnitedHealth Group Inc. UNH, +0.63% which has a pharmacy-benefit manager unit, rose 1%, by contrast. Rite Aid Corp. RAD, +0.68% , which operates pharmacies, rose 1.4%.