DRUGS ONLINE: Amazon.com Buys Big Stake in Drugstore.com
Internet book retailer Amazon.com has bought a 40% stake in Drugstore.com, an online pharmacy outlet that makes its debut today. The deal gives Amazon a foothold in the $150 billion-a-year pharmacy market -- seven times the size of the retail book market -- while Drugstore.com will likely benefit with a link on Amazon's site expected to draw large volumes of Internet traffic (Hansell, New York Times, 2/25). Drugstore.com also hopes to draw in customers through an exclusive partnership with the internet portal Yahoo! (Orr, Ft. Lauderdale Sun-Sentinel). One e-commerce analyst estimated that $66 million in drugstore items will be sold online in 1999, an amount likely to grow to $1.2 billion -- 3% of the total market -- by 2002 (Times, 2/25). Drugstore.com will operate much like mail order pharmacies, and by working with a distributor already licensed to sell drugs in all 50 states, the company enjoys a significant advantage over other fledgling Internet drugstores currently slogging through red tape to complete licenses. The site will feature e-mail alerts to remind people to refill prescriptions, content on health and wellness and chat rooms where pharmacists will field questions (McCollum, San Jose Mercury News, 2/25). Users will be able to shop online, transfer existing prescriptions from other pharmacies or have doctors call in at 1-800-drugstore (Bloomberg/New York Post, 2/25). The site will carry 15,000 items, from prescription drugs to standard drugstore items, and will store a record of shoppers' purchases to speed routine shopping. The Times reports that Drugstore.com will target patients with chronic illnesses whose prescription needs are routine and predictable. A potential glitch: chronically ill patients tend to be older, and analysts have noted that seniors are "the most reluctant to shop online" (2/25). But, an online drugstore does have the advantage of privacy: "Unlike bookstores, where people like to shop, discover, get a cup of coffee, no one likes browsing in the Preparation H section of the drugstore," said Drugstore.com CEO Peter Neupert (San Jose Mercury News, 2/25).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.