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Amazon could push more pharmacies into offering lab tests

by Emma Court
June 27, 2017 9:12 a.m. ET

Pharmacies need to do more if they want to compete with Amazon


In November of 2015, Quest Diagnostics Inc. and Safeway Inc. joined to do something new and unusual: offer lab services like blood tests in Safeway pharmacy locations.

By now, the companies have opened 65 such locations, and they’re aiming for 200 by the end of this year.

Consumers can already fill prescription drugs at pharmacies and even get diagnoses at increasingly widespread pharmacy clinics. Why not lab work, too?

The concept, which is fairly new, has taken on a new urgency. Expanding pharmacy services has become a more immediate priority for the industry on the heels of Amazon’s AMZN, -0.54% Whole Foods WFM, -0.07% purchase.

Amazon reportedly has plans to get into pharmacy, which sparked pharmaceutical stocks to lose about $10 billion in combined market cap on June 16.

An Amazon pharmacy entry isn’t a sure thing — the company told MarketWatch it has “a practice of declining to comment on rumors and speculation” — and some on Wall Street are skeptical about the retail giant’s interest in pharmacy or ability to break into the highly regulated industry.

The threat should “accelerate CVS’s and Walgreens’ diversification into health-care delivery, with lab services a natural extension,” said Morgan Stanley analyst Ricky Goldwasser.

While Quest DGX, +0.11% and Safeway pioneered this type of collaboration, Quest wants to work with other companies too, with a goal of about 1,150 more such locations, Goldwasser said.

(Quest was involved with a pilot program with CVS and Walmart, according to company commentary in September 2016.)

Another major lab services company, Lab Corp. LH, -0.63% has also said it’s interested in partnerships.

http://www.marketwatch.com/story/would-you-like-blood-work-with-that-why-amazon-could-push-more-pharmacies-into-offering-lab-tests-2017-06-23