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Amazon backs off plans to sell pharmaceuticals to hospitals triggering surge in supplier stocks

Suppliers such as McKesson, Cardinal Health and drug store chains including CVS and Walgreens all saw boost after CNBC reported Amazon's about-face.

Beth Jones Sanborn, Managing Editor

Stock prices for major drug suppliers got a boost following a report that Amazon had backed away from plans to sell drugs to hospitals.

McKesson and Cardinal Health saw increases of about 5 percent and AmerisourceBergen rose about 3 percent, while Cardinal Health stock had plunged 25 percent over the past year.

[Also: 5 ways Amazon could disrupt healthcare]

Drugstore chains saw increases too. Walgreens Boots Alliance stock went up 6 percent and CVS Health and Rite Aid stock prices spiked 7 percent. 

The reversal comes after Amazon struggled to sell hospitals on changing their purchasing processes in favor of the retail giant, according to CNBC, which reported Amazon's changed plans Monday citing people familiar with the matter. The report also said Amazon would need to build a stronger "logistics network" for such and endeavor to succeed.

[Also: Walmart signals continued interest in healthcare space through remodel of pharmacies]

For the time being, Amazon will focus on selling other medical supplies to hospital and clinics, according to a separate report from Reuters, as the highly regulated pharma environment and strength of legacy suppliers may have proven too daunting for the online retail giant at this time. 

Amazon is still causing a fair amount of disruption in the healthcare space with its current operations, including a recent announcement that they would offer discounted amazon Prime memberships to Medicaid beneficiaries. The 54 percent discount would bring the price of a Prime membership down to $5.99 a month. 

There is also the much-discussed joint venture with JPMorgan Chase and Berkshire Hathaway. Few details have been revealed about the venture, other than the companies billing it as an effort to cut healthcare costs for thousands of employees.

Twitter: @BethJSanborn
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