(Bloomberg) -- Morgan Stanley (NYSE:MS) says it’s not too early to start talking about Amazon.com Inc (NASDAQ:AMZN).’s entry into Brazil’s drug store market.
The e-commerce giant is already a step closer to the U.S. drug retail market after the June acquisition of online pharmacy PillPack, analyst Javier Martinez points out. If that takes place, it’s just a matter of time before the company replicates the model in Brazil.
That would mean that Raia Drogasil SA, the biggest drugstore operator in Brazil, would have a giant new competitor. Management is already laser-focused on protecting the company’s market, with plans to open 240 stores through next year. Such a presence allows Raia Drogasil to offer efficient logistics and competitive delivery options, the analyst writes. But is it enough to compete with Amazon?
"We argue that investors should start considering potential pharmacy disruption from Amazon," writes Martinez, who holds an equal-weight rating on the stock.
Amazon doesn’t pose a threat in the medium- to short-term, the analyst says. And he points out that if Amazon decides on such a move in the U.S., the behemoth still lags behind in Brazil, as does the entire e-commerce market. And there’s no "real" pharmacy benefit managers and complex logistics and regulatory entry barriers.
But, Martinez points out, "complexity doesn’t mean that it can’t be done, just that it may take longer."