There's an old saying: “Politics makes strange bedfellows.” I might add that this happens sometimes in business too.
major pharmaceutical company Eli Lilly (LLY -0.86%) and leader in e-commerce/cloud services. Amazon (AMZN -2.42%) It may seem like we don't have much in common. However, the two companies will continue to cooperate on important aspects. And both Lilly and Amazon stocks could benefit from this partnership.
How Lily and Amazon work together
Lilly announced Wednesday that it will use Amazon Pharmacy to fill prescriptions for some drugs on its direct-selling website LillyDirect. The pharmaceutical giant launched LillyDirect earlier this year.
Patients who use LillyDirect do not need to go to their doctor's office. Instead, Lilly's website helps you connect with an independent telehealth provider or find a medical professional near you if you prefer an in-person visit. LillyDirect also allows online pharmacies to obtain obesity, migraine and diabetes prescription medications directly from Lilly and have them delivered to patients' homes.
Amazon entered the online pharmacy business in November 2020. Amazon Prime members can get many prescription drugs delivered within two days for free. Customers who are not enrolled in Amazon Prime can receive free shipping within 4-5 days. He can also upgrade to 2-day shipping for a small fee.
Why this partnership makes sense
LillyDirect is already working with Truepill to create online prescriptions. Amazon Pharmacy is his second online pharmacy in partnership with Lilly. This partnership makes sense for both large companies.
Lilly now has another option for filling patient prescriptions with LillyDirect. Amazon Pharmacy has the potential to attract more patients to LillyDirect. Amazon is exploring ways to deliver prescription drugs even faster than two days. Lily could benefit from these efforts.
Amazon Pharmacy plans to deliver some of the most popular prescription drugs on the market. Demand for Lilly's weight loss drug Zepbound continues to soar. Amazon Pharmacy will also deliver Lilly's migraine drug Emgality, as well as diabetes products such as Basaglar, Humalog, and Humulin.
A partnership with Lilly, the world's largest drug company by market capitalization, could pave the way for Amazon Pharmacy to work directly with other companies in the industry. John Love, vice president of Amazon Pharmacy, told CNBC that the company's fast delivery “makes us attractive to Lilly, payers, health care providers, all kinds of people who are looking for a different type of pharmacy.” We will be a valued partner and collaborator.”
Why both Lilly and Amazon stocks should be winners
Lilly and Amazon's stock prices rose slightly on the day the partnership was announced. S&P500 I slipped a little. It is unclear whether this news was a small trigger or not. But both stocks should benefit in the long run as a result of the partnership.
Lilly Direct could expand Lilly's prescription drug market. Working with Amazon Pharmacy should increase the number of patients using LillyDirect. Amazon, on the other hand, has made a big bet by expanding into healthcare. Lilly's choice of her Amazon Pharmacy is another important step in which that gamble paid off. Of course, Lilly and Amazon stock were big winners even before the two companies partnered, and likely would have continued to deliver exceptional returns even without the partnership.
Zepbound isn't Lilly's only big growth driver. Sales of the company's type 2 diabetes drugs Munjaro and Jardiance, as well as anticancer drugs Belzenio and Taibaite, are rapidly increasing. Lilly hopes to soon win U.S. regulatory approval for its Alzheimer's disease drug donanemab, which could become another blockbuster in its lineup.
Amazon's cloud services platform will almost certainly continue to enjoy strong tailwinds from the introduction of artificial intelligence (AI). The company has also made steady progress in improving its profitability and free cash flow.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Keith Speights has a position at Amazon. The Motley Fool owns a position in and recommends Amazon. The Motley Fool has a disclosure policy.
