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Amazon.com unit abandons plan to sell pharmaceutical products, CNBC says

Amazon found it difficult to persuade hospitals to change the way they purchase products
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Amazon Business failed to convince hospitals to change the way they purchase products

Amazon.com Inc.'s (NASDAQ:AMZN) Business unit, which sells bulk items to companies, has abandoned a plan to sell pharmaceutical products after weighing it last year, according to a report by CNBC, citing people familiar with the matter.

Amazon Business’s decision is partly because it failed to persuade hospitals to change the way they purchase products and cut out middlemen from the deals, CNBC said.

Another issue was that Amazon Business would have had to build an extensive logistics network that could accomodate drugs and other pharmaceutical products, which are sensitive to temperature, according to the report.

The retreat from the pharmaceutical space was seen as favorable by investors in pharmacies. CVS Health Corp. gained 5.7% to US$67.00 in early afternoon trading, while the Walgreens Boots Alliance Inc., which owns Walgreens and Boots, jumped 4.1% to US$66.43.

Amazon Business may consider getting into pharmaceuticals again as it gains size, according to CNBC.

Shares of Amazon.com were up 0.64% at US$1,439.50.

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