Amazon is going to crush this whole group of companies

Amazon.com Inc. (Nasdaq: AMZN) is about to strike a new target.

“It’s a question of when, not if,” David Larsen told clients in a report last Thursday.

Larsen is an analyst at Leerink Partners, an elite boutique brokerage firm that is an expert in healthcare stocks.

From my 20 years on Wall Street, I know that Leerink’s analysts are top-notch.

When they say something, you pay attention … which is exactly what many of you should do now.

Because if Amazon enters this market, it would pose an immediate threat to many of its actions.

These are popular dividend-paying stocks that I’m sure many of you own.

And that’s terrible news for you and your wallet.

See, this is what happens when Amazon targets your stocks …

First, they start to go down.

Second, as the business your stock controls becomes “Amazoned,” it continues to decline.

In this case, it is a business that is considered safe. It has many barriers to entry, according to one of the CEOs it is targeting.

However, an analyst at a consulting firm believes otherwise.

“They are instantly disruptive if they do it differently,” says Linda Cahn of Pharmacy Benefit Consultants.

So what is the business that Amazon is preparing to disrupt?

Ripe to be surprised

It’s the prescription drug market.

You may not have known it, but before you get your meds at your local pharmacy, you go through a pretty wild ride.

This complicated pipeline enriches the middlemen. It also makes medicines more expensive by up to 36%.

This is a big problem. Total prescription drug spending in the US was $ 457 billion in 2015. And it’s projected to skyrocket to $ 610 billion by 2021, according to recent research.

The current system is a gold mine for intermediaries: companies like Walgreens Boots Alliance Inc. (Nasdaq: WBA), CVS Health Corp. (NYSE: CVS) and Express Scripts Holding Co. (Nasdaq: ESRX) get rich off us.

That’s because, in the end, all the extra money comes from you and me, most directly through higher copays at the pharmacy and increased health insurance rates. Finally, we also pay through our taxes when we pay for government programs like Medicare and Medicaid.

In other words, this group of companies is ready to be Amazoned.

Transparency and efficiency

You see, Amazon specializes in bringing transparency and pricing efficiency to the businesses you are looking for. That’s because these are companies that make money. because they lack transparency and efficiency.

“Amazon could bring transparency to a market that is completely lacking,” says Cahn.

Amazon poses a real and direct threat to Big Pharma, according to Leerink Partners.

I agree. And the stock market is taking notice and beginning to appreciate this threat.

CVS shares are already down from their peak in May 2016. Walgreen is down from their peak in August 2015. Finally, Express Scripts is down from their peak in July 2015.

I think these companies will be destroyed by Amazon. That’s because your only true competitive advantage is information.

It used to be difficult to get information on drug prices and pharmaceutical spending. However, this is no longer true.

This information is now widely available. And in the hands of Amazon, it will become a flamethrower that will destroy the profits that these middleman businesses generate.

Deadly traps for your money

When Amazon goes into this business, it will cut prices. We know this from other companies that have been listed on Amazon. It’s also the first thing Amazon did when it took over Whole Foods, which it recently acquired.

With that, the profit margins of CVS, Walgreens and Express Scripts will be crushed. Your actions will follow.

Now, many of you will be tempted to buy these stocks. They will look cheap. And they will still look cheap. But don’t be fooled by them.

I think these companies are death traps for your money. They are doomed. Amazon and innovative companies like this will crush them until they leave.