Mercado Livre expansion into prescription drugs hits Brazil pharmacy stocks

Shares of major Brazilian pharmacy chains fell sharply following Mercado Livre's announcement that it will expand its operations to include the sale of prescription medications. The e-commerce giant plans to sell drugs such as antibiotics and GLP-1 weight-loss pens through its own pharmacy in São Paulo, with a goal of integrating up to 20 third-party pharmacy networks into its marketplace by the end of the year.

Market reaction was significant, with Pague Menos dropping 8%, RD Saúde falling 5.38%, and Panvel losing 4.90%. Analysts noted that weight-loss drug consumers represent a high-value segment, as they often spend significantly more than average customers.

While investors reacted to the increased competition, some analysts from XP and JPMorgan suggested the market reaction might have been exaggerated, noting that the immediate impact on the profits of established retailers could be limited. Meanwhile, Abrafarma, the pharmacy industry association, cautioned that digital marketplace sales must still comply with specific sanitary regulations and Anvisa's forthcoming rules.