Online retailer Amazon.com Inc., which is reportedly mulling a larger entry into health care, is notorious for its low prices.
But when it comes to medical distribution, incumbent industry leader Cardinal Health Inc. said that price is actually its advantage.
Because of the distributor’s scale and size, the “price we’re selling at today is significantly, and I mean significantly, lower that what else is out there,” Chief Executive Mike Kaufmann said, adding that “it would be hard” for someone else to beat it.
For example, when Cardinal Health CAH, +2.88% ships gloves to a medical facility, it ships pallets of them rather than boxes, Kaufmann said.
Medical products also can’t be commoditized like other retail areas, Cardinal Health management said, since doctors can have very specific preferences.
They also suggested that Amazon AMZN, +0.47% would be at a disadvantage because much of Cardinal Health’s medical segment profits are outside of the U.S.
The remarks, made Monday at the J.P. Morgan Health Care Conference in San Francisco, the largest industry conference of the year, illustrate the way that Amazon’s potential entry into the sector continues to cast a pall over Cardinal Health and other health-care distributors.
In a presentation at the conference, Kaufmann — the company’s newly-minted CEO — emphasized the range of services that Cardinal Health offers, including medical and surgical products “distributed five times a week in semi-truck loads,” inventory management services and generic and specialty medications, among other things.
Shares of Cardinal Health and rivals AmerisourceBergen Corp. ABC, +0.64% and McKesson Corp. MCK, +0.94% have been pressured by reports of a possible Amazon entry — even though Amazon hasn’t even confirmed an interest in the space, and it’s unclear what shape such a move would take.
Amazon did not immediately return MarketWatch’s request for comment.
In November, Morgan Stanley declared Cardinal Health most at risk in the case of an Amazon entry, followed by McKesson, because of their earnings exposure risk.
Cardinal Health stock fell significantly between April and late November, but has recovered somewhat since then.
Cardinal Health shares rose 3% on Monday and have declined 1% in the past three months, compared with a nearly 8% rise in the S&P 500 SPX, +0.13% and an 11% rise in the Dow Jones Industrial Average DJIA, +0.41% .