Shares of dental supply distibutors sank Wednesday after Morgan Stanley issued a stark warning to investors: “Amazon is here.”

Dental supply distributors Henry Schein and Patterson Companies both fell more than 3 percent after analyst Steve Beuchaw said that Amazon is buying supplies directly from oral goods manufacturer Dentsply Sirona.

“We have new evidence that Amazon is accessing critical products from Dentsply Sirona,” wrote Beuchaw on Tuesday. “While Amazon makes up a small share of average total spending both backward (4 percent) and forward looking (5 percent), it was used by 34 percent of practitioners in our survey in the last year suggesting it is making inroads into many practices.”

The analyst downgraded both suppliers to underweight from equal weight.

Amazon, Henry Schein, and Patterson Companies did not immediately respond to CNBC’s request for comment.

Many have speculated that Jeff Bezos and his company could try to disrupt the medical or pharmacy supply chain and undermine established distributors like Henry Schein and Patterson. By accessing dental supplies directly from a manufacturer like Dentsply Sirona, Amazon could work to deliver medical devices and products directly to dentists and other physicians.

Amazon indicates a majority of the dental products on its business-to-business portal are sourced directly from manufacturers, with the other 50 percent sourced by third parties, wrote the analyst in November, allowing a distributor of Dentsply Sirona products to resell via Amazon.

–With reporting by Michael Bloom

Source: Tech CNBC
Shares of dental suppliers drop on potential new threat from Amazon