Google (GOOG) will no longer accept ads from unaccredited online pharmacies in the U.S. and Canada, and will only allow pharmacies to target customers in the country in which they operate, the company announced today.
Importing cheaper drugs from Canada is a huge business — and one that does a lot of online advertising.
Broadpoint AmTech analyst Ben Schachter says in a note today that 76% of ads returned by Google searches for the top five best-selling prescription drugs came from Canadian pharmacies, which will be banned under the new rules.
Schachter expects that the advertisers who replace these pharmacies will pay less, and that it is unlikely Google took this step without pressure from regulators. This will hurt Google’s advertising revenue, but not enough for Schachter to alter his estimates.
More broadly, Schachter says this reinforces the point that “regulatory and legal concerns continue to be our top risk factor” for Google.