Amazon to buy PillPack in potentially disruptive drug retail push

Adjust Comment Print

Amazon today unveiled plans to get into the pharmacy business with the acquisition of the online service PillPack.

Founded out of Boston in 2013, PillPack invites customers to sign up online, and the company then dispatches "over-the-counter" and prescription medications in individual packs organized by date and time. The service is available in 49 states, with its main pharmacy located in Manchester, New Hampshire.

Amazon said Thursday that PillPack offers a combination of deep pharmacy experience and a focus on technology.

The deal - for which terms were not immediately disclosed - marks Amazon's latest push into the healthcare industry.

The purchase follows the announcement in January that Amazon, Berkshire Hathaway Inc and JPMorgan Chase & Co were forming a joint venture to tackle rising USA health care costs.

"CVS CVS.N and Walgreens have become particularly reliant on the pharmacy side to drive their businesses forward", said Neil Saunders, managing director of GlobalData Retail, calling it a "folly" to not invest in retail. It also handles deliveries, refills, and adjustments to medications. The big pharmacy chains have been bracing for Amazon's arrival, and this deal could "shake up the drugstore industry", per CNBC.

An aging population means we'll see an increase in health concerns and chronic conditions like heart disease, neurodegenerative diseases, and cancer that can be costly to manage. Shares of drug wholesalers McKesson Corp (MCK.N), Cardinal Health (CAH.N) and AmerisourceBergen (ABC.N) also fell sharply.

"When Amazon sneezes, everybody else catches a cold", said Joseph Feldman, an analyst with Telsey Advisory.

"They've gotta go to the store three or four times a month because the pharmacy can't even fill them the same day", Parker said.

At the time, Parker argued that the company was working to protect its monopoly on home-delivered prescriptions, which Express Scripts disputed.

PillPack has raised $118 million in venture capital funding.

With Amazon's (amzn) firepower behind it, PillPack can upend how customers buy and receive their prescription medications.