Amazon enters pharmacy market with acquisition of PillPack

June 29, 2018

According to a 2015 study by Memorial Sloan Kettering Cancer Center, nearly three out of five Americans (60%) take a prescription drug daily—and many take multiple drugs. Now. Amazon—which supplies nearly everything we need online—is entering the pharmacy market by acquiring a company called PillPack that makes taking medicine easier.

Many youngsters who are going to sleepover camp this season will take PillPacks with them—small plasticine envelopes that contain multiple, daily prescriptions that are sorted by dose and are labelled for the date and time at which the child is to take them. And they are not the only ones who rely on this service: Seniors increasingly are signing up for the service at home, so that they don’t have to sort their pills and remember when to take them.

Founded in 2013, the private, Boston-based company says that it helps customers ”take the right meds at the right time, every time—and is now available in 49 states, both as a direct-to-customer mail service and as an in-network pharmacy that works with such companies as CVS Caremark, Express Scripts, Humana Pharmacy Solutions, Aetna, and more.

“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” says Jeff Wilke, Amazon CEO–Worldwide Consumer. “PillPack is meaningfully improving its customers’ lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier. We’re excited to see what we can do together on behalf of customers over time.”

The deal — for which terms were not immediately disclosed — marks Amazon’s latest push into the healthcare industry. In January, the company announced a collaboration with JPMorgan and Berkshire Hathaway meant to reduce healthcare costs for their own U.S. workers.

According to a report by Business Insider, pharmacy stocks in the U.S. market dropped on the deal announcement, most notably those of CVS (-8.1%), Rite Aid (-3.1%), and Walgreens Boots Alliance (-9.2%).

The business news outlet commented, “Pharmacy shareholders will perhaps find solace in the fact that they’re not the only industry to have billions in market value erased by a single Amazon announcement. The trend has been playing out repeatedly over the past year, with grocery stores, athletic-apparel retailers, and package-delivery services among the afflicted groups.”

The reasoning is simple, Business Insider said: Amazon has a ton of cash and an unparalleled logistical network, and when it looks poised to enter or expand its position in a market, traders get scared and bail out of holdings in competing companies.

The deal is slated to close by year-end 2018.

Research contact: @AmazonNews

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