Amazon Acquires PillPack, Enters Pharmacy Business
After appointing a CEO for its healthcare joint venture with Berkshire Hathaway and JPMorgan last month, Amazon.com announced an acquisition that underscores how it also hopes to have a more direct — and more commercial — role in the world of healthcare in the coming years. Amazon has purchased PillPack, an online pharmacy the lets users buy medications in pre-made doses. Terms of the deal haven't been disclosed by Amazon, but sources close to the deal say it was for just under $1 billion. PillPack had reportedly been in talks with Walmart for an acquisition. The deal is expected to close in the second half of 2018.
Total Retail's Take: Amazon has been linked to the pharmacy business for some time now, and this acquisition of PillPack makes it official. The online retail giant has it sights set on disrupting another industry — pharmacy — and the effects are already being felt by the established players in that space. Last week's announcement sent the stocks of other pharmacy chains, drug distributors, pharmacy benefit managers and even health insurers tumbling. For example, Walgreens Boots Alliance saw its share price drop 9.4 percent, Rite Aid Corp. was down 13 percent, and CVS Health Corp saw a 9.2 percent drop. Much like the grocery sector with Amazon's acquisition of Whole Foods in 2017, the entrance of the online giant into healthcare figures to leave pharmacy retailers scrambling to preserve market share. In order to do so, they'll need to match the convenience and ease with which consumers can shop on Amazon, including delivery. In other words, they have their work cut out for them. The advantage that they hold over Amazon — at least for now — is that Amazon has never operated in a space as closely regulated as pharmaceutical drugs. We'll see how long that lasts.