Amazon to Buy Online Pharmacy Startup PillPack as Entry Into Health Care

Above PillPack

Above PillPack

Amazon today unveiled plans to get into the pharmacy business with the acquisition of the online service PillPack. PillPack has pharmacy licenses in all 50 states and brings in-house expertise that could help Amazon move more quickly into a space filled with regulatory obstacles, said Michael Rea, chief executive of Rx Savings Solutions, a company that develops software to help consumers lower the cost of prescription drugs. 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 is expected to close during the second half of 2018.

Amazon on Thursday announced it had signed an agreement to acquire PillPack, an online pharmacy. The company delivers medications in pre-sorted dose packaging, lifting the burden of sorting doses and scheduling for patients.

Amazon.com Inc. is buying its way into the heart of the USA health-care system, instantly shaking up a prescription-drug industry already in the midst of a broader transformation. In April, CNBC reported Walmart Inc. was in talks to buy the company for "under $1 billion", citing unnamed sources. Earlier this year, the technology giant announced its move into US employee health care via a partnership with Berkshire Hathaway and JPMorgan, while reports have been surfacing for a while that it was looking to enter the lucrative pharmaceutical realm.

Terms were not disclosed. Shares of drug wholesalers Mckesson Corp, Cardinal Health and AmerisourceBergen were also down.

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The announcement confirmed earlier speculation that Amazon was interested in expanding into healthcare.

CVS shares tumbled 8.6 percent in pre-market trade on the news, while Walgreens slumped 8.5 percent. Our subscribers rely on FiercePharma as their must-read source for the latest news, analysis and data on drugs and the companies that make them.

Amazon declined to answer questions about how PillPack would be incorporated into its business and whether there are plans for global expansion.

The reasoning is simple: 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.

Some analysts played down the immediate threat Amazon poses. PillPack already raised over $120 million in funding, according to Crunchbase. It counts Accel Partners, Atlas Venture, CRV, Founder Collective, Menlo Ventures, Sherpa Ventures, Techstars among its investors. Last week, the companies said author and Harvard professor Dr. Atul Gawande would lead the venture.

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