March 23, 2019

Amazon to buy online pharmacy PillPack

03 July 2018, 12:44 | Silvia Roy

Amazon to buy online pharmacy PillPack

Amazon to buy online pharmacy PillPack

PillPack supplies pre-sorted prescription drugs and other services to people who take multiple medications, a growing market as the US population ages and requires treatment for multiple complex, chronic conditions. Amazon rose 2.6 per cent, while UPS fell 2.3 per cent and FedEx lost 1.3 per cent. While speculation about Amazon entering the health-care space has plagued the sector for months, Robert W. Baird & Co. called the PillPack news "a full frontal attack" on companies whose valuations were already near historical lows. Walgreens Boots Alliance was down almost 7% at the open, CVS dropped more than 9% and Rite Aid was down more than 11%.

On Thursday, Amazon announced it had bought PillPack, an online pharmacy for about $1 billion, a source briefed on the deal told The New York Times. "I think there's the potential for (this to be) a very powerful deal, a powerful acquisition".

Lekraj noted that PillPack's business is geared largely toward patients with recurring medication needs, which, as a group, tend to be older, and many of those people still prefer to go to bricks-and-mortar pharmacies. Following the acquisition news, shares of Walmart tumbled about 1%. According to Reuters, the share prices of drug wholesalers like Mckesson, Cardinal Health and Amerisource Bergen also dropped. In January, Amazon, Berkshire Hathaway and JPMorgan Chase announced plans to create an independent company that's "free from profit-making incentive" and geared toward providing innovative healthcare solutions to their USA employees. However, the transaction is subject to some regulatory approvals. PillPack is a niche player now, with more than 50,000 customers. Its PharmacyOS - the system it has built that forms the basis of the company - is a platform that helps manage patient data and figure out how to balance meds together in safe doses for its customers.

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The remaining equity is owned by the firm's employees, the person said.

Walgreens doesn't seem too anxious.

"The pharmacy world is much more complex than just delivering certain pills or certain packages", Pessina said. "We're all just waiting and tapping our foot to see the actual policy". "The Street will view this Amazon move as the beginning of the threat, not the entirety of it".

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"I think this is a fundamental step for Amazon, to begin to attack the pharmacy industry", said Adam Fein, president of Pembroke Consulting and an expert on the drug supply chain.

But no area of the market felt the pain worse than pharmacies themselves. It is an in-network pharmacy for some PBMs and for major Medicare Part D plans, a federal drug benefit to help Medicare beneficiaries pay for self-administered prescription medicines.

The deal is expected to close in the second half of 2018.

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