Amazon Shakes Up Drugstore Industry With PillPack Deal

Jun 29, 2018, 18:32
Amazon Shakes Up Drugstore Industry With PillPack Deal

It is time for the prescription drug supply chain to accept reality: Amazon is serious about entering the pharmacy business.

PillPack is an online pharmacy which operates in all 50 USA states and offers pre-sorted dose packaging and home delivery.

Amazon's acquisition of PillPack is sure to rankle the business-development team at Walmart, which was reportedly looking at buying the pharmacy startup in early April.

Bezos been thinking about the drug business for almost two decades; in 1999, Amazon purchased a stake in Drugstore.com.

Shares of both CVS and Express Scripts were down in premarket trading in NY.

The debut of Walgreens Boots Alliance Inc (WBA.O) into the Dow Jones Industrial Average Index .DJI this week marks the worst performance of any new entrant in the past 10 years, a Reuters analysis shows. Walgreens was already trading lower after reporting in its latest earnings report that same-store sales in its United States pharmacy business fell.

With Amazon's announcement Mizuho analyst Ann Hynes, in a note, said pending health insurer/PBM mergers of Aetna Inc with CVS and Cigna Corp with Express Scripts "are even more critical now".

Prescription drugs sales are largely intertwined with groceries and personal items like makeup and shampoo and Amazon already sells bulk packs of latex gloves, bed pads and syringes. So much for that. Amazon will retain the Manchester location, according to PillPack. It's not clear yet what Amazon plans to do with the new business, including whether it will allow the firm to remain independent (as with shoe retailer Zappos) or turn it into the foundation of a bigger health-care push, reports CNNMoney. The deal is expected to close in the second half of 2018, according to a statement from the companies.

Walgreens doesn't seem too anxious.

Amazon announced today that it is buying online pharmacy PillPack, the deal immediately shook the industry. "I strongly believe that the role of the physical pharmacy will continue to be very, very important in the future".

TJ Parker, co-founder and CEO of PillPack, said the company which specialises in handling dose packaging and coordinates refills and renewals, will benefit from a tie-up with Amazon.

Doctors and PBMs have long said patients not properly taking their medicines is one of the main causes of increased health care costs, leading to hospitalisation and more severe health issues.

Additionally, Amazon's $13.7 billion purchase of the natural and organic supermarket chain Whole Foods in June a year ago could provide the real estate Amazon may need to expand its pharmacy interests. Aetna had hoped to combine with rival Humana while Cigna was planning to merge with Anthem.

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