Amazon Makes Its Move on the Pharmacy Industry:
Amazon agreed to purchase on-line pharmacy PillPack yesterday. Terms of the deal were not immediately disclosed. Reports estimate Amazon paid approximately $1 billion for the Boston-based company.
Rumors have circulated that Amazon has wanted to enter the prescription-medication industry for a while. The economics make sense. The U.S. prescription drug market is $330 billion per year , according to Bloomberg. Pharmacy giants CVS and Walgreens have already captured most of that market. They have long worried about the Amazon rumors.
Jeff Bezos finally pulled the trigger yesterday.
Even before the Amazon acquisition, PillPack was considered an innovative company in its own right. It is considered the mini-Amazon of the pharmacy world. The company already operates in all 50 states. It distributes medications in pre-sorted packages. Multiple medications are often packaged together, if they are taken at the same time. The unusual packaging keeps customers on schedule with their medications. More importantly, the packaging prevents customers from taking improper dosages.
Amazon was also attracted by PillPack’s established relationships with drug-distribution companies.
Jeff Wilke, the CEO of Amazon Worldwide Consumer, explained: “PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology . . . We’re excited to see what we can do together on behalf of customers over time.”
Other pharmacy stocks sharply declined yesterday. Walgreens Boots Alliance fell 10%. CVS sustained a 6% decline.