Amazon continues push into healthcare with deal to buy PillPack

FirstWord Pharma, June 28th, 2018

Amazon entered an agreement to acquire full-service pharmacy PillPack for an undisclosed amount, the companies announced Thursday. “PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” commented Jeff Wilke, CEO of Amazon Worldwide Consumer.

Earlier this year, sources suggested that PillPack, which delivers medications in pre-sorted dose packaging and coordinates refills and renewals, was in discussions to be bought by US retailer Walmart under a deal valued at less than $1 billion.

The news comes after Amazon, together with Berkshire Hathaway and JPMorgan Chase, announced an agreement in January to create a not-for-profit healthcare company that aims to reduce healthcare costs for their US employees. Earlier this month, the companies appointed Atul Gawande as CEO of the joint venture effective July 9. Amazon and PillPack noted that the transaction is expected to close during the second half.

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In response to the latest news, shares in pharmacy chains CVS Health, Rite Aid and Walgreens were all down more than 10 percent, while other companies in the drug supply chain such as Cardinal Health, AmerisourceBergen, McKesson and Express Scripts also saw their shares decline. Walgreens Boots Alliance CEO Stefano Pessina, who called the acquisition a “declaration of intent from Amazon,” cautioned that “the pharmacy world is much more complex than the delivery of…certain [pills or] packages.”

Commenting on the news, Neil Saunders, managing director of GlobalData Retail, stated “Amazon’s acquisition of PillPack is a warning shot in what is about to become a major battle within the pharmacy space.” Meanwhile, Rx Savings Solutions chief executive Michael Rea remarked “this move signals just how big of a market opportunity there is to change the pharmacy landscape.”

However, Cantor Fitzgerald analyst Steven Halper said “at this juncture we are not worried about Amazon’s entrance into the prescription market.” He suggested “even if PillPack is a network provider today, it does not mean it will be a network provider in the future, especially if Amazon has designs of significantly ramping its prescription volume.”