The pharmaceutical industry needs an ice pack.
Amazon.com, Inc. AMZN struck a blow Thursday with its acquisition of PillPack, an online pharmacy.
"PillPack's visionary team has a combination of deep pharmacy experience and a focus on technology," Jeff Wilke, Amazon CEO Worldwide Consumer, said in a press release. "PillPack is meaningfully improving its customers' lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier.”
Why It’s Important
Armed with PillPack, which fulfills prescriptions online and delivers medications to consumer homes, Amazon becomes a competitive threat to retail pharmacies.
CVS Health Corp CVS fell 6 percent, Rite Aid Corporation RAD 10.6 percent and Walgreens Boots Alliance Inc WBA 9.9 percent on the news. Express Scripts Holding Co ESRX also dropped 1.4 percent, and Walmart Inc WMT, which expressed interest in PillPack earlier this year, fell 1.2 percent.
"Together with Amazon, we are eager to continue working with partners across the healthcare industry to help people throughout the U.S. who can benefit from a better pharmacy experience," TJ Parker, co-founder and CEO of PillPack, said in the release.
Not The First Time
It’s worth noting, though, that a step of this nature wasn't unexpected. Amazon has been building momentum behind health care pursuits for some time.
Earlier this year, Loup Ventures noted the firm was well positioned to disrupt the pharmacy benefit management industry, patient-provider interactions and patient data networks.
In January, Amazon teamed up with JPMorgan Chase & Co. JPM and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) to disrupt the health care sector, and just last week, they appointed Dr. Atul Gawande the venture’s CEO.
In May 2017, the company reportedly hired a business manager to help break into the pharmacy market, and some expected the firm was building an internal pharmacy benefit manager for employees.
Before that, Amazon had begun selling medical supplies and equipment in the U.S. and specific substances globally. In Japan, it collaborated with pharmacies on prescription drug delivery.
What’s Next
The transaction is expected to close in the second half of 2018. How Amazon will integrate the program into its Prime membership program is yet to be seen.
Related Links:
Amazon's Pharma Aspirations: Cowen Finds No New License Applications
Analyst: Why Diplomat Could Be Amazon's Ticket Into The Pharma Space
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