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Amazon Buys Prescription Drug Mailer for $1 Billion
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Photo courtesy of Reuters.

Summary: Amazon has agreed to buy prescription drug startup, PillPack. 

Amazon has its sights set on the US healthcare system, particularly the prescription drug industry. Bloomberg reported that the multi-billion dollar internet retailer has sealed the deal to buy PillPack for $1 billion.

  
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PillPack is an online pharmacy that sends medication by the dose to your door. Its beneficial for users with chronic conditions because it sends 14-day dosages but divides them into daily packages for free.

Bloomberg said that Amazon’s acquisition has pharmacy retailers like CVS and Walgreens nervous. Almost immediately after Amazon’s buy was announced, CVS shares sank by 8.9% while Walgreens shares fell by 8.5%. CNBC said that Walmart lost $3 billion in the stock market.

Lisa Bielamowicz, president of consultancy Gist Healthcare, told Bloomberg that Amazon’s deal with PillPack can affect the pharmacy industry just like Amazon has affected other industries.

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“This provides an avenue for Amazon to disrupt major pharmacy chains the way that they’ve disrupted booksellers, pet supplies, clothing and other big-box retailers,” Bielamowicz said.

The deal is expected to close later on in 2018, and entering the drug space could mean major dollars for Amazon.



Bloomberg said, “The U.S. market for prescription medicine is vast. In 2016, U.S. consumers spent $328.6 billion on retail prescription drugs, according to U.S. government data. CVS had prescription sales of $59.5 billion last year, while Walgreens sold $57.8 billion worth of drugs in its fiscal 2017.”

PillPack has approval in all 50 states to mail prescription drugs and relationships with drug supplies, which would allow Amazon to expand into the drug market quickly. The startup also has software that examines when refills are needed or how to charge copays, and their automated system eliminates work that some pharmacists are burdened with now.

Michael Rea, CEO of Rx Savings Solutions, told Bloomberg that the Amazon-PillPack deal could change the industry and was a sign of the times.

“This move signals just how big of a market opportunity there is to change the pharmacy landscape,” Rea said.

Amazon started out as an online bookseller and has since grown the brand to sell everything from clothing to groceries. It has purchased other companies such as IMDB, the internet movie database; Whole Foods; Zappos; Goodreads; and Audible.

Bloomberg stated that Amazon founder and CEO Jeff Bezos has wanted to change the healthcare industry for quite some time.

“Bezos already has signaled his frustration with a health-care system characterized by rising costs for consumers and companies, sometimes-poor outcomes, and unnecessary complexity. Earlier this year, he and fellow CEOs Warren Buffett and Jamie Dimon of Berkshire Hathaway Inc. and JPMorgan Chase & Co., respectively, agreed to form a new venture to reshape how the companies handle worker health benefits. The entity recently hired celebrated surgeon and health journalist Atul Gawande to steer the effort,” Bloomberg said.

What do you think of Amazon’s latest purchase? Let us know in the comments below.



 

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