Monday, 19 November, 2018

Amazon buys online pharmacy PillPack

The Walgreens logo is seen outside the store in Times Square in New York Amazon buys online pharmacy PillPack
Melissa Porter | 03 July, 2018, 00:47

When Amazon announced plans to buy pharmacy startup PillPack, the reckoning across the entire industry's supply chain was swift and brutal.

The PillPack acquisition gives Amazon a foothold in the regulated pharmacy business.

Amazon.com said it would buy online pharmacy PillPack, sending shares of drug distributors and retailers tumbling. "We want to help them continue making it easy for people to save time, simplify their lives, and feel healthier". It has also developed pharmacy software that helps coordinate refills, makes sure the shipments are on time, and provides an online dashboard for patients.

Shares of rival pharmacies CVS, Walgreens, and Rite Aid immediately sank by as much as 9 percent on fears that the Seattle-based online behemoth would crumple the drugstore market.

Walgreens" chief executive, Stefano Pessina, said he was "not particularly worried" about the PillPack deal in an earnings conference call with analysts on Thursday, describing it only as a "declaration of intent' by Amazon.

PillPack, which launched in 2014, is available in every USA state except Hawaii.

Pillpack aims itself at customers who take multiple forms of medication, delivering drugs in pre-prepared packages with the correct dosages.

Drug wholesalers like Cardinal Health, AmerisourceBergen and Express Scripts experienced deep losses.

"Hard as it might be, reducing health care's burden on the economy while improving outcomes for employees and their families would be worth the effort", Amazon CEO Jeff Bezos said at the time.

"We have great partners in our traditional carriers and it's exciting to continue to see the logistics industry grow", said Dave Clark, Amazon's senior vice president of worldwide operations.

The announcement comes one week after Amazon, JPMorgan Chase and Berkshire Hathaway revealed the CEO of their new healthcare tech company. "The Street will view this Amazon move as the beginning of the threat, not the entirety of it". "I think there's the potential for (this to be) a very powerful deal, a powerful acquisition".

But all the companies said on Thursday was the deal was subject to some regulatory approvals and that the companies hope to close the transaction during the second half of this year. But Amazon wasn't after the company's revenue, it wanted the company's 50 licenses (for each state) and innovative sorting service - which will enable resource-rich Amazon to ramp up distribution immediately.