Amazon shakes up drugstore industry with acquisition of online pharmacy PillPack

The retailing behemoth announced Thursday morning that it will acquire PillPack, an online pharmacy designed for patients who take multiple prescription drugs.

All told the three drops accounted for over $11 billion in stock market value wiped out because of today's announcement. Although PillPack expects sales to exceed only about $100 million this year, Amazon's huge customer base and existing shipping infrastructure could allow the company to scale up quickly.

Rite Aid shares also fell, as did the stocks of big drug distributors Cardinal Health and AmerisourceBergen.

Volume on US exchanges was 7.13 billion shares, compared with the 7.28 billion average for the last 20 trading days. The startup serves tens of thousands of customers and last summer launched PharmacyOS, a system created to simplify interactions between pharmacies, patients and payers and assist patients who manage multiple prescriptions.

Doctors and PBMs have long said patients not properly taking their medicines is one of the main causes of increased health care costs, leading to hospitalisation and more severe health issues.

A PillPack spokesperson said the deal won't have any impact on the Somerville workforce.

Some analysts played down the immediate threat Amazon poses.

Bezos has been thinking about the drug business for almost two decades; in 1999, Amazon purchased a stake in Drugstore.com.

These and other health care stocks rose a few months ago after reports that Amazon may not have been interested in selling prescription drugs.

Pharmacist TJ Parker and computer scientist Elliot Cohen founded PillPack in 2013 after meeting at a medical-technology program at the Massachusetts Institute of Technology. It counts Accel Partners, Atlas Venture, CRV, Founder Collective, Menlo Ventures, Sherpa Ventures, Techstars among its investors.

PillPack raised a total of roughly $118 million in private capital before its acquisition by Amazon.

PillPack was reported in April 2018 to be in talks to be acquired by Walmart, for a price of less than $1 billion. Now, that deal appears to have fallen through as Amazon came through with an undisclosed offer. Just hours before Amazon announced it's buying PillPack, Walgreens beat analyst estimates on third-quarter revenue and earnings. Pessina insisted that physical pharmacies would continue to be "very important".

  • Eleanor Harrison