Amazon to buy PillPack in potentially disruptive drug retail push

Amazon.com Inc. announced that they are willing to purchase the small online pharmacy ‘PillPack’, the world’s biggest online retailer and a drugstore chains, drug distributors, and pharmacy benefit managers.

‘PillPack’ supplies the orders of items like, pre-sorted prescription drugs and other services to people, who take multiple medications. Shares of CVS closed down 6.1 percent, while Walgreen fell 10 percent. Shares of drug wholesalers McKesson Corp, Cardinal Health and AmerisourceBergen all fell. Pharmacy chains and drug wholesalers lost about $14 billion in market value on Thursday, while Amazon gained about $5.5 billion.

The deal’s potential to disrupt major players across the drug supply chain nationwide prompted a sell-off in shares of possible rivals, while sending Amazon shares up 2.5 percent.

Amazon is vying for a share of what is a more than $450 billion total U.S. prescription drug market, according to research firm IQVIA. Moreover, ‘PillPack’ forecast its sale to move to the height of only $100 million this year.

According to industry experts, Amazon can also bargain with pharmaceutical companies, providing them the ability to offer cheap generic drugs even to customers without health insurance. But it can also face a difficult competition with pharmacies run by CVS Health, Walgreen Boots Alliance, and Walmart Inc, and pharmacy benefits provided by CVS, Express Scripts UnitedHealth Group.

Neil Saunders, managing director of GlobalData Retail said, “Amazon’s acquisition of PillPack is a warning shot in what is about to become a major battle within the pharmacy space,” The value of the deal was not disclosed. Bloomberg reported it to be $1 billion, citing a person familiar with the matter”.

by Sawan Kumar on June 30, 2018

Related Articles