Amazon is buying PillPack

30 June, 2018, 02:28 | Author: Regina Lloyd
  • PillPack prepackages and mails consumers pills.									Pat Greenhouse  The Boston Globe

The retailing behemoth made its first significant move into the pharmacy business by buying PillPack, an online company that ships medications to customers' homes, reports the Wall Street Journal.

PillPack has mail-order pharmacy licenses in all 50 US states, which could allow Amazon to expand quickly. The company delivers medications to customers in pre-sorted doses created to make it easier for people to take multiple medications a day.

Amazon has widely expected to move into the pharmacy business.

The debut of Walgreens Boots Alliance Inc (WBA.O) into the Dow Jones Industrial Average Index .DJI this week marks the worst performance of any new entrant in the past 10 years, a Reuters analysis shows. (WBA.O), which earlier Thursday reported tepid USA same-store sales, and rival CVS Health Corp.

It was precisely the sort of deal that the health care industry had feared. And what's notable about this particular case is the outsized degree of the market cap erased, relative to the price Amazon paid for PillPack.

"Money's no barrier for Amazon - they could acquire any of the big group wholesalers fairly easily, and that could cause significant indigestion for community pharmacies, as they'd have a supply chain ready-made and purchasing power second to none".

Mr Read says the size of the Australian market may be some protection for pharmacy - but Amazon could use the sector as a "leverage point" to gain greater traction in other areas. CVS Health, Walgreens and Express Scripts Holding opened down on the news.

Amazon could also negotiate directly with pharmaceutical companies, giving them the ability to offer cheap generic drugs even to customers without health insurance, according to industry experts. Kroger Co. (KR.N), the biggest USA supermarket chain, saw US$2 billion in market value wiped out in one day.

Some analysts played down the immediate threat Amazon poses. "And I think that that's more likely than not what you're going to see today"'.

The acquisition may turn out like, which ultimately exited the prescription business and focused on over-the-counter products before being bought by Walgreens and ultimately shutting down. PillPack previously raised $118 million from venture capitalists and is said to have surpassed $100 million in sales for 2017.

A September 2016 funding round valued the Boston-based startup at around US$360 million, according to venture-capital database PitchBook. In April, Walmart Inc. was said to be in talks to buy the company.

And if Amazon's torrid stock performance in recent months is any indication, the company's shareholders love the deal activity, among other fundamental drivers. Pessina insisted that physical pharmacies would continue to be "very important".


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