With $1B Purchase of PillPack, Amazon Fulfills Its Pharmacy Destiny

"Amazon's acquisition of PillPack is a warning shot in what is about to become a major battle within the pharmacy space", said Neil Saunders, managing director of GlobalData Retail. Sources told TechCrunch that Amazon is paying "just under" $1 billion for PillPack, a hefty premium seeing that PillPack was last valued at $361 million, according to financial tracking service PitchBook.

PillPack, meanwhile, is already licensed to deliver medications to all 50 USA states, helping Amazon clear the regulatory hurdles that might have complicated its foray into the prescription drug industry.

TJ Parker, PillPack's co-founder and chief executive, said: "Together with Amazon, we are eager to continue working with partners across the healthcare industry to help people throughout the USA who can benefit from a better pharmacy experience". Its software helps drugstore manage refills and offers an online dashboard for patients.

Shares of CVS, Express Scripts and Walgreens Boots Alliance Inc. were down in premarket trading in NY.

With PillPack's processes and knowledge of the industry and Amazon's vast network of resources, the deal could provoke a moment of genuine disruption in healthcare, which is already going through a digital metamorphosis.

The pharmaceutical industry is a giant market. Shares of Walgreens, CVS, and Rite Aid plunged Thursday, collectively losing $12.8 billion, according to CNBC.

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

PillPack, which delivers medications in pre-sorted dose packages and employs more than 700, also has offices in Manchester, N.H. The company had previously been rumored to have been in talks with Walmart. Terms of the deal were not disclosed, but TechCrunch and Bloomberg reported the deal was for "just under $1 billion".

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

Amazon is also working with JP Morgan Chase and Berkshire Hathaway on a new health care company that is seeking to lower costs and improve care.

Some analysts played down the immediate threat Amazon poses. Hill sees supply-chain stocks potentially trading below 10 times their price-to-earnings multiples as competition heats up.

News of the deal rattled drug retailers, who have long feared Amazon's entry into their realm. Amazon now sells over-the-counter drugs through a partnership with Perrigo It also has pharmacy licenses in a number of states, in addition to being fully licensed to distribute medical devices across the United States.

(Copyright © 2015. All Rights Reserved.)
 
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