Amazon just put the entire pharmaceutical industry on notice

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Amazon on Thursday announced plans to buy the online pharmacy PillPack, marking its latest push into the healthcare industry. In April, CNBC reported Walmart Inc. was in talks to buy the company for "under $1 billion", citing unnamed sources.

The deal is expected to close during the second half of 2018.

"PillPack's visionary team has a combination of deep pharmacy experience and a focus on technology", noted Jeff Wilke, Amazon CEO for worldwide consumer.


Terms of the arrangement were not immediately disclosed. "We're excited to see what we can do together on behalf of customers over time".

Walgreens Boots Alliance Inc's WBA.O chief executive officer said on Thursday he was not anxious about Amazon.Com Inc's AMZN.O push into the USA healthcare sector, but investors were rattled by the threat the online giant could pose to the sector. Shares of drug wholesalers Mckesson Corp, Cardinal Health and AmerisourceBergen were also down.

It also coordinates refills and renewals, and makes sure shipments are sent on time.


"When Amazon sneezes, everybody else catches a cold", said Joseph Feldman, an analyst with Telsey Advisory. In January, the company announced a collaboration with JPMorgan and Berkshire Hathaway meant to reduce healthcare costs for United States workers. The company serves patients who take multiple medications, sorting those medications into individual packets, so patients don't have sort the drugs themselves. Pharmacy and health benefits companies have long fretted that they'd be next.

Lekraj noted that PillPack's business is geared largely toward patients with recurring medication needs, which, as a group, tend to be older, and many of those people still prefer to go to bricks-and-mortar pharmacies. It had raised $123 million in financing, most recently $5 million in debt from TriplePoint Venture Growth in August 2017, according to data from industry research firm PitchBook. "Even if PillPack is a network provider today, it does not mean it will be a network provider in the future, especially if Amazon has designs of significantly ramping its prescription volume".


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