Pharmacy stocks fall as Amazon charges into the drug business

Pillpack

Pillpack

The company delivers pre-sorted dose packaging, coordinates refills and renewals and makes sure shipments are sent on time making it easier for "any customer to take the right medication at the right time, and feel healthier", according to TJ Parker, co-founder and CEO of PillPack. Its pharmacy is based in Manchester, N.H., and its business operations are located in Somerville, Mass.

"Longer term, Amazon will become a key player in health care, but the timeline is likely longer than most expected, given last-mile delivery infrastructure needs to scale first".

Health care stocks fell after Amazon.com said will buy online pharmacy PillPack.

Amazon, however, has threatened to cause the biggest disruption with stealthy moves to widen its product and distribution reach.

CVS Health noted that PillPack isn't the only company in the space with drug delivery capabilities.

A sign marks the corporate offices of PillPack in Somerville, Massachusetts, U.S., June 28, 2018.

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.


"We wouldn't be surprised to see pharmacies in Whole Foods at some point", he told the news service. Following the acquisition news, shares of Walmart tumbled about 1%.

Shares of drug wholesalers, like those of AmerisourceBergen, McKesson and Express Scripts, also took a smaller hit following news of the deal.

Amazon's acquisition of PillPack follows a larger-though less defined-move into the healthcare sector for the online giant.

The company picked up independent pharmacy PillPack for an undisclosed amount on Thursday, allowing it access to PillPack's pharmacy distribution system created to make getting prescriptions simpler for patients.

Moreover, Amazon is working with Warren Buffett's Berkshire Hathaway Inc. and JPMorgan Chase & Co. on a joint venture that will provide healthcare services to their more than 1 million employees.

PillPack runs a platform known as PharmacyOS, which manages patient data and figures out how to even out prescription drugs in safe doses for customers. It expects to close the deal during the second half of this year.

He said PillPack could be kicked out of current PBM networks, "especially if Amazon has designs of significantly ramping its prescription volume".

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