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Amazon Acquires Online Pharmacy PillPack

June 28, 2018
by Rajiv Leventhal
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Amazon announced today that it has acquired PillPack, a Boston-based online pharmacy startup.

PillPack delivers medications in pre-sorted dose packaging, while coordinating refills and renewals and striving to send shipments on time. The aim of the company is to provide an easier customer experience for those who take daily medications. Terms of the deal have not yet been disclosed, but a TechCrunch report is estimating that it will be for just under $1 billion.

The move is yet another one for Amazon into the healthcare space. Earlier this year, Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. announced that they were launching an initiative to improve satisfaction and reduce costs for their companies’ employees. Details of that joint venture have been vague, but experts have pointed to reducing healthcare fraud and administrative costs as key areas that the companies will focus on. Just recently, the organizations tapped Atul Gawande, M.D., as CEO of the initiative.

CNBC reported in May that PillPack was in talks to be acquired by Walmart for under $1 billion. According to that report, “The sources cautioned that the PillPack deal is not yet finalized and could still fall apart, and that Walmart has considered buying a number of start-ups. Still, the sources said discussions between the two about a sale have been happening for months.” And, it was also at that time when CNBC reported in the story, “Amazon also courted the company and at one point held discussions.”

Indeed, in the end it is Amazon that has made the deal. Jeff Wilke, Amazon CEO worldwide consumer, said in a statement, “PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology. PillPack is meaningfully improving its customers’ lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier. We’re excited to see what we can do together on behalf of customers over time.”

In a statement responding to the deal, Forrester analyst Arielle Trzcinski noted that as many as 50 percent of chronic patients do not take their medications as prescribed. And, 20 to 30 percent of medications are never filled. As such, said Trzcinski, “With Amazon + PillPack this eliminates the need to stand in line at the pharmacy which may help overcome past barriers, especially if that patient has issues with mobility or transportation. Amazon will know if the patient didn’t refill their prescription and could potentially reach out via Alexa to refill their prescription.”

Trzcinski continued by noting that, “We are already seeing the use of Alexa and other voice enabled devices engage with patients at home.  From medication reminders to gathering data on a patient’s health, Alexa could remind a patient to take their medications—therefore knowing when it is time for a refill and automatically submit the order.” She added, “This will disrupt the way consumers pick up their medications and has serious implications for brick and mortar retail pharmacies.”

Pharmacy stocks in the U.S. market dropped on the deal announcement, most notably those of CVS (-8.1 percent), Rite Aid (-3.1 percent), and Walgreens Boots Alliance (-9.2 percent), according to a report in Business Insider.

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