Amazon has sensationally announced its entrance into the prescription medication market with news yesterday of its acquisition of virtual pharmacy PillPack in a deal worth almost US$1 billion.
The online retail giant, which has disrupted the global consumer goods sector, has positioned itself to take a slice of the vast prescription drug market that in 2016 totalled $US328.6 billion in the States alone.
Pillpack delivers medications in pre-sorted dose packaging and coordinates refills and renewals, particularly for people who take multiple daily prescriptions.
The company also has pharmacy licences throughout America’s 50 states that could fast-track Amazon’s moves into a highly regulated sector.
“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” Jeff Wilke, CEO of Amazon Worldwide Consumer, said in a statement.
“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.”
The deal, which is expected to be finalised later in 2018, has sent pharmacy companies “scrambling to figure out what this means for their business model”, according to Adam Fein, president of Pembroke Consulting and an expert in the prescription drug supply chain.
“I think this is a fundamental step for Amazon, to begin to attack the pharmacy industry. This is the beginning of the pharmacy industry shakeout,” Fein said in The Washington Post.
In a note to investors, analyst at Baird Equity Research Eric Coldwell wrote that companies in the medication supply chain were being "crushed” and “[Wall] Street will see this as a full-frontal attack.”
Founded in 2013, PillPack brought in more than $US100 million in revenue last year. The tens of thousands of customers using the platform pay a monthly service fee, which is often covered by insurance companies.
“PillPack makes it simple for any customer to take the right medication at the right time, and feel healthier,” TJ Parker, cofounder and CEO of PillPack, said in a statement.
“Together with Amazon, we are eager to continue working with partners across the healthcare industry to help people throughout the US who can benefit from a better pharmacy experience.”
Amazon wasn’t the only retailer to take an interest in the virtual pharmacy startup. Earlier this year rumours were circulating that Walmart was in talks to acquire PillPack, with reports the American bricks-and-mortar retail giant was offering less than $1 billion.
It’s no secret Amazon has its eye on the lucrative healthcare space.
In January it announced a partnership with Berkshire Hathaway and JPMorgan Chase to build out a non-profit healthcare company that, for the time being, will focus on the companies’ employees.
Last week the partners named Dr Atul Gawande as CEO and announced that the initiative will be based in Boston.
A version of this story was originally published on the US edition of Healthcare IT News.
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