Amazon enters healthcare market with PillPack purchase

Amazon’s acquisition of online pharmacy PillPack has shaken the US healthcare industry and confirmed the company’s dedication to entering the market

  • By Fernando Moncada Rivera | Friday, June 29th, 2018

PillPack sends the correct dose of medication to the customer’s door, packaged so they know what to take and when

On June 28, e-commerce giant Amazon announced it would acquire online pharmacy PillPack for an undisclosed amount, shaking the US healthcare industry and putting the company in direct competition with other major drug providers for the first time.

The deal will allow Amazon to use its sprawling distribution infrastructure to scale up the relatively small pharmacy, bringing its services to more customers.

The deal will allow Amazon to use its sprawling distribution infrastructure to scale up the relatively small pharmacy

PillPack’s service delivers pre-packaged doses of medication that customers can simply collect from dispensers when it comes time to take them. It also automatically manages prescription refills and makes monthly deliveries directly to the customer’s door. The service is best suited to people who have to take multiple daily prescriptions.

“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” said Jeff Wilke, Amazon’s CEO for Worldwide Consumer, in the 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.”

Amazon’s stock closed around two percent higher the day of the announcement compared with the previous day, while major healthcare companies across the country saw their stock suffer. Aetna and CVS saw their share value drop by around two percent and 11 percent, respectively, before beginning to recover. Altogether, the announcement resulted in a loss of around $23.5bn in market cap for major US pharmacies.

The deal is another signal of Amazon’s seriousness in entering the healthcare industry. In January, the Seattle-based internet behemoth entered into a joint venture with Berkshire Hathaway and JPMorgan to reduce healthcare costs for their employees, but the PillPack acquisition is the company’s first foray into direct competition with established market players.