Amazon Makes Big Foray Into Health Care With PillPack Purchase

Amazon buys PillPack an online pharmacy that was rumored to be talking to Walmart		
		
	Ingrid Lunden

       @	   
   	7 hours

Amazon buys PillPack an online pharmacy that was rumored to be talking to Walmart Ingrid Lunden @ 7 hours

Amazon is officially getting into the health care business and buying online pharmacy PillPack, reportedly the deal is worth about $1 billion.

Amazon on Thursday announced it had signed an agreement to acquire PillPack, an online pharmacy. The fund participated in an early investment round that raised $8.8 million for the startup, which streamlines the prescription drug delivery process for people that require multiple daily medications and ships to all 50 states.

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

The big pharmacy chains have been bracing for Amazon's arrival, and this deal could "shake up the drugstore industry", per CNBC.

CNN Money reports that CVS shares fell 9% in early trading, while Walgreens Boots Alliance dropped by more than 10%.

The move represents a formidable threat to pharmacy chains including Walgreens Boots Alliance Inc., which earlier Wednesday reported tepid USA same-store sales, and rival CVS Health Corp. Walgreens was already trading lower after reporting in its latest earnings report that same-store sales in its United States pharmacy business fell.

The two say that completion of the transaction is subject to regulatory approvals and other customary closing conditions, and they expect to close the transaction during the second half of 2018.

Bezos already has signaled his frustration with a health-care system characterized by rising costs for consumers and companies, sometimes-poor outcomes, and unnecessary complexity. And what's notable about this particular case is the outsized degree of the market cap erased, relative to the price Amazon paid for PillPack.

This is the latest of several recent moves that show Amazon is dedicated to making inroads in healthcare.

The reasoning is simple: Amazon has a ton of cash and an unparalleled logistical network, and when it looks poised to enter or expand its position in a market, traders get scared and bail out of holdings in competing companies.

Amazon could also negotiate directly with pharmaceutical companies, giving them the ability to offer cheap generic drugs even to customers without health insurance, according to industry experts. McKesson, Cardinal Health and AmerisourceBergen shares were all down after the news. Big packaged food stocks also took a hit. "And I think that that's more likely than not what you're going to see today"'. It recently began selling medical devices and instruments, as well.

A September 2016 funding round valued the startup at around $360 million, according to venture-capital database PitchBook. Now, that deal appears to have fallen through as Amazon came through with an undisclosed offer.

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